Liability Insurance Contributing Columnist


Three Questions To Ask When Times Get Tough

Jen Pino-Gallagher
Director of Food & Agribusiness Practice
M3 Insurance

January 22, 2021


The headwinds of the pandemic continue to blow. Despite the challenges, the dairy industry has responded nobly by shoring up their supply chain – from farm to plant – and continuing to deliver high quality, delicious products to consumers.

The pandemic has dominated the headlines, but another business headwind has put pressure on dairy processors across the nation – the hard insurance market. We’ve written about the hard market impact before and how it’s ushered in more expensive insurance, less coverage, and in extreme cases, risks of non-renewals. When managing the added pressures caused by the pandemic, many dairy processors have found themselves in a reactive vs. proactive business stance.

Taking a proactive approach to managing your dairy operation’s insurance program doesn’t have to be a multistep, tedious activity.

It can actually start with three simple questions posed to your broker:
1) Where’s my budget?
2) Are there limits on my limits? (A.K.A. capacity challenges)
3) Is my carrier still committed?

Ask your current insurance broker for a budget four to six months in advance of your renewal.

It is the broker’s job to keep their finger on the pulse of the insurance industry and communicate changes and solutions to their clients. Just like many dairy processors watch the block and barrel pricing, insurance brokers monitor changes in insurance pricing.

A trusted, strategic advisor like your broker should be communicating price fluctuations by line of insurance. Asking for your estimated insurance budget well in advance of renewal helps prepare you for the impact caused by premium swings and keeps your insurance providers accountable.

Limited Limits
If the insurance industry were a buffet, and “capacity” was on the menu, there would no longer be an “all-you-can eat sign” at the door. In this hard market, you can’t get as much as you want.

Capacity is defined as the most amount of insurance one insurer will offer for a single line of business. When there is a lot of capacity in the market, insurance limits are readily available. When capacity is tight, like it is now, an insurer will offer less coverage than a dairy processor needs.

Here is an example: Dairy processor wants a $10 million umbrella but their renewing insurance carrier will now only offer $5 million. The broker needs to find another insurer willing to offer an additional $5 million in coverage – or, put another way, $5 million in excess of the first $5 million. This is referred to as “layering coverage”.

When your insurance broker creates a “layered” insurance option, they must pay extra attention to the details of how the insurance coverage is written to ensure the coverages work together harmoniously in the time of a claim. In today’s climate, it’s not unusual to see layered approaches on property coverage as well as umbrella, especially on larger plants.

Is my Carrier still committed?
The third question to ask your broker is specific to whether the carriers providing your insurance are still interested in providing coverage to the dairy sector – and you specifically.

Throughout the last several years, some insurance carriers have soured on dairy as well as other sectors of the food industry, as claims have risen and their ability to make a profit has shrunk. Asking this question of your broker well before your renewal will prepare you for any changes in carriers or non-renewal.

While these three questions won’t replace a full, strategic analysis of your insurance program, they will provide some proactive steps that could save you from being surprised at renewal.

As we move into 2021, the broad hope is that the gale force winds of the pandemic will lesson and clearer skies will be in the forecast. We’ll continue to weather these storms together

Jen Pino-Gallagher is director of the food and agribusiness practice at M3 Insurance. M3 Insurance offers insight, advice and strategies to help clients manage risk, purchase insurance and provide employee benefits. The views expressed above do not necessarily reflect those of Cheese Reporter. You can contact the columnist by calling (800) 272-2443, or by visiting


Jen Pino-Gallagher

Jen Pino-Gallagher is a Director of Food & Agribusiness Practice at M3 Insurance. M3 Insurance offers insight, advice and strategies to help clients manage risk, purchase insurance and provide employee benefits.
For more information, call (800) 272-2443 , visit

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