Usually when we give market updates, we’re talking about the price of corn, soybeans or commodity inputs or expenses… but there’s also some important insurance market updates that producers and agribusiness should know about.
There’s two areas in which an agribusiness is impacted by what’s happening in the insurance market – your people and your products, says Jen Pino-Gallagher, the director of Food & Agribusiness Practice at M3 Insurance.
She says fraudsters are scamming agribusiness employees into sending hundreds of thousands of dollars worth products to them — stealing that product. The FBI issued an advisory late last year with the USDA and FDA to get the word out about this scam, which is taking place through business email compromise.
“In early 2022, four different fraudulent companies placed large orders for whole milk powder and nonfat dry milk from a food manufacturer,” Pino-Gallagher tells the story. “The orders were valued at almost $600,000. They were picked up by the fraudsters. The victim company was unaware that something was wrong until they didn’t receive payment.”
There are steps agribusinesses can take so that this scam doesn’t happen to them. Pino-Gallagher says the biggest one is to train employees to be able to sniff out scams and cyber attacks. She adds that if you are a victim of this type of fraud, make sure that it’s covered in your cyber or crime insurance policy.
Another trend in the insurance industry is that food processors are facing uncertainty regarding insurance coverage of ingredients. This results from a 2016 Wisconsin Supreme Court case called Wisconsin Pharmacal Co., LLV v. Nebraska Cultures of California, Inc.
“The case involved the incorporation of a product into a supplement tablet. It was the incorrect product, as a result the supplement tablet had to be recalled. So a court case ensued about whether that claim would be covered under the insurance,” Pino-Gallagher explains. “The court ruled that integrating a defective product did not constitute property damage.”
She says that since then, Wisconsin food processors have been uncertain if product liability claims will be covered. Now there are a limited number of insurance solutions to fix this gap, she says. She recommends talking about it with your insurance broker.
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