Is self-insuring an option?

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By Dwain Duxson

Is self-insuring an option? - I thought Insurance was boring. And it probably is if it's just sitting there in the background doing what it's intended for. But it’s not, because it’s a big expense now, and it’s noticeable. I have had an amazing amount of replies from yesterday's story on Insurance. You can read the article here.

Many of the replies were wide and varied, with some saying they don't take the risk and insure everything, some saying they are reducing the number of things they are insuring, and another said he will only insure the Crop for what it's going to cost him to put it in next year.

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But one Farmer said they are considering self-insuring. I had to ask the question of how that would work, and they said they would just put the $80k premium aside in an interest-earning bank account and use that as their cover. If he didn't have a claim in the first 3 years, they would have a minimum of $240k put aside for claims. It's still a risk, but what isn't in Farming?

Another guy mentioned doing it with a group of hand-picked Farmers. Personally, that sounds a bit messy. You know how independent we are as Farmers in Australia. Interestingly, that's just how the Insurance industry started: a group of Fishermen in England pooled, say, 10 quid each, and if someone sunk their Boat, they would get access to the pool of funds to buy another Boat. Would you ever think of self-insuring? Reply to dwaind@farmtender.com.au

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