Agriculture: Reaping the rewards

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With a rise in the theft of agricultural plant equipment, the industry and police are striking back with new initiatives.

Agri-crime is on the up. Theft in the UK agriculture sector increased by 17% in the past two years and cost the industry an estimated £49.7m in 2010, according to the NFU Mutual Rural Crime Report.

While these crimes include the theft of oil, diesel and livestock, stolen plant and equipment is one of the main issues for the sector and its insurers. Figures from NFU Mutual, which insures around 70% of the market, show that the number of tractor thefts in the UK increased by 8% in 2010, with the cost of claims increasing by 21%.

“It’s been a major problem in the past few years, with thieves targeting expensive tractors,” says Tim Price, rural affairs spokesman for NFU Mutual.

There are also indications of new developments in these crimes. Simon Stevens, managing director of Rural Insurance, explains: “We’re starting to hear about incidents where a vehicle is stolen and the owner is then asked to pay a ransom for its return,” he explains. “In one case, the farmer approached the police but was told they might as well pay the ransom.”

Unfortunately, plant is regarded as an easy target by thieves. The countryside is difficult to police, with very few specialist enforcement teams focusing on plant theft.

In addition, security can be lax, as David Harrison, area underwriting manager for Gloucester at NIG-backed Farm Web, explains: “Agricultural plant can be large, making it difficult to lock away. Additionally, it’s often in remote areas, so it can be easy to steal without anyone noticing.”

Poor security

Security on the machinery itself is often poor too, with a history of manufacturers producing just one key that will fit all the different models. Additionally, there’s little attention to identification, with one insurer citing a police crime report on a recovered tractor simply stating ‘green’ as the vehicle description.

However, the industry is fighting back, with the agriculture sector benefiting from a broad approach to fighting plant theft. Bodies such as the Plant & Agricultural National Intelligence Unit, the Association of Chief Police Officers’ Vehicle Crime Intelligence Service and the Plant Theft Action Group are leading the battle to stamp out the crime.

“It’s been very positive,” says Martin Ball, engineering underwriting and operations manager at Allianz Insurance and chair of the PANIU funding group. “The PANIU helps to bring together the main plant insurers to discuss the issues. It’s really helping to raise awareness of the need to improve security.”

Together these bodies are starting to see signs of success. Although NFU Mutual’s figures show that tractors remain a target for thieves, in general plant theft is on the decline. The unit’s latest quarterly report, covering the period April to June 2011, revealed a 34% reduction in the number of machines reported stolen compared with the previous quarter or a 26% fall from the same period the previous year.

While some of this reduction may be down to a fall in the amount of construction work being carried out, initiatives such as the Construction Equipment Security and Registration scheme have proved particularly successful.

The scheme is backed by a number of organisations, including the Home Office and ACPO as well as insurers and plant manufacturers, and aims to tag, mark and register plant to aid identification and recovery. Already more than 60 000 machines have been registered.

Kevin Howells, managing director of Datatag, which runs the Cesar scheme, says insurers and manufacturers are helping to drive up the amount of plant that is registered. “Insurance companies are offering incentives to register plant and fit security and more manufacturers are coming on board to factory-fit security devices,” he says.

Another security device proving to be popular is Tracker. Rather than rely on GPS technology, which can fail as a result of jamming or simply by putting the vehicle into a container, Tracker also uses VHF technology to send a signal.

“This greatly improves the chances of recovering the plant,” says Clive Gerling, director of marketing and technology at Tracker. “Around 85% is returned the next day and, overall, we get close to 95% of vehicles back.”

Insurers reward those prepared to register and fit security to their plant. Examples of the types of discount available include up to 27.5% from NFU Mutual; up to 45% from Allianz; and up to 50% from RSA.

International problem

With plant often taken out of the UK soon after it is stolen, the industry is also looking at ways to tackle the problem internationally. The Cesar database is linked to the Police National Computer, the Serious Organised Crime Agency, Interpol and Europol, which is helping to drum up interest abroad.

Mr Howells expects the Netherlands to implement the scheme in the next few months with other European countries following soon after. “We’re also working to introduce it in other parts of the world, including South Africa, Australia and the US,” he adds.

Closer to home, the agriculture sector is also beginning to benefit from its own initiatives. For instance, Avcis has been working with other forces and farming unions to raise awareness of agricultural plant theft with the public. Chris Ruff, detective constable at the Avcis Intelligence Unit, explains: “We’re talking to the public about the issues and encouraging them to phone through anything suspicious,” he says. “As an example, the thieves usually ship tractors in threes and we’ve recently had reports from members of the public about tractors being parked in unusual places.”

While there have been plenty of successes, Cath Williams, business development director for investigation services at Cunningham Lindsey, says the industry needs to do more to ensure plant theft continues to fall.

“There’s no magic wand and insurers and the police need to continue to raise awareness of the issues. As an example, although Cesar is a fantastic development, more work needs to be done to register older plant. With new machinery registered we’re seeing displacement, with thieves ignoring the new plant and going for the older ‘invisible’ plant instead,” she says.

Mr Howells admits that getting owners to register older construction plant hasn’t been easy. Around 80% of the machinery is owned by plant hire companies who simply wait to replace it with newer models that are factory fitted with Cesar.

However, the agricultural market has bucked the trend, with around 50% of the 20 000 machines registered having been retro-fitted. “It’s a no-brainer for many farmers,” he says. “I spoke to one farmer who saved £400 a year by getting his combine harvester fitted, at a cost of just over £100. The insurers have really helped in this area.”

Government cut-backs could also affect the fight to beat plant theft with bodies such as the Metropolitan Police’s Stolen Vehicle Unit potentially under threat. Mr Ball says this would be a major set-back as the operational support it provides to the PANIU is important. Instead, the unit would have to rely on local police boroughs to provide this support. “We are lobbying the Metropolitan Police to keep the SVU and there’s also a possibility that it could be maintained with some insurer funding,” he adds.

Another area where insurers may need to pay closer attention is policyholder fraud. Although many of the agriculture insurers insist that this is less likely as the recession hasn’t hit farming as hard as other sectors, Craig Dickson, director at Beachcroft, says he’s seeing a growing number of cases where theft hasn’t taken place at all. “We are seeing more instances of policyholder fraud,” he explains, “including a case where the farmer had dug up a field and buried his plant to hide it. It may be an increase in fraud or it could be that insurers are more tuned into identifying it. Insurers do need to be mindful of this though.”

Diverse challenges

As well as focusing on plant theft and the possibility of increased policyholder fraud, agriculture insurers are tasked with a variety of other challenges affecting their sector. Stephen Record, managing director of BIB Underwriters, says farmers are also wrestling with legislation, health and safety, right-to-roam, asbestos surveys and environmental issues. “There’s a lot going on in agriculture that insurers and brokers need to be aware of,” he adds.

In particular, insurers continue to face challenges as farmers diversify their businesses into areas such as holiday lets, campsites, weddings, cheese and ice cream production and off-road biking, as well as the latest venture, renewable energy.

Installing renewable energy sources — whether these be solar panels, wind turbines or anaerobic digesters — or growing crops that can be burnt to produce energy, has benefits for farmers. “A farm can use a lot of energy, especially a dairy farm,” says Record. “A renewable energy source could provide this or the farmer could make money by selling it back to the grid.”

But while it might be a money spinner for the farmer, this can present underwriting headaches for insurers. “It’s very different to the risks we’d normally cover within agriculture,” says Stevens. “We can look to Ageas for some coverage in this area but it’s hard to find specialist insurers for some wind turbines projects.”

As well as new risks, the agricultural sector is faced with a pricing challenge. With NFU Mutual dominating the market, it can be difficult for other insurers to increase premiums and remain competitive.

Andy Halstead, branch manager for Axa Insurance in Leeds, says: “NFU Mutual gave heavy discounts on its policies last year for its centenary year and I suspect other insurers are finding it tough to compete. Premiums do need to increase and I’m beginning to hear reports from brokers of carriers talking about increasing rates or restricting cover.”

One area where this is beginning to happen is with young drivers. Halstead says that often an 18-year-old son will be included on the farm policy, enabling him to drive the family car at a much lower rate than if the insurance had been arranged separately.

Other indications of a stricter approach to risk management come from Harrison. He says that with theft continuing to dog the sector, more post-loss surveys are taking place. “There’s a bit of an education process going on,” he explains. “After a theft we’ll often send an assessor out to suggest security improvements. Some things are difficult to secure but we welcome any steps that can be taken.”

Taking severe steps

Whether more severe steps need to be pursued to push through premium increases could come down to one thing – the weather. Forecasts suggest a similar weather pattern to the last two years, with many discussing a high probability of snow as early as October. “That would mean three bad winters in a row, which will be hard,” says Stevens.

While a bad winter is miserable, for those involved in agriculture it can bring financial woes too. As well as an increase in claims for burst pipes, the past two years have seen a large number of snow claims, with farm buildings simply collapsing under the weight. “This would force the sector to increase premiums,” adds Halstead. “We’d be able to withstand a couple of bad winters if they were freak weather events, but if this becomes the norm, premiums will have to rise.” n

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