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Taking new ground: Cover for farm labourers

21.09.11


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Taking New Ground:

Cover for farm labourers

As if fluctuating weather patterns, uncontrollable fires and large-scale disease aren’t enough for farmers to contend with, a regular turnover of staff generates further challenges. Hanna Barry found out about a tax-deductible product that ensures labour-force security to farmers by providing personal accident cover to their farm labourers.

Health & Accident Underwriting Managers” Groundbreaker product is designed to provide accidental death and disability cover to farmers and farm labourers.  At a reduced premium (as little as R 10 per month for R 40 000 worth of disability cover), different amounts of cover can be purchased by the farmer to cover supervisors, farm workers and temporary labour.

Managing director of Health & Accident, Adrian Hofman, compared the product to an employer buying public liability cover on all the staff, so that the employer is the one paying but all employees are covered.  “Ultimately it is ensuring the entity, being the farm, against the person working for the farm dying or being injured and as a result of the injury being unable to work, which would result in a loss of turnover,” he explained.

Due to the regular turnover of staff, it is very difficult for a farmer to provide employee benefits as affordability becomes an issue. This is especially true for farmers who employ temporary labour during the harvesting season.  In the Ceres Valley in the Cape, where labourers mainly pick oranges over a three-month period, some farms will quadruple their staff complements for just that period.  On such farms this can translate into an additional 8 000 people.

Occupation based Cover

Underwriting is based on the primary occupation of people (so a premium will differ between someone operating a combine harvester versus somebody picking strawberries) and the quantity of staff to be insured; so that depending on the size of farming operations, there will be discounts for volume of staff.

Well Covered

The cover is international, which is particularly useful for those farmers who have farms in Mozambique and Swaziland.  It includes 24-hour travel, for both work and holiday purposes.

It also covers farmers and labourers for injuries incurred after hours, for activities unrelated to farming, as the organisation will make a loss if that individual is not able to work.  There is a slight reduction in premium if cover is only for during work hours; however, Hofman noted that 80 per cent of claims occur after hours.  

Breaking into the market

“This product was designed so that the admin is low, the premium is low, it’s tax deductible and the farmer owns it,” Hofman commented.  Since most farmers live off the beaten track, the products are distributed through co-operatives that already sell crop insurance and are registered financial service providers.

Unfortunately, the people distributing the products at the co-op don’t often tell people about the product.  Hofman explained that although ground personal accident and medical travel insurance fall under their FSP license, subject to them receiving the necessary training, it’s so far removed from their normal product offering, that it is not always grasped by everyone.  Furthermore, the co-ops need to understand the particular labour needs of the farmers they are serving, but the only contact they have with a farmer is when he or she comes in to buy stock and supplies.

Thus educating the market is the biggest challenge, as many farmers don’t even know this product exists, which is why the role of brokers in keeping farmers informed cannot be overemphasised.