South Africa’s farming sector is under growing financial pressure, prompting many farmers to adopt innovative strategies to maintain profitability. These can include contract farming arrangements, leasing portions of land to third parties, or switching to higher-value crops and infrastructure investments. However, these changes can introduce new risks that may not be covered under their existing insurance policies.
I urge farmers to prioritise full disclosure of any changes to their operations. When a farmer’s insurance policy is initially underwritten, it is based on specific farming-related activities, whether it’s cattle farming, crop production, or fruit farming. Alterations to operations — such as leasing farm space to outside contractors, installing solar energy systems, or engaging in third-party processing — change the risk profile. If these aren’t disclosed to the insurer, the policy may no longer be valid, and claims could be denied.
The rise in non-disclosure in the agricultural sector is a growing concern, particularly around these types of operational changes. For instance, a farmer who enters a joint venture with a contractor for crop spraying or storage might not realise this increases both liability and fire exposure. Their policy, tailored to traditional farming risks, won’t necessarily cover claims stemming from third-party negligence or equipment damage from unauthorised usage. Failing to disclose these activities leaves the business exposed.
The consequences of non-disclosure can be severe and may result in the voiding of the policy at the claims stage if the loss is linked to an undisclosed risk. Full, ongoing disclosure allows the insurer to make relevant adjustments to cover and pricing and also provides an opportunity to explore additional risk mitigation solutions — such as reinsurance or tailored endorsements — to protect both the farmer and the insurer’s exposure.
As farming businesses evolve, their risk categories may shift from medium to high-risk, necessitating more frequent risk assessments. Agricultural businesses typically undergo an initial risk survey, with annual reviews thereafter. However, when introducing high-value assets like processing plants, advanced irrigation systems, or expanding storage capacity, the risk profile shifts significantly, and insurers may need to reassess more frequently.
Another common area of non-disclosure includes infrastructure investments like installing solar panels or building cold storage, as well as changes in farming activity, for example, transitioning from grain to high-value crops such as berries or nuts. Farmers might not realise how these upgrades or shifts affect their insurance. If not reported, the policy may no longer reflect the business’s actual needs.
Non-disclosure doesn’t just affect claims — it can also hinder future insurability. If a history of non-disclosure emerges, it may lead to increased premiums or result in the business being declined cover altogether. Insurers view non-disclosure as a sign that risk has been misrepresented, making it harder to maintain favourable terms.
To help farmers navigate these evolving risks, I encourage regular and transparent communication with brokers. A broker’s role is to ensure that policyholders understand the full extent of their coverage and that any changes in their operation are disclosed promptly. This is especially important in agriculture, where operations can shift rapidly due to market demands or climate challenges. Working closely with a reputable broker is essential for maintaining suitable coverage.
As the agricultural sector continues to modernise and adapt, full disclosure remains critical in protecting farming enterprises. We urge all farmers to review their policies regularly, especially when changes occur in operations, assets, or third-party agreements. Keeping insurers informed is the best way to avoid unpleasant surprises at the claims stage.
* Botha is the head of underwriting at Western National Insurance.
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