Insurance is often dismissed as a necessary expense, but according to Brett Cohrs, CRM and Senior Vice President at Palomar Insurance, the best-run farms treat risk management as a core business strategy which leads to long-term profitability. The best-run businesses, he notes, prioritize risk management, seeing it as an investment in the operation’s future.
Here’s what every poultry leader needs to know about navigating the evolving insurance market and fortifying their farm.
Disclaimer: This information is for educational and informational purposes only and is based on general industry knowledge and discussions on risk mitigation. It is not a substitute for professional legal, financial, or insurance advice. Always consult a qualified, licensed insurance professional for work on your specific operation.
The New Rules of the Insurance Market
The current landscape requires leaders to think strategically about financial protection:
- Risk Retention is Increasing: Deductibles have risen dramatically, sometimes as high as $5 million for large operations. Producers must plan for this increased financial risk by having a dedicated rainy day fund or line of credit to cover potential losses.
- Technology is a Non-Negotiable: Underwriters are increasingly looking for proactive use of technology as a risk mitigation tool. This includes specialized technology for electrical monitoring and fire prevention.
- Valuation Matters: Failure to accurately value your property and business interruption risk can cause major issues during the claim process. You must clearly justify your assets and potential income loss.
The Non-Negotiable Fire Risk Checklist
Electrical fires are the number one cause of barn fires. Underwriters demand to see evidence of these key practices:
- Annual Infrared (IR) Scanning: All electrical boxes must be scanned annually. Many insurers also prefer scanning motors and other components that could cause a spark.
- Facility Separation: New houses must maintain a separation of at least 100 feet. Pricing will often reflect any allowance made for distances less than this.
- Firewalls: Install firewalls and fire doors in egg corridors and use fire separation between key areas of processing facilities.
- Material Choice: Use fire-retardant materials for components like manure belts.
- Contingency Planning: Detail your emergency response plan, including water availability, contact with fire departments, and your capability to source spare parts for critical equipment immediately following a loss.
The Unintended Risks of Modern Barns
While the industry strives for efficiency, modern cage-free environments introduce significant new risks:
- Increased Scale = Higher Loss: The shift to massive houses means a single fire can lead to catastrophic losses, often costing upward of $20 million.
- Technology and Dust: Cage-free houses contain exponentially more electrical components (fans, belts, motors, LED lights). When this complex electrical system is combined with an abundance of fine, flammable dust and litter, it creates a high-risk environment.
The Future of Fire Risk Mitigation
You cannot afford to simply hope a fire won’t happen. A strategic, proactive approach is essential. This is where advanced technology closes the risk gap.
Prism Controls’ ThERM™ Detect and Respond was developed specifically to counter the risks in modern, dusty barn environments by:
- Sending Alerts when a temperature abnormality is detected, giving you time.
- Automatically Responding by taking critical actions, including cutting power, closing baffles, and shutting off gas, to potentially contain the fire before it escalates.
By implementing superior technology and robust maintenance plans, you present a strong risk profile to underwriters, ensuring your operation is protected and financially sustainable for years to come.For a detailed breakdown of what underwriters are looking for in poultry operations, listen to the full podcast episode here.