Feasibility research report for insuring commercial poultry production

storage, handling, and land application of excess poultry waste. Until the current regulationswere set, manure disposal was the responsibility of the contract growers. Now it is the integratorwho must bear this cost. As integrator costs rise, so does the probability that processing plantswill close, leading to reduced bird placements, lower payments to growers, or abandonment ofcontracts. 39Private Insurance InventoryPrivate insurance companies offer coverage to commercial poultry operations, family farmpoultry operations, private hatchery operations, and contract growers. Policies and the coverageprovided are described herein.Building CoverageAlthough coverage varies by company, ―All Risk Coverage‖ insurance is available for farmbuildings. These policies indemnify losses from fire, weather, damage due to snow and ice load,or impact by a farm-owned vehicle. Replacement cost coverage is available for farm buildings.Typically, no depreciation is calculated in establishing indemnities. Building policies tend tocover the repair or replacement of fixed equipment. Replacement cost coverage is also availablefor all on farm dwellings including the replacement cost of contents.Companies writing poultry insurance building coverage have various underwriting requirementsbased on the age of the poultry house. Policies are generally contingent on a favorableinspection of the poultry house. Although insurance companies tend to have a limited range ofpremium rates regardless of house construction materials (i.e., the premium rate on all-metalhouses may be the same as the premium rate on wood frame houses), there is a movementtoward differentiating the rates, with all-metal housing receiving discounts. While insurancecompanies may not fully understand the exposures presented by environmentally controlledhousing, computer technology to manage inputs and outputs, and integrated processingequipment, several insurance companies have focused attention on developing coverage thatappropriately addresses these details of the poultry industry.Flock Insurance CoverageMost insurers offering coverage for the poultry industry do not typically cover animal mortalityor loss of business income resulting from loss of birds. However, several carriers and/oragencies are aggressively seeking customers through online sales. 40 Some insurance is availableto cover the value of lost poultry as well as the loss of business income resulting from theinability to complete a production cycle. Covered losses include losses to livestock due tocontaminated feeds, smoke, failure of environmental controls, suffocation of the livestock, biosecurityissues (terrorism and quarantine), and certain defaults by integrators. 41 These productlines are offered in at least 19 states, including most, but not all of the major poultry productionlocations 42 and are offered by carriers who underwrite insurance in the United States. 43 The39 State of Maryland. 1998. BILL INFO-1998 Regular Session-SB 413. April 8, 2003.40 e.g., PoultryInsurance.com http://www.poultryinsurance.com/, accessed May, 2010.41 Thomas Gregory Associates, http://www.thomasgregory.com/property-casualty/poultry/, accessed May, 2010, Alabama FarmInsurance, http://alabamafarminsurance.com/, Westfield Insurance,http://www.westfieldinsurance.com/farm/farm_insurance.jsp/, accessed May, 201042 Westfield Insurance, http://www.westfieldinsurance.com/farm/farm_insurance.jsp/, accessed May, 2010Use or disclosure of information or datacontained on this sheet is subject to therestrictions on the title page of this report.23Risk Management AgencyContract No: N10PC18148