More accountability for farmers in disaster situations

Following the recent heavy rainfall across the country, NZI is reminding farmers to think ahead following the Government’s decision to give fewer cash handouts after weather disasters in rural areas.

With a changing climate and an increase in weather events across the country, such as the July storm that devastated communities in the upper North Island, its critical farmers have the capacity to cope with a large loss.

The MAF Adverse Events Recovery Framework lays out the Government’s responsibilities to the rural community in dealing with adverse climatic events and natural disasters.

Under the plan, cash assistance from the Government will now only be available for assets for which no insurance cover was available.

If something is insurable but is not insured, cash payouts will not be made after a major event. Farmers will not be getting cash payments for lost bridges, fences, culverts and hay because these items could have been insured.

Head of NZI, Ian Foy, says if a farmer has not taken out a comprehensive level of insurance, they are at risk of major financial loss.

“We want to make this new situation clear: if you can insure assets, you must insure them or face potentially devastating consequences after a weather event.”

The cash handouts will also only be given in a major disaster situation. Localised weather events - which can be just as devastating financially - may not trigger those handouts. 

“A high standard has been indicated for a major event. For example, the Manawatu floods in 2004 would count but not the Canterbury snowstorm of June 2006 or the July storm that hit the upper North Island,” Ian Foy says.

The policy shift is the result of the major flood events in the Manawatu in 2004, when the taxpayer was left with a hefty bill for clean up and recovery.

NZI, which offers the widest range of rural cover in the country, recommends that farmers take a close look at the quality and extent of their insurance coverage when preparing disaster recovery plans.

Insurance brokers are best placed to provide a professional assessment as to farmers’ needs and consideration of what is insurable.