Policy holders at risk of underinsurance says EBM Insurance & Risk

But should the time come that you do have to call on your policy, you want to know that it is going to cover you adequately.

For EBM Insurance & Risk director of broking, Ryan Cameron, underinsurance is one of the biggest issues across the general insurance industry.

Since its establishment in WA in 1975, EBM has grown to become Australia's leading privately owned and operated insurance broking firm, with nine offices nationally, including a strong presence in rural and regional WA.

Mr Cameron said their clientele spanned the entire agricultural lifecycle, from primary producers, to transport and logistics, machinery dealers, warehouses, processing and retailers.

"We pride ourselves on our ability to manage insurance programs from 'paddock to plate'," he said.

When recommending tailored insurance solutions, each business was assessed on their individual enterprise and circumstances to ensure its suitability - for example, someone running a 50 hectare property would have a completely different risk profile to running 50,000 hectares.

"It is essential that people and businesses have cover that is suitable for their circumstances," he said.

Mr Cameron said EBM, through its head office in West Perth and also regional branches around WA, spent a lot of time and effort communicating with their agribusiness and broader clients about insurance issues affecting the farming sector.

Current market conditions have seen significant increases in the cost of materials and labour in particular.

"Prevailing market conditions are that the cost of materials have increased significantly during and post Covid-19," he said.

"There are a lot of property assets that, since 2020, cost 20-30 per cent more to reinstate now, and the rural community hasn't necessarily caught up with that, which can leave them at risk of being underinsured."

It is often the case that the true test of a policy comes when a catastrophe occurs, and policy holders naturally want their insurance to respond adequately.

To help find that balance, Mr Cameron said they conducted annual reviews of policies with their farming clients.

"Some may say nothing has happened in the 35 years that we've been in business, why are premiums so expensive," he said.

"But it can just take one single event, such as the Wooroloo fires, or ex-Tropical Cyclone Seroja, where there is mass destruction, when people realise how good or bad their insurance policy is.

"We pride ourselves on the quality of our advice, not only helping to find the best policies, but in the event of it being called upon by helping to advocate for our clients and remedy any issues.

"It is these big events that highlight the issues with underinsurance, as business enterprises can discover that they have big exposures, and it's certainly an area where the insurance industry could do better.

"The premise hasn't changed in the more than 25 years that I have been involved in insurance broking - be cognisant of prevailing market conditions, of the replacement material costs, of the costs of getting trades to more isolated geographical locations."

An example of this was in the aftermath of ex-Tropical Cyclone Seroja in 2021, when a once-in-50 year cyclone hit the coast of WA, causing widespread damage with Kalbarri faring the worst.

Mr Cameron said of the more than 8900 claims lodged in the aftermath with an estimated value of $335 million, EBM handled more than 700 claims on behalf of their policyholders with an estimated $25 million in insured losses.

This was a circumstance where insurance policies were well and truly tested, and any deficiencies people may have had came to the fore.

Mr Cameron said the sheer scale of the loss and damage was beyond the capacity of any local workforce, but this was compounded by border closures from Covid-19 and labour shortages across the State and country.

"EBM helped our clients to navigate through some of the more complex losses, co-ordinating adjusters, engineers, tradespeople and providing general insurance advocacy to help them get back on track," he said.

Mr Cameron said sadly it often took a large or catastrophic loss to test an insurance policy, and often EBM picks up more clients in the wake of such circumstances.

"Farmers talk, and it's our client base that often act as our best referrers when people are dissatisfied or unhappy with their insurance requirements," he said.

Mr Cameron said one of the other significant factors facing farming enterprises was consolidation - farms are getting bigger, and in line with that their risk dynamics.

"With bigger farms means the combined assets are fairly significant - there's not just one header, there's now two or more," he said.

There was also a farming generational change, that meant farming clients were becoming increasingly savvy in terms of business acumen.

EBM focusses on four main pillars when helping to put together policy recommendations for their rural and regional clientele - farm and farm motor insurance, crop and workers compensation insurance.

Clients also have the added advantage of being offered access to EBM's Risk Solution Network, which is a panel of expert industry providers offering services such as critical incident support, surveyor and risk engineering services, occupational health, and legal advice.

The purpose of this Network is to provide our clients with any additional support they need to identify, understand and manage risks.

"This really bolsters our offering for clients, because they have access to experts across multiple industries who can come up with independent reports and research, which in turn helps clients to understand their risk profile and reduce or mitigate in line with their insurance policy," he said.

"The Network supports the broad risk evaluation piece."

EBM also has a dedicated team that supports workers' compensation claims internally to allow them to be managed in a timely and cost-effective manner.

Mr Cameron said the overall key for business owners in the agribusiness sector was to take the time to sit down with their adviser and work through their asset registers.

"They need to make sure they are aware of the cost of replacing their assets, whether it be domestic dwellings, sheds, silos, machinery or vehicles," he said.

"They shouldn't wait for the policy to be tested to find out the pitfalls of underinsurance.

"People can't rely on a 'she'll be right' attitude - if something happens they want and need to be protected."