Recent flooding in the UK has created a perilous environment for cattle, sheep and other livestock, and while farmers do their best to ensure their animals are safe and secure, insurance has a role to play in protecting them against potential losses.

“When animals are in a field close to a river in flood and get too close to it or try to cross the river, they can get swept away, and we have certainly dealt with claims of that nature,” says Mike Collins, Director of Agrical – a loss adjustor specialising in livestock and aquaculture, which works with several Lloyd’s underwriters.

According to Bill White, Account Executive in Willis’ Livestock Division, livestock that drowns or disappears due to flooding is a peril usually covered under a standard famer’s combined property policy – a broad policy he says is bought by the majority of famers, which typically includes coverage for ‘death due to fatal injury to livestock on own premises’. High value animals such as pedigree bulls and rams are often insured under individual mortality policies, Collins adds, although he stresses that from Agrical’s perspective, the vast majority of farmers in flood-affected areas have suffered minimal livestock losses so far in 2014.

“Farmers know to move their stock to higher ground wherever they can, and take whatever evading action is appropriate. They will move mountains to make sure their livestock are safe,” he says.

“Moving animals from a field near the river bank to another field higher up isn’t hugely significant, but if the farm hasn’t got any higher ground, farmers may have to move the livestock off the farm altogether,” says Collins. However, both White and Collins say it is unlikely farmers could claim for cost associated with moving animals to safe ground under their policies.

For the owners of angling lakes, fish farms and other aquaculture facilities, a key concern is that rising water levels could allow the fish to swim away. The Times reported in February that several angling lakes near the River Thames have overflowed in the recent floods, releasing fish worth up to £5000 each into the wild. “If a fish farm near a river overflowed there could be some significant losses,” says Collins, although Agrical is yet to see any aquaculture claims in 2014.

Revenue generating animals

According to Collins, top pedigree cattle used for breeding can be worth in excess of £10,000 each, while the vast majority of commercial dairy or finished beef cows are valued at between £1000-2000 each. There is an even starker difference in the value of sheep; the best rams can be worth up to £30,000, while a typical commercial ewe would be valued at £100-150 and a fat lamb below £100. Meanwhile, he adds, individual chickens are worth very little, but if an egg-laying building is flooded and tens of thousands of egg-producing hens perish, claims could run into hundreds of thousands or even millions of pounds due to lost revenue.

Indeed, if revenue-generating animals die or escape, farmers may face business interruption (BI) losses. “We do get involved with BI claims, but they need to flow from an insured event that causes material damage,” says Collins. Flooding can cause material damage (washing away fences, for example) which could trigger BI claims if animals were to escape or be washed away, yet Collins estimates that nine out of ten UK farmers elect not to buy BI coverage with their livestock insurance. “Whether they are covered or not depends on how the broker arranges the cover, but options are limited for non-intensive risks,” he says.

UK market

The Lloyd’s market insures livestock and aquaculture risks from around the globe. According to White, there are a handful of specialist underwriters in this space, although several general composite insurers also offer coverage.

Neither White nor Collins have seen any evidence of UK farm insurance pricing being affected by recent inclement weather, but White notes that some insures are being more selective when it comes to providing coverage to farms in flood-prone areas.

But, says Collins, flood risk is still not a major concern in the UK relative to other perils when it comes to livestock. “As a loss adjustor dealing in this particular area, flood risk hasn’t resulted in a huge surge of claims. We were more affected by the strong winds – particularly on 12th February this year – where there was a significant surge in wind damage claims to farm buildings over quite a wide area, particularly in Wales,” says Collins.

Last year, late snow in March proved more deadly for livestock than this year’s floods – suffocating or freezing many sheep in Wales and Northern Ireland, he adds, while according to White, disease and bio-security is more of a threat to livestock in the UK than floods. In fact – Willis is yet to see any livestock claims activity among its clients from the recent inclement weather. “Incredibly, I can’t recall a single livestock claim from the floods so far this year,” he says, noting that many of the large pedigree beef herds are located in the North of England and Scotland.