Rising insurance costs may force machinery dealers to close

FARM machinery dealers have been badly hit by increases in insurance costs, it was revealed yesterday.

At the National Ploughing Championships in Ballinacolla, Co Laois, Farm Tractor and Machinery Trade Association president Edwin Pratt said that if insurance premium costs continue to rise at the same levels as the last two years, many farm machinery dealers will be forced to either scale down their operations or close.

Increases in the cost of renewing insurance premiums are now proving prohibitive for some companies, Mr Pratt said.

Farm machinery dealers are considering their future on the basis of these and expected insurance cost increases, he added.

Mr Pratt said the FTMTA has analysed the insurance costs for many of its member firms in recent weeks to identify the extent of the cost increases and the results were alarming.

“We have looked at a large number of policy premium rates for 2002 renewal and compared them to the costs in previous years.

“We are alarmed that the premium rates have shown an average increase of 125% over last year’s rates. Each week we are receiving new reports from members of extra increases.”

Mr Pratt said the increases could threaten jobs in the sector.

“Employment in the farm machinery industry will be under threat as will the level of service that can be offered to farmers and contractors.

“Our members have taken action in the area of risk management and despite low claims records in recent years, we are being penalised with huge increases in insurance quotes,” he said.

Mr Pratt said there has been a huge increase in the cost of public/product liability and defective workmanship insurance cover for farm machinery dealers.

He said young mechanics, who are the lifeblood of the service nature of the industry, are being especially discriminated against in terms of motor insurance cover.

There is a real danger important service operations will be affected by the lack of insurance cover for young mechanics, Mr Pratt said and farmers will no longer be able to have service work carried out in the field.

European-based farm machinery dealers are not being faced with the same insurance increases as Irish dealers, even though the trading conditions are similar, Mr Pratt said.

“Through our European counterparts in CLIMMAR, the dealers association, we have found that a 5% to 10% increase in premium costs for similar type of insurance cover is the norm.

“We are looking at all options for FTMTA members for the future.”

Mr Pratt said the FTMTA expects tractor unit sales for the year to increase by 12%.