Concepts of insurance for poultry
P. SATYANARAYANA REDDY
Inspite of all precautions, accidents do occur. Earth quakes, floods and cyclones occur frequently causing loss of lives and damage to property. Hence, it is necessary to adopt more effective techniques or devices or methods to deal with the problem ‘risk’ in modern society. Insurance is one of the important methods to deal with risk where by it is transferred to an insurer.
Human life and material possessions are continuously exposed to loss or damage by numerous destructive forces. There is a great deal of uncertainty in life, commerce and industry. Risk is inherent and uncertainty is a fundamental fact of life. Human beings have a strong desire for security of their lives and possessions. This desire for security is to be satisfied by taking all precautions possible to avoid or prevent the consequences of risk.
Insurance is a concept which provides for collection of small amounts of premium from many individuals and firms out of which losses suffered by a few are reimbursed.
Insurance in India
References to insurance are found in “Manu Dharma Shastra” (Code of Manu). Earliest transactions of insurance are traced to the beginning of the fourteenth century in Northern Italy. However, insurance was established in India only at the beginning of the 19 th century.
In 1972, the General Insurance Business ( Nationalisation) Act, 1972 was passed. Under the provisions of this Act, the General Insurance Corporation of India was established by the Government with effect from 01.01.1973. All the 107 insurance companies were merged with one or the other of the four subsidiaries of the General Insurance Corporation there after. The four subsidiary companies are :
The Oriental Insurance Company Limited
New India Assurance Company Limited
National Insurance Company Limited
United India Insurance Company Limited
In tune with the social objective of the Government soon after Nationalisation, all the insurance companies have developed packages which cater to the needs of rural India. In this process, insurance of cattle, sheep, dog, poultry Honeybee, Sericulture and other livestock is facilitated. Financial institutions have taken a policy decision that all livestock and poultry units financed by them are to be insured.
Insurance industry is opened to private players as per IRDA Act 2000 and a few private players have started insurance business in India.
India ranks amongst the best in world for poultry population. It ranks 4 th in egg production thousand MT egg mass) and 5th in broiler production (1600 million broiler). The layer industry is growing at an average level of 4-6% and broiler industry by 8-10% per annum. The annual per capita availability of eggs and broiler meat is 38 and 1150 gms., respectively. The recommended consumption level is 180 eggs and 10.8 kg poultry meat per head per annum. This shows the scope for further growth of Poultry Industry. However, the poultry farmers suffered many losses due to epidemic diseases and natural calamities like cyclones, floods, earth quakes etc. At times, the magnitude of losses is so severe that the farmers find difficult to get back into farming again.
Insurance Packages for Poultry Industry
This is where the insurance would take care the poultry farmers whenever they are exposed to the above stated risks.This is explained by the following example.
Poultry Farm of 10000 birds
Peak value of Bird Rs.75/- premium rate 3.5%
Premium payable for year : Rs.28928/-
Premium for 5 years Rs.144640/-
If there be a loss once in 5 years and assuming that 20% of Birds die, compensation payale to the farmer (Rs.1,50,000) is equal to the premium paid by him. However, if the loss is more, it would have a heavy financial impact on the farmer. Losses suffered by farmers of coastal Andhra Pradesh are 50% to 75% of flock during cyclone of 1990 and outbreake of Gumbaro disease during 1996. Those farmers having insurance to their farms are able to continue in Poultry industry because of prompt and effective settlement of claims. Those farmers who have not insured their farms could not come back.
Indian Insurance Industry has developed many packages which will take care of the following possessions of the poultry farmers :
Poultry houses and equipment like Sprinklers, Cages, Waterers, Feeders
Feed mixing plant, raw material for poultry feed and feed mix
Personal assets of the poultry farmers in his house
Health requirements of the farmer
Important products available are :
Poultry insurance for poultry stock
Fire insurance for poultry houses, feed plant, sprinklers, feed stock etc
House Holder’s insurance of assets of poultry farmer at his residence
Personal Accident insurance for the farmer and his family members
Health insurance for the farmer and his family membersMore about
Comprehensive Coverage for Poultry Birds
For the purpose of insurance the word ‘poultry’ refers to layers, broilers and the breeding stock, which are exotic and cross-bred. Indigenous and non-descript birds will not be insured.
Broilers – 100 per batch
Layers - 500 per batch
Hatchery – 2000 per batch
Valuation chart will be worked out on the basis of multiple factor given in the formula as shown hereunder :
The multiplier is to be applied together to the prevailing feed cost and day old chick cost, to arrive at week-wise valuation.
Table III – Valuation factor for layer birds
The multiplier is to be applied together to the prevailing feed cost and day old chick cost, to arrive at week wise valuation.
The policy shall provide indemnity against death of birds due to accident (including fire, lighting, flood, cyclone, strike, riot and civil commotion and terrorism) or diseases contracted or occurring during the period of insurance subject to the following exclusions
Intentional slaughter of the birds except in cases where destruction is necessary to terminate incurable suffering on humane consideration and to protect the remaining healthy flocks to reduce additional losses on the basis of certificate issued by qualified Veterinary Surgeon or in cases where destruction by order of lawfully constituted authority under intimation to Insurance Company.
Consequential loss however caused.
Permanent and partial disablement of any nature.
Loss of production.
Marek’s disease, Ranikhet disease, fowl pox and infectious bronchitis. These diseases are covered by the policy if the birds are successfully inoculated against these diseases and the necessary veterinary certificate to that effect is supplied to the company. Coccidiosis and other diseases are covered only if preventive and curative measures are taken from time to time. The farm should be closed for 2 months if epidemic disease occurs.
Malnutrition/shortage of water, death due to starvation because of non supply of feed to farm due to any reason whatsoever.
Loss due to huddling and/or piling of birds
Avian Leucosis Complex (ALC)
War, invasion, act of foreign enemy, hostilities (whether war be declared or not) civil war, rebellion, revolution, insurrection, mutiny, tumult, military or usurped power or any consequences thereof or attempt thereat.
Any accidental loss, destruction, damage or legal liability directly or indirectly caused or contributed to by or arising from nuclear weapons.
A Veterinary Certificate from a qualified veterinarian or the consultant veterinarian of the insured is necessary.
In case of layer farms having more than 5000 birds inspection of the farm should be preferably done by Company’s Veterinary Officer.
Veterinary health examination fees should be borne by the insurer
The insurer reserves the right to check periodically and depute for the purpose thereof any representative.
Veterinary report should in all cases be sent to company and should not be handed over to the propose.
Good Features Discount
The discount not exceeding 5% on premium may be allowed if the farm is having any five good features listed below :
The above good features should be certified by the Company’s representative.IMPORTANT UNDERWRITING CONDITIONS
Flock record on day to day basis – daily stock register
Vaccination and inoculation particulars
Incidence of diseases
Purchases and sales
Procedure for Claim Settlement
Admissibility of the claim
Claim under the policy would be admissible only if the mortality in the flock exceeds beyond the excess limit given below
Table – IV : Claim for Broiler and Layer
For claims out of Gumboro disease, additional excess @ 20 % would be applied.
In the event of death of birds, immediate intimation should be given to the company and the insurer should be supplied with the following documents and required information.
In the case of alarming death, out-break of epidemic nature, immediate notice with in 12 hours should be given to the company and all birds should be segregated and produced to the representative of the company or to any person authorized by the company for inspection.
Daily mortality details should be sent to the company on weekly basis failing which report will be treated as NIL for that particular week.
Delay in reporting of the claim should be avoided and if there is delay for more than three days, the claim would be treated as non – standard.
During the outbreak of epidemic, natural calamities in the farm, insured should arrange emergency sale of live in the presence of the representative of the insurance company in order to avert or minimise the loss. In case the insured realises the values less than the valuation table agreed upon for the corresponding week, then the difference will be paid to the insured as per terms and conditions of the policy.
Various Standard Forms
Veterinary certificate for acceptance of risk (Fitness Certificate)
Veterinary Certificate to be submitted during claims :
Death Certificate and Post Mortem Report
Insurance for Assets in the poultry farm excluding birds
Assets of the poultry farm, like houses, equipment, quarters can be insured under Standard Fire and Special Perils Policy.
Scope of Coverage :
Fire, lightning, explosion/implosion, aircraft damage, riot-strike and malicious damage, storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation, impact damage, subsidence and landslide include rockslide, bursting and/or over-flowing of water tanks apparatus and pipes, missile testing operation, leakage from automatic sprinkler installations, bush fire.
Note. Definition of each peril covered under standard fire and special perils policy are as per Section –II of All India Fire Tariff.
Major Exclusions :
The first 5% of each and every claim subject to minimum of Rs. 10,000/- in respect of each and every loss arising out of ‘Act of God’ perils such as lightning, STFI, subsidence, landslide and rockslide cover under the policy.
The first Rs. 10,000/-, for each and every loss arising out of other than AOG perils. Excess shall apply per event per insured. Excess clause will not be applicable to policies which cover dwellings.
Loss, destruction or damage to bullion or unset precious stones, any curious or works of art for an amount exceeding Rs. 10,000/-, goods held in trust or on commission, manuscripts, plans, drawings, securities, obligations or documents of any kind, stamps, coins or paper money, cheques, books of accounts or other business books, computer system records, explosives unless other wise expressly stated in the policy.
Loss, destruction or damage to any electrical machine apparatus, fixture or fitting arising from or occassioned by over-running, excessive pressure, short-circuiting, arcing, Self heating or leakage of electricity from whatever cause (lightning included) provided that this exclusion shall apply only to the particular electrical machine, apparatus, fixture for fitting so affected and not to other machines, apparatus, fixture or fittings which may be destroyed or damaged by fire so set up.
We also have policies for personal insurance for promoters/owners, employees and staff working in the farm. These policies can also be extended to cover their families. To name a few, Personal Accident Insurance Policy, Mediclaim Policy, Householders Policy and Vehicle Insurance etc.
Many farmers are reluctant to take insurance as they find the premium is high. Financial institutions should make insurance a mandatory component in the project in the interest of the farmers as being done for various other schemes. This helps in substantial reduction of premium cost. Farmers should maintain proper records which results in hastle-free and satisfactory claim settlement. Insurance helps the farmer to sustain in poultry business when the farms are affected by epidemic diseases/ Natural calamities. Insurance should be utilised not to be exploited.
|Source : IPSACON-2005|