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13 April 2021 | 3-minute read
In many ways the Lloyd’s Bloodstock market epitomizes Lloyd’s as a place to do business; it is a specialty marketplace with expert underwriters working with niche brokers to provide unique products to a global client base.
It is a relatively small market (combined GWP for bloodstock and livestock insurance and reinsurance was c£150m in 2019) and it is also a challenging time for this class, with many books struggling to make a profit in recent years. Despite the difficult market conditions, which underwriters are working hard to improve, 2021 is shaping up to be a big year for the LMA’s Bloodstock & Livestock Committee. We are working with underwriters to support and assist them, with some major projects in the pipeline. Here’s what’s coming up.
Wordings
We have just completed an update of the UK Equine Policy wording (for consumers) and we have also produced a New Zealand-specific version for the first time (many thanks to Lloyd’s New Zealand and their external Counsel for their input). The main focus of this review was to refresh and simplify policy language for consumers without making major changes to coverage positions; never an easy task.
Equine policies cover mortality of the insured horse(s), provided death is caused by an accident, illness, disease or injury, notified during the policy period, with theft coverage a common extension. The Lloyd’s market also offers a range of specialist covers for risks associated with (primarily thoroughbred) breeding, including stallion risks such as sub-fertility, loss of income and permanent disability, as well as mortality risks for new-born foals and broodmares.
A series of further wordings projects are currently planned, including:
- an update of the LMA model UK Livestock Policy (for consumers)
- a review of the Australian Equine Policy (commercial), in light of new incoming contract law changes in Australia as of 1 April
- a review of important commonly used defined terms including “veterinary treatment” and “life-saving surgery” and;
- publishing Lloyd’s Europe versions of commonly used wordings, including translations and adjusted to meet local law requirements.
Animal Welfare
The LMA’s Bloodstock & Livestock Committee is also a keen contributor to debates internationally regarding animal welfare reform, to promote the humane treatment of animals.
We have provided input and support to an ongoing consultation in Australia and we are seeking to provide similar input to equivalent discussions in the UK and Ireland.
Claims Data
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"As a non-equestrian, I am inclined to agree with Ian Fleming’s famous description of horses: “dangerous at both ends and uncomfortable in the middle”
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We are working with DXC to improve the claims data available to our members, to aid trend analysis and drive a deeper understanding of the risks; a critical feedback loop for improving results.
The range of insured values (and claims quantum) in this class of business never fails to surprise me; horses vary in price from <$500 to $50,000,000 and claims can follow a similar pattern! Racing and sport horses are especially vulnerable to illness and injury, making them financially risky. A racehorse training accident resulting in a leg fracture could easily produce a loss of $100,000 if the horse needed to be put down for humane reasons and there was no surgical option to save it. As a non-equestrian, I am inclined to agree with Ian Fleming’s famous description of horses: “dangerous at both ends and uncomfortable in the middle”, but many equine insurance professionals (perhaps even the majority?) are horse owners and/or riders themselves and are passionate advocates.
Educational Events
The Annual Nick Mills Memorial Lecture was delivered virtually this year on 8 Feb by Tullis Matson of Stallion AI, to over 130 LMA delegates and additional guests. The topic was artificial insemination (equine, cattle and also rare breed preservation) and included a fascinating live tour of the facility and laboratory. We received extremely good feedback and this event will take some beating next year. Additional events are also under discussion for 2021.
2021 will be a hectic time for this market, especially as we are likely to see a strong uptick in equine breeding and racing activity over the next few months as the Covid-19 restrictions start to lift.
David Powell
Head of Technical Underwriting & Secretary to the LMA Bloodstock & Livestock Committee