Farm insurance costs soaring

Farmers’ wallets are getting lighter as machinery and equipment become more expensive and insurance companies recover from a year of natural disasters.

Millewa farmer Chris Hunt has spent 20 per cent more on farm insurance this year, largely due to the rising cost of machinery. Picture: Glenn Milne

Farm insurance costs are rising as machinery and equipment become more expensive and insurance companies recover from a year of natural disasters.

National Farmers Federation vice president and Wimmera farmer David Jochinke said his insurance bill had gone up 20 per cent at his most recent renewal.

“You’re not getting anything more for it,” he said. “But we can’t operate without insurance.”

“The premiums of many pay the losses of a few, but the losses of a few have been substantial (due to last year’s flooding). And it hasn’t been a few, it’s been a lot.”

“Added to that, the cost of machinery, and even the cost of housing and replacing of housing and buildings has been hit by the inflationary pressures, therefore the cost to replace them in a timely manner has also increased. So not only have we seen huge losses (from flooding in eastern Australia), we’ve seen replacement costs go through the roof,” Mr Jochinke said.

According to Insurance Council of Australia data, a record $36.5 billion in claims were paid out nationwide last year. In NSW and Queensland, the value of claims incurred exceeded the value of premiums collected by insurance companies by more than $500 million.

Insurance Council of Australia chief executive Andrew Hall noted in the agency’s annual report, published last month, that “the cumulative impact on insurers’ operations of nearly three years of extreme wet weather, which came after one of the worst bushfire seasons in our history, has been significant”, forcing insurers to employ hundreds of extra staff.

In Victoria’s north west Millewa region, farmer Chris Hunt said his latest renewal had also gone up 20 per cent.

“The insurance premium has gone up, and that is one part of the issue, but the bigger part of the issue is the price of new machinery,” he said.

“We’ve got a sprayer we bought new two years ago for $622,000. A back-of-the-envelope estimate we got off the dealer over summer (for a new model of the same machine) was $940,000.”

Added to that, the cost of a silo has “basically doubled in three or four years” and house building costs have gone up, he said.

“We’re actually maintaining or increasing the value of value of the machinery, the sheds and the silos on the renewal (because it’s not depreciating),” he said.