The first ever cases of equine influenza (EI) in Australia have brought the horse industry to a stand still. As of Monday, 27 August 2007, the Department of Primary Industries confirmed 47 cases of equine flu with at least another 200 horses to be tested.
See Insurance Response below.
Updates of this article can be found at:
Update 12 October 2007
Ongoing Updates
On Saturday 25 August, all states and territories of Australia agreed to implement a standstill on the movement of horses until further notice. Penalties for non adherence include fines of up to AUD$44,000 and 12 months imprisonment.
Animal health authorities recommend that all equine events and gatherings should not take place during this time. A number of race meetings have been called off in Australian states including the Sydney International Three-Day Event an Olympic equestrian preselection meet and this weekend's Birdsville Cup, Queensland's historic bush race meeting. Agricultural Shows, Breed Shows, sales and other horse events have also been cancelled throughout NSW and Queensland.
Standstill Zones prohibit the movement of all horses including ponies, donkeys, mules and other equine species. The use of police horses as crowd control during the forthcoming Asia-Pacific Economic Co-operation (APEC) forum summit in Sydney have been cancelled after all 36 of the NSW mounted police unit in Redfern have been quarantined with 6 testing positive to EI.
Some reports suggest the world renown Melbourne Cup, some 2 months away on the first Tuesday in November, be cancelled or delayed as a result. With an outbreak of equine flu in Japan as well The Cup is unlikely to include Japanese horses. Betting on the Melboune Cup has been suspended until confirmation the Cup will run as scheduled.
While no cases of equine flu have been detected in Victoria the Australian Government Minister for Agriculture, Peter McGauran, said it was possible Victoria's Spring Racing Carnival would be delayed "It is better to have a deferred Melbourne Cup than have no Melbourne Cup at all….", "But it does look increasingly likely that the start of the Spring Carnival campaigns by leading horses will be inevitably delayed and that may cause racing authorities to put back the feature races."
Financial Impact
With calls for a national enquiry into the outbreak and commonwealth quarantine procedures, millions of dollars in losses are being reported. Reportedly the industry is worth AUD$8billion a year and is Australia's third largest employer.
Short term Impact
- Racing NSW spokesman Peter V'Landys estimates the national cost of three days without racing has been AUD$100 million in lost betting alone.
- NSW TAB reportedly lost AUD$40 million in gambling revenue over the weekend.
- Centrebet reportedly lost about AUD$5 million in lost earnings at the weekend.
- Racing NSW general manager of industry, Brian Judd, said "the investments on New South Wales racing within New South Wales would amount to in excess of $14 million, and prize money lost within that 72-hour period is up around $1.2, 1.3 million".
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The Age reported delaying or cancelling the Victorian Spring Racing Carnival could slash tens or even hundreds of millions of dollars from the economy as fallout spreads throughout the tourism, retail, fashion, hospitality and gambling sectors.
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New Zealand Racing Board (NZRB) racing manager Michael Dore said about NZ$4.5m will be lost in New Zealand betting turnover. However, there is a potential recoupment of income from Australians betting on NZ races and several greyhound meetings had been rescheduled to suit Australian time slots.
The Australian share market has been impacted as well with shares in Tabcorp Holdings Ltd, Tattersall's Ltd and Centrebet International Ltd falling. On Monday 27 August Tabcorp shares opened down 4.61 per cent, Centrebet down 3.16 per cent and Tattersall's down 4.04 per cent.
Longer Term Impact
EI is rarely fatal to horses however, it is highly contagious and, has been seen in such a short time, completely disruptive to the horse industry. Reported estimates suggest a month long ban on the movement of horses in Australia could reduce revenue by AUD$1billion. This doesn't take into account other factors such as living with EI in Australia and the impact to the breeding industry.
Australia and New Zealand have never before experienced EI. If not contained, this outbreak now affects quarantine laws between these countries and therefore the costs of moving horses for racing or other events. In turn this affects the number and level of horses that might attend Australian race meetings.
If EI is not contained in Australia it will mean annual vaccinations of horses.
Then there is the impact to the breeding industry. The breeding season starts on September 1 and is likely to be delayed three weeks or longer. The Federal Agricultural Minister Peter McGauran explained that "Given that most of those stallions serve up to five mares a day, often at a price of $100,000 to $200,000, you can easily calculate what a loss it would be".
Potential Insurance Response
Livestock
Generally livestock is insured for its replacement value (which should not exceed its reasonable market value). While there might not be any direct loss such as the death of an insured animal, it is generally required that your broker/insurer be notified if an animal is ill. Cover for infectious diseases may not be available. A basic cover may only provide cover for Death, Accident, Theft or Straying. Additional cover may be required for veterinary fees.
Breeders
Breeders should have insurance for Business Interruption, Loss of Gross Profit. In this case livestock should be insured on the basis of the estimated sales values of, for example, yearlings and stallions and breeding programmes. As with livestock, generally, policies should provide cover for:
- Death due to an accident
- Death due to an illness or disease
- Loss of use due to an accident
- Loss of use due to an illness.
Betting Agencies
These are likely to be covered by Property type standard and custom written policies. However, whether these policies are specifically tailored to the business and this type of loss remains to be seen.
A standard Industrial Special Risks (ISR) policy wording specifically excludes losses from livestock (Property Exclusion 6).
Jockeys
News reports indicate jockeys will have income protection insurance. However, in most instances these polices have waiting periods ie. a nominated period of time you are out of work before the policy responds, like an excess, such as 30 days, 60 days, etc.
Update - 12 October 2007
Update - 29 October 2007
For up to date information about the Equine Flu response see Department of Primary Industries website:
http://www.dpi.vic.gov.au/dpi/index.htm
Author
Claim Solutions Pty Ltd.
Insurance Policy
Country: - Australia
Policy Description: - Livestock, Income Protection Insurance, Business Interruption
Insurer: - Wesfarmers Federation Insurance Limited (WFI) , CGU Insurance Limited (CGU) (other than in WA), Agricola, NTI and NRMA (QLD only), and others.
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