If more and more farmers lose their insurance claims because of neglecting to report adjustments of their businesses to their insurers, the country will suffer economically as that would impact food production and employment.  

This was a warning from the National Livestock Farmers’ Association of South Africa (NaLFA-SA). 

The association was reacting to an initial warning from the Western National Insurance that there were “more and more” farmers at risk of losing their claims because of failure to update their insurance about operational changes in their farming businesses. 

Western National Insurance’s underwriting head, Jan-Hendrik Botha, said in a statement issued on Wednesday that there was a critical blind spot emerging in the farming industry. 

“More and more farmers are making significant operational changes without informing their insurers, and it’s putting their insurance claims at serious risk. 

“Just one undisclosed adjustment, such as leasing land to a third party or entering a processing joint venture, could result in a denied claim,” read the statement. 

The insurer said this was while the farming sector was increasingly facing financial pressure due to the rising operational costs and unpredictable climate conditions. 

The pressure had prompted many farmers to adopt innovative strategies to maintain profitability, such as contract farming arrangements, leasing portions of land to third parties, or switching to higher-value crops and infrastructure investments. 

“When a farmer’s insurance policy is initially underwritten, it is based on specific farming-related activities, whether it’s cattle farming, crop production, or fruit farming. 

“Alterations to operations — such as leasing farm space to outside contractors, installing solar energy systems, or engaging in third-party processing — change the risk profile. 

“If these aren’t disclosed to the insurer, the policy may no longer be valid, and claims could be denied,” said Botha. 

Farmers commonly ignore updating their insurance regarding changes such as installing solar panels, building cold storage, or transitioning from grain to high-value crops like berries or nuts.

“Farmers might not realise how these upgrades or shifts affect their insurance. If not reported, the policy may no longer reflect the business’s actual needs,” added Botha.

NaLFA-SA secretary-general Nakana Masoka said this would have a severe impact on the country’s economy. 

He said farmers whose insurance claims had been disputed would have to lay off employees. 

“This would have an impact on the agri-economy, food security for the country. Any disaster that impacts farmers has a ripple effect on the country’s economy,” he said. 

Masoka said most black farmers, who might be likely to defect on their insurance reporting, own 60% of the country’s livestock. 

“If disaster strikes these farmers, it puts the largest portion of the country’s food security at risk.”    

He said there was a huge risk for a farmer to operate without insurance because the natural disaster “will destroy your business in one go”. 

“Now that we have a problem with foot-and-mouth disease in some provinces, until the government declares this a national disaster, farmers depend on their insurance. 

“Otherwise, your whole production will collapse,” said Masoka.   

He said NaLFA-SA was constantly encouraging its 10,000 members to update their insurers of their business changes quarterly. 

“We have a system of identity scan where you just take a picture of each cow’s nose, and that programme automatically creates a certificate for your cows.

“If you do it every three months, you can just compare the certificates that there were 200 cows this time, and when there are now 120, the insurance should be informed every quarter that the number of cows is still in the same place or others have been added,” said Masoka. 

He said every cow that is sold should be removed from the farmer’s profile. 

“After three months, when I give my report to the insurer, they can see that this one has been moved, and I give a reason for that so that the insurance does not have a problem with livestock farmers.”

He said each cow has its specific description and “no two cows have the same nose structure”.

“The structure of the nose is different even if the cows are twins.”

He stated that many farmers, particularly those lacking skills in business administration, such as record management and continuous reporting, contribute to the failure to update their insurance.

Masoka said stock theft was another reason, as farmers who steal from other farmers would shy away from updating their insurance about the number of animals kept on their properties. 

“You will not register the stolen animals in your name, but should an insurance representative come to do a count and find that you registered 100 cattle but now you have 130, and you have no explanation where the others came from, there is a problem.

“If all your cows die of a disease, the insurance will be reluctant to pay for those that were insured because suddenly these are unknown cows that could have brought diseases to your farm. 

“In that case, your biosecurity was compromised and therefore your insurance claim would be disputed,” said Masoka.  

bongani.hans@inl.co.za 

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