Ray Ryan reports on why rising insurance costs are presenting a real challenge to the financial viability of a number of Irish cattle marts
FEARS are growing that the soaring cost of insurance could force the closure of some livestock marts across the country.
More than 1m cattle are sold each year in livestock marts, which also provide many diversified services including property sales and retailing.
But all is not well in the sector, according to Donegal Sinn Féin TD Pearse Doherty, who recently raised the issue in the Dáil.
“It is a business which finds itself coming under increasing financial pressures as a direct result of what is fast becoming the cross-sectoral problem of insurance costs,” he said.
Mr Doherty said marts are reporting heightened demands from their insurers. Those demands are to introduce costly structural adaptations and changes to existing practice which it is claimed will help keep the cost of cover down.
“However, even though some marts have already carried out those works, they are seeing dramatic increases in their premiums,” he said.
Mr Doherty said that the operators of one mart, having spent over €12,000 on changes, saw their premiums rise from €8,000 in 2015 to a whopping €15,000 for 2017 -2018 - an increase of nearly 100% in 24 months.
“Another mart has advised that the costs of its renewal is now a staggering €30,000,” he said. “This cost is among its biggest overheads for the year and the figure is now unsustainable.
“It has scaled back its operating times and cannot scale back any further. The next step is whether to close the mart. This is particularly the case for smaller marts and co-operatives which operate only a limited number of days.
“Mart owners simply cannot afford to pay such inordinate insurance premiums and many fear that if the issue is not remedied shortly, it will result in their likely demise.”
Mr Doherty called on the Government to ensure that the plight of marts are brought into the terms of reference of the insurance review.
He said the marts are local trading hubs — institutions in their own right — where farmers and traders come to do business, to socialise and, in most instances, to continue a long and lasting family farming tradition.
Minister of state Michael D’Arcy said he had been advised by Insurance Ireland that livestock marts have significant exposure to injuries to employees and members of the public.
This has resulted in claims occurring with a level of frequency which has led to a reduction in market capacity due to the nature of the risk.
In response, insurers have developed active risk management programmes in order to try to reduce the level of accidents and injuries.
He said he understood insurers have been working with marts with a view to implementing improvements in practices and facilities to reduce claims as this is the key area in terms of managing claim costs. Mr D’Arcy said Insurance Ireland has advised that it is not aware of any recent major increases in the cost of insurance for agricultural mart owners.
However, Mr D’arcy said that if he was mare aware of a specific issue facing an individual mart owner, he recommends that he or the mart owner raise it with Insurance Ireland.
He said he understands Insurance Ireland is happy to discuss the issue in its free information service for all queries, complaints or difficulties regarding obtaining insurance.
Mr D’Arcy said the cost of employer and public liability insurance is being examined as part of the second phase of the Cost of Insurance Working Group.
Mr Doherty earlier asked Mr D’Arcy to take a sample of perhaps 20 marts to see if insurance premiums have increased dramatically.
Mr D’Arcy said he had already telephoned two marts closest to him.
The cost for one of the largest marts in the country is about €12,500 and its owner said its premium had not increased because it did not have a claim for 12 years.
“When I pushed him about his knowledge of other marts, he said from what he has been told, the cost to insure a moderate-sized mart is between €20,000 to €25,000,” he said.
Mr D’Arcy said he took on board Mr Doherty’s assertion that there is probably a bigger issue where premiums for smaller marts, operating on a smaller number of days and with a smaller turnover, go from €8,000 to €15,000.
“It is concerning in the extreme if they have done the work required to ensure there are no claims, or where they have done the work if there were issues to be resolved. I have a real problem with that,” he said.
Mr D’Arcy said if Mr Doherty supplies him with the details, he will pursue the matter and will also take it to the next phase of insurance analysis.
“The marts are crucial and are an essential part of rural Ireland in terms of trade. It is not just the marts because there are shops and other services attached to them,” he said.
“I am from rural Ireland and an agricultural background and do not want to see any further slippage in this sector.”
Fianna Fail’s spokesman on agriculture, Charlie McConalogue, also recently raised “the financial pressure being experienced by livestock markets as a result of rocketing insurance costs”.
In a Dáil reply, Finance Minister Paschal Donoghue said neither he nor the Central Bank can interfere in the provision or pricing of insurance products.
These matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept.
This position is reinforced by the EU framework for insurance.
“Consequently, I am not in a position to review individual cases nor to direct insurance companies as to the pricing level or terms or conditions that they should apply in particular cases,” he said.
© Irish Examiner Ltd. All rights reserved