26 December 1997


Taking a structured

approach to risk can lead to

lower insurance premiums,

as Philip Clarke reports

ACCIDENTS on farms cost money – a lot of money.

Not only is there the expense of repairing or replacing damaged facilities. There may also be the cost of downtime, compensation to injured staff, a drop in output or sales and even a loss of profile within the industry.

"The cost of accidents almost inevitably impacts on the insurer," says the NFU Mutuals Pam Oldfield. "The easy response is to put up premiums. But six years ago we took the view that most accidents are avoidable. There could be savings for both parties if simple precautions were taken. We therefore set about developing our risk management service, to advise farmers on how to reduce their exposure."

The service involves a full survey of the farm by a qualified risk reduction surveyor, followed up with a detailed, confidential report and recommendations.

Such has been the success of the scheme – analysis shows that farmers who have had a survey make half as many insurance claims as those who have not – that the company has recently set up NFU Mutual Risk Management Services as a totally separate subsidiary.

Trained surveyors

Currently there are about 50 trained surveyors covering the whole country and over 2000 surveys have now been completed. Staff are recruited to provide a range of specialisations – equine, livestock, arable, forestry – and are trained intensively in-house, until they attain the necessary licence. This can take two years.

One such surveyor is John Coupe, who operates in the Midlands. "The aim is to get the farmer operating in compliance with all the rules and regulations that govern food and farm safety. These are changing all the time and it is hard for anyone to know exactly what is required of them."

The list of common mistakes is a long one, (see table). But Mr Coupe is particularly concerned by the number of accidents involving children which can be easily prevented. "Inadequate guards, tractor wheels propped against walls, unfenced slurry areas, access to animal housing – all are hot spots for inquisitive children," he says.

"We also pay particular attention to pollution and security risks – using the instinct of an insurer to identify target areas."

Getting the farmer involved is crucial, he says, insisting that the key decision maker is with him throughout the survey, which typically lasts a whole day.

This point is emphasised by company director, Mrs Oldfield. "It is essential the farmer accompanies the surveyor throughout. Of course most people want to avoid accidents. But often it is the familiarity they have with their surroundings that is the greatest danger. They just dont see those accidents which are waiting to happen. Our surveyors provide a fresh pair of trained eyes."

The price of the service is wide-ranging – determined by the complexity of the farm set-up and the time taken for the surveyor to visit and prepare his report. But the starting point is £700 and can run to several thousands.

Free advice ignored

Mrs Oldfield says it is important that the farmer "buys into the concept" of risk management. "People tend not to take a great deal of notice of free advice. They take it much more seriously if they have to pay for it."

Certainly the response rate so far has been good, with recent research showing that in 83% of cases all "urgent" and "necessary" recommendations had been acted upon.

But the idea is also to reward farmers who take risk management seriously. "After all, why should they have to cross subsidise farmers who are not doing the job properly and represent a higher risk to the insurer?" asks Mrs Oldfield.

As such, farmers are given vouchers to offset against their insurance premiums over a three-year period – reckoned to be the effective life span of any risk assessment. "The discounts are targeted to relevant parts of their insurance. For example, they may not be used against motor vehicle cover. But they may be used in areas such as public liability, theft and pollution," says Mrs Oldfield. In most cases, the client should be able to get his fee back in the form of insurance premium savings.

Having set the service up as a separate company, risk management surveys are also now available to non-NFU Mutual policy holders for an equivalent fee. In this case, they are also given a voucher, which they can redeem against an NFU Mutual policy if they wish to open one.

But Mrs Oldfield is adamant there is no insurance "hard sell" attached to the service. "We aim to keep both sides of the business quite separate."

One farmer who has already had a risk reduction survey is John Hutchings. He runs a mixed enterprise, with 242.8ha (600 acres) of arable, 540 sheep and 150 dairy cows from Barton Farm, Alderminster, Oxon.

It was the introduction of COSH&#42 (control of substances hazardous to health) regulations a few years ago that prompted him to seek outside assistance. "To try and do it myself was a huge burden," says Mr Hutchings. "There were mounds of literature from the Health and Safety Executive and, at the time, there were still many grey areas. I was glad of the help." (A full COSH&#42 assessment is an integral part of every risk reduction survey.)

Buildings rewired

The main recommendation to come out of his survey two years ago was to get the farm buildings completely rewired, incorporating circuit breakers. "We also had to introduce a proper dirty water system at the dairy. Before, we would have to cart it out in tanks throughout the winter, but now we can store it and use it when we need to."

These things, of course, have cost money. But many other things, such as placing old tractor tyres flat on pallets, reinstating guards over machinery and locking medicines away in cupboards, are cheap, common sense measures that take little effort – just a bit of forethought.

"Many of these things would have to have been done anyway. But now they are an integral part of our risk management policy," he says.

The NFU Mutual hopes that other farmers will adopt a similar approach, leading to fewer claims on the underwriters, lower insurance premiums for farmers and a cleaner bill of health for the industry as a whole.n

NFU Mutual risk reduction surveyor, John Coupe (left), looks high and low for hidden dangers with midlands farmer, John Hutchings.

Top 10 serious farm


1 No residual current device on

electrical equipment.

2 No safety guards on power-

driven machinery.

3 Poor fencing around pits and


4 Dangerous power saw handling.

5 Sub-standard chemical storage.

6 Hazardous electrical wiring.

7 General building defects.

8 Dangerous forklift and material


9 Unguarded accesses, including


10 Unprotected farm waste and

slurry areas.

Source: NFU Mutual Risk Management Services.

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