At Australasia Underwriting (AUPL), we have seen firsthand the unique challenges that come with temperature-controlled livestock facilities, affecting both farmers and insurers alike.
Modern agriculture increasingly depends on precise environmental controls to boost production efficiency. However, this technological advancement also brings new vulnerabilities that traditional farm insurance policies often overlook.
Temperature-controlled livestock facilities face a perfect storm of underwriting challenges. Their remote locations, specialized building materials, and crucial reliance on uninterrupted power create a risk profile that is quite different from that of standard farm structures.
Sadly, climate change has only exacerbated these challenges, with Australian farmers witnessing a 23% decline in average profits over the last twenty years due to shifting climate conditions. Now, these operations are confronting both traditional and emerging risks all at once.
One especially troubling vulnerability arises from an unlikely source: livestock urine. The corrosive nature of animal waste poses a constant threat to the electrical systems that manage temperature, ventilation, and feeding.
A recent case in Victoria showcased just how quickly things can spiral. A regional poultry operation suffered an electrical system failure when urine penetrated the control panel. The subsequent temperature spike resulted in significant losses of livestock, all before backup systems could kick in.
The Underwriting Challenge
Standard farm policies weren’t designed for these scenarios. The complexity begins with the structure itself.
Unlike conventional buildings, many temperature-controlled facilities utilize Expanded Polystyrene (EPS) construction. This material provides excellent insulation but introduces fire risks and special considerations for water damage.
Power dependency creates another layer of vulnerability. These operations rely on round-the-clock electricity to maintain precise conditions. Even brief outages can trigger catastrophic losses. Regular maintenance and thermographic testing is essential to keep these systems running well.
Water access presents a third challenge. Remote locations often mean limited municipal water supply, complicating both fire protection and daily operations.
Managing the risk
We’ve developed a specialized assessment framework for these facilities based on lessons from multiple claims scenarios. Our approach focuses on five critical control points:
Electrical system isolation – Ensuring control systems are protected from livestock exposure through proper sealing, elevation, and regular inspection.
Redundant power solutions – Requiring backup generators with automatic transfer switches and fuel supplies sufficient for extended outages.
Water security planning – Assessing on-site water storage capacity and alternative supply options for emergency response.
Construction material management – Evaluating EPS panel condition, joint integrity, and fire separation barriers.
Environmental monitoring systems – Verifying remote alert capabilities that function even during primary system failures.
Case Study Lessons
A large-scale egg production facility in rural Victoria provides instructive lessons. Despite having backup generators, the operation suffered significant losses when rodents damaged critical wiring between the power failure sensors and generator activation system.
The post-incident assessment revealed that while individual components met standards, the system integration contained vulnerabilities. Temperature rose rapidly in the controlled environment, reaching critical levels within 45 minutes.
This case highlighted that climate volatility makes these operations increasingly vulnerable and the absolute requirement for regular electrical maintenance and thermographic testing. Extreme weather events can simultaneously cause power disruption and prevent emergency services from reaching facilities to implement manual interventions.
Broker Considerations
For insurance brokers serving agricultural clients, these specialized facilities require additional due diligence. Standard questionnaires rarely capture the critical control points that determine actual risk exposure.
We take the time to help guide brokers through a thorough risk assessment process before finalising coverage. This helpful step benefits everyone involved by uncovering chances for improvement that can enhance insurability and help lower premium costs.
The most successful brokers in this area cultivate a deep understanding of environmental control systems and how they can fail. By grasping the connections between construction materials, electrical systems, and livestock management, they gain a valuable competitive edge.
Temperature-controlled livestock facilities are set to evolve as Australian agriculture adapts to the changing climate. It’s important that the insurance industry evolves right along with them.
At AUPL, we’re really passionate about developing innovative coverage solutions that address these specialized risks. By combining our technical expertise with practical experience, we aim to provide effective protection for these essential agricultural operations.
