Safeguarding your investment in game

Gerhard Diedericks, head of Santam Agriculture, says that with the growing market for game in South Africa, especially for rare and exotic animals, and the high risk associated with this type of investment, insurance is becoming increasingly important.

Safeguarding your investment in game
Gerhard Diedericks Photo: Courtesy of Santam

Have you seen an increase in the demand for insurance to cover game, and if so, what has spurred this growth?
The market for game is growing, with an increase in people investing in game to diversify their investment portfolios. Game insurance has been around for a long time, but the market for it only really started growing three to four years ago, as a result of this increased investment in the industry.

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Over the past two years, the prices of certain species have skyrocketed and there has been a marked increase in the demand for rare and exotic game. This growing market demand has also resulted in the need to breed better quality or more exotic animals, giving rise to a greater need to insure against potential financial losses.

As more rare and exotic animals become available through breeding programmes, the value of these animals may start decreasing somewhat, but on the whole we expect to see continued growth in the game industry. The demand for game meat, which is fast gaining popularity as a healthier meat alternative, as well as the hunting value of specific species, will most likely also have a positive impact.

What are the insurance options available for insuring game?
Santam’s Agri Asset policy incorporates comprehensive and limited option cover, such as veld and chemical immobilisation cover. Limited cover includes only fire and lightning cover, while ‘all risk of mortality cover’, provides total risk cover with only a few exclusions. We provide this cover in partnership with Associated Marine, which handles the transit and auction part of the policy.

Transporting game is not the same as transporting other livestock – the risks are often much higher. Transit cover usually includes coverage for the first 14 to 30 days after the animal has been transported. These days, some of the larger breeders opt for all-risk coverage to cover game from the time of capture for an auction until animals have either been sold or delivered to the buyer.

Does this type of insurance only cover individual animals or can a herd or a pair be insured as well?
Clients have the option of insuring a single animal, a pair or a herd – as long as the animals can be individually identified with ear tags or microchips. Most clients ensure either single, high- value investment animals or herds.

Are there some game species that cannot be insured?
We have certain guidelines, rates and excesses for underwriting certain animals, but we do not exclude specific animals from being insured. Management practices, the level of camp fence maintenance, and the methods for monitoring animals, for example, will all influence the underwriting criteria applied.

How valuable must an animal be before it makes sense to insure it?
This differs from one game farm owner to the next and is really up to the person purchasing the insurance. Game valued at R1 million on a specific farm may be considered a considerable asset, but on a farm with game to the value of R25 million,
it may not be a priority to insure a single animal that is worth less than R100 000. It also depends on an individual’s appetite for risk.

In most instances, animals used for breeding are quite valuable to a farmer and may be a ‘prize animal’. However, the decision about which animals to insure remains with the farmer. We do require some proof of animals’ valuation to prevent farmers from insuring only according to potential.

Does insurance cover death as a result of natural causes as well as poaching?
Our cover includes indemnity from death associated with natural causes. Each species has an average life expectancy. For smaller antelope this can be anything up to 15 years, while larger game species such as buffalo and rhino can live up to 25 years or longer. If an individually insured animal or members of a herd die of natural causes within a reasonable lifespan, they would be covered by some of our insurance products.

However, we try not to insure antelope older than 15 years, or buffalo and rhino older than 25 years. This means that if an animal is bought for breeding purposes at an advanced age, it may be difficult to insure it. Poaching, theft and predation are not covered by our insurance products. Since the price received for a poached animal may be considerably higher than its breeding value, and due to the high risk of poaching some species,

it is actuarially impossible to determine a fair and appropriate premium for coverage. The premium would have to be about 100% of the value of the animal, therefore it doesn’t make economic sense to offer this type of coverage.

Are there areas in South Africa where game cannot be insured, or where insurance is much more expensive due to higher disease or safety risks?

As part of our underwriting criteria, we gather the necessary information from the client on our application form and then use this to determine the applicable risk rate. Game farmers and those investing in game should understand that it is not advisable to keep game in areas where farmers already face an increased threat of cattle theft.

In addition, if a farm is situated near an informal settlement or other area where there may be packs of feral dogs, this risk, which is not classified as predation, may be excluded from the cover. This is especially true if the client has previously suffered losses as a result of feral dog attacks.

As the risk of disease is not confined to a specific area, the same basic conditions apply throughout the country. A farm’s disease record, compiled by an approved vet, also has to be correct and up to date. Some diseases such as malignant catarrhal fever (snotsiekte) are excluded.

Does game insurance provide cover for losses due to natural disasters, for example veld fires?
The limited cover options provide indemnity for fire. The all-risk cover includes cover for all natural disasters such as fire, storms and floods.

What are the minimum preventative measures to which game farmers have to adhere to qualify for game insurance?
Just as you probably won’t be able to insure a car that already has a few dents or other problems, you will struggle to insure animals that are not in a good, healthy condition. A condition for covering animals is that they should be in sound health and good condition, which means they should be free of diseases, lameness, injuries and disabilities.

Another condition is that game farmers must adhere to all central and local government legislation, including statutes, regulations and by-laws pertaining to transport, handling and holding of game. Other basic principles include proper fencing, firebreaks, an active farm manager, and access to specialised game vets to look after animals and ensure rapid response in the event of animals being injured or threatened in any way.

Email Gerhard Diedericks at [email protected].

This article was originally published in the 8 May 2015 issue of Farmer’s Weekly.