Farming News - Farmers to get loyalty discount despite NFU Mutual overall loss

Farmers to get loyalty discount despite NFU Mutual overall loss

26 Mar 2019
Frontdesk / Finance

NFU Mutual, the insurer of over three quarters of the UK’s farmers and growers, is rewarding loyal members with Mutual Bonus rates of up to 17.5% after its 2018 financial results marked eight consecutive years of underwriting profit.

All NFU Mutual’ s farming General Insurance customers will continue to receive a Mutual Bonus, in the form of a discount off their premium at renewal. The discounts of 12.5% to 17.5% for those who have insured with NFU Mutual for over five years will be applied from July 2019 until June 2020.

The sustained growth of the General Insurance business is in part due to the insurer’s high levels of customer retention, and a record 96.3% of farming members chose to renew their insurance with NFU Mutual last year.

NFU Mutual supported farmers through a year of exceptional weather, which saw heavy snowfall and prolonged sub-zero temperatures when the ‘Beast from the East’ struck in March, followed by a prolonged drought and record high temperatures in June and July.

As grazing grass disappeared on livestock farms across the country, farmers were forced to start feeding silage and hay intended to feed cattle and sheep over winter, and the price of hay and straw soared. NFU Mutual responded by automatically increasing farmers’ insurance cover for stored crops without extra charge.

The tinder dry conditions led to a sharp increase in the number of harvest and moorland fires. NFU Mutual claims data shows that the number of fire claims doubled in July and August – a future concern if, as predicted, climate change brings more hot, dry summers.  

The strong performance of the company’s core insurance business was offset by a reduction in investment returns affected by volatile global financial markets which contributed to an overall financial loss for the year of £290m.

Following several years of exceptional growth, global stock markets and the UK commercial property market as a whole experienced a turbulent 2018. This was reflected in NFU Mutual’ s own investment performance which saw overall investment assets under management by the Group decrease by £1.2bn in 2018 to £18.9bn.

Lindsay Sinclair, Group Chief Executive, said: “Despite an overall Group loss caused by challenging global investment markets, the sustained growth of our core insurance business is great news for our members. They are central to everything we do and it’s a privilege to be part of an organisation that shares its success with its members.

We believe loyalty should be rewarded and our members have responded in kind with nearly 96 per cent choosing to renew their policies with us last year. Our continued success and robust capital position means our members – people who have insured their farms, homes, cars, and businesses with us – will continue to get a Mutual Bonus discount when they renew. I’m proud that our financial strength and continued sustainable growth has enabled us to return £253m to our members in this way last year.

“Our overall financial performance shows a loss for the year and this is due to the effect of global political, social and economic uncertainty on our investment portfolio. Our financial strength allows us to take a more balanced approach to our long-term investments and the benefits of this are evident in our five-year returns. While stocks and shares may have had a turbulent year across the globe, we believe our investments in companies in the UK and abroad will deliver better long-term value for our members and we expect returns will improve substantially over time.

“By running our business in the long-term interests of our members, we remain able to set ourselves apart from our competitors, offering value to our members and rewarding loyalty, which keeps us in a strong position going into 2019 and beyond.”  

“As a mutual with its heart and soul in agriculture, we are continuing to support our farming members and their families. The high level of stress and worry caused to people living in the countryside by rising rural crime is something that is all too apparent. We have invested over £1.4m on initiatives to tackle rural crime, including financial support for the police NAVCIS team which works with our own claims staff  to prevent tractors and quads being stolen – and bring vehicle thieves to justice.

“We reaffirmed our support for the Farm Safety Foundation, a charity we set up back in 2014, which has helped them deliver another high-profile Farm Safety Week in 2018 and also launch the Mind Your Head campaign, which aims to raise awareness of mental health issues in the farming industry, tackle the stigma surrounding mental health and build a community of support and resources for those affected.

“We are also using our expertise, gained in over a century protecting farming businesses, to help farmers plan ahead in an era of declining farm subsidies. Many farmers are contemplating diversification to boost farm incomes or provide a business opportunity for family member.  

“We are sharing the lessons we have learned insuring and managing the risks on diversified farms through a report which analysed the factors which made diversification successful for those who have already taken the plunge, and looks at the future prospects for a range of initiatives from renewables through retail operations to tourism.”