The Specialist

Spring 2020

Weatherbys Hamilton Rural Newsletter

theSpecialist In this issue: Coronavirus:

Back to the land:

Into the future:

Insurance issues

Responsible ownership

The new WH offices

Outlook Understanding the challenges to farming and estate practices

the Specialist Spring 2020

Welcome to our Spring 20 edition of the Specialist.

The shortage of ventilators, PPE and testing equipment has been one of the biggest issues so far in the NHS’ heroic efforts to contain and treat Coronavirus. This is a salutary reminder of the risks that globalisation carries when supply chains of critical materials become stretched in an intricate and fragile web across the world. The same is equally true of food production where we import roughly 50% of what we eat from abroad. The nationalist voice may become dangerously loud as the world strives to recover but, whilst being suitably wary of it, the chance should not be missed in this country to re-evaluate what really matters to our society and the way we want to live.

In the meantime we send our best wishes to our clients at such a difficult time and are ready and willing to help in whatever way that we can.

Charles Hamilton Chief Executive

the Specialist Spring 2020

Coronavirus – insurance issues The Coronavirus pandemic has obviously delivered a massive shock to every aspect of life over the past couple of months and continues to do so. Insurance is no different and the extraordinary and hitherto unknown nature of the risk has put it in uncharted waters in some areas, with definitive answers not always easy to provide.

The unfortunate reality is that globalisation is now throwing up risks that may not always be insurable.

Insurance policies that are disease specific and were drafted before Covid-19 was identified are understandably unlikely to extend to include issues emanating from it.

Business Interruption cover is obviously a very emotive topic at present and the liability of insurers under some policies is bound to be independently tested. With the stakes so high no quarter is likely to be given and the ramifications for the losing side are potentially disastrous. The solvency of an insurer is critical to all its policy holders and so any policy that is found to expose an insurer to a liability that it did not intend to cover could impact on its ability to pay claims that are unrelated to Covid-19.

In these instances the Government would likely have to consider stepping in as the insurer of last resort.

However, our experience is that the insurance industry is generally meeting our clients’ expectations and particular areas of focus for us have been:

• T ravel – We have provided guidance to

many travellers who have had to cancel, postpone or return from various destinations in rushed and inconvenient circumstances and most travel insurance has worked well.

Everyone has a responsibility to mitigate their loss in the first instance by asking, for example, for refunds from hotels or airlines, but after that insurance is certainly there to help provided the circumstances of the claim are valid under the policy.

• Farming – We have been able to reassure

many of our clients on the validity of their policies in specific areas, particularly in the case of dairy producers where uncollected milk has caused problems. Covid-19 has the ability to expose farmers to various liabilities and those selling produce such as eggs and potatoes at the farm gate, or making home deliveries, continue to be covered for Public & Products Liability. If they become ill with the virus and have the benefit of Personal Accident and Illness cover, this also continues to operate as normal.

• Event Cancellation – Some, but not all,

insurance policies have covered Covid-19.

The order from the Government prohibiting mass gatherings from taking place has clearly demonstrated the need for events of every description to be cancelled.

Badminton Horse Trials is one particularly close to our hearts, as we have sponsored and entertained extensively there on the

lake for the last three years, but thankfully for Badminton its cancellation insurance seems to have responded.

• Operational changes – There are bound

to be changes to the way many businesses are now operating, whether it is with staff working from home or being redeployed to other activities. There may be prolonged periods of unoccupancy where flats, houses and holiday cottages become empty. Some businesses that are usually very busy during the spring and summer periods may be seeing drastic reductions in their turnover and wage roll. Conversely there will be others that are seeing an increase in activity, or have diversified their offering, and could for example have farm shops with extra staff and more valuable stock. These are all material changes of which insurers may need to be made aware, so it is important not to forget the basics in these very difficult times.

In the same way that there has been a huge national effort in virtually every sector to ensure that the country gets through this crisis, we in turn are committed to doing everything that we can to help our clients and would encourage anyone to call if they want to talk through any aspects of their insurance.

To claim or not to claim?

Nobody enjoys paying an insurance premium. You are not receiving anything tangible in return other than a promise to pay if you suffer a loss. If it is substantial; a house fire, your car is stolen, or an expensive holiday is cancelled; then the decision to claim is straightforward. The amount will easily exceed your annual premium and you would be significantly out of pocket if you did not claim for it.

However, before claiming for a lost iPhone, a Ryanair flight to Dublin or a damaged bumper could it end up costing you more than the claim itself? In addition to any excess, there is a risk that your premium at renewal could increase disproportionately to the amount that you have claimed. This is because insurers tend to penalise clients for continually making small claims because of the cost of processing and would like to dissuade policyholders from making them if they can. Surprisingly, an insurer will probably consider a client who has had made 3 claims in 5 years, all of which were under £1,000, as a less appealing risk than someone who has had one £30,000 claim in the same period.

So when should you claim? After all you religiously pay your premium every year and have every right to receive something in return when you suffer a loss. There is no rule of thumb, but we recommend considering first how much of a dent the claim will actually make to your pocket and its context with any other claims that you have made. Talk it through with your broker, establish what is actually covered under the policy and what you are likely to end up receiving after factoring in any excess.

Our advice is invariably to regard insurance as protection against major events rather than incidental losses. If the damage is minimal and you have the available funds to repair it, it may not be worth claiming. It is also important to select a level of excess that you are comfortable with. A spokesman for the Association of British Insurers (ABI) recommended in a recent Daily Telegraph Finance article that insureds should take out insurance only to cover what they cannot afford to pay for themselves if things go wrong. Inevitably he added the caveat; “look for a higher excess only if you can afford it and it meets your needs.” 1 According to Thisismoney.co.uk2 the average cost of home insurance in 2019 increased by 13%, driven by climate change and the volatility in UK weather. This has already been exacerbated in 2020 by Storms Ciara, Dennis, and Jorge and the costs of Covid-19 are not yet known.

The likelihood is that premiums will increase further and make insurers more selective of the business they underwrite, so it will continue to be worth weighing up when it is worth making a claim.

1. www.telegraph.co.uk/finance/personalfinance/insurance/motorinsurance/8295225/Is-it-worth-claiming-on-insurance.html 2. www.thisismoney.co.uk/money/bills/article-7599971/Home-insurance-premiums-soared-25-three-years.html

the Specialist Spring 2020

Back to the land Twenty-five years ago, when my wife and I were house hunting, that is all we thought we were doing. In the event, the opportunity to buy a house that was not then on the market required us to take on the farm that adjoined it.

Without really meaning to, we became landowners.

The land had been let to a neighbouring farmer and this we continued with until another neighbour offered to take it on and convert it to organic. We had come to hope that this might be possible but had been assured by our original tenant that it wasn’t viable. I walked the boundaries with our new friend and when we ‘trod the sod’ he showed me how, after only a few years of renting it to the ‘conventional’ neighbour, the land was lifeless – robbed of its organic matter and devoid of worm life.

It has been a long journey since then and in some ways we have come full circle. We have worked with the Soil Association for most of this time but are now no longer registered as an organic producer.

This is because we share-farm with another set of neighbours – who themselves had been certified organic in the past. Now they simply farm the land to the best of their ability and this means working with nature to ensure good organic matter in the soils, breeding the right characteristics in their herd and developing more effective husbandry. The result is that we are basically operating under organic principles, but employing some measures that would not be allowed if we were entirely true to them; like running an AD plant with bought in plant matter, administering veterinary treatments and of course the occasional spot of weed killing!

Court of Noke – Court of Noke from the water meadow before silaging last year. Court of Noke sits next to the River Arrow, with meadows that are grazed by dairy cattle and the world’s oldest recorded Hereford herd.

At many points along the way we have asked ourselves – “why do we not sell the land as it contributes little more than is required to service the debt we took on to buy it and its capital value could unlock all sorts of other opportunities?”

The ownership of land has a strong pull. To walk one’s own fields and survey one’s own acres from the windows is a special pleasure and above all – a privilege!

If I sold what would happen?

I would be richer and Lord knows there are plenty of 150 acre farms around here which are worked dog and stick, 24/7, that afford little surplus to their owners but will make their heirs rich when they (inevitably) sell them! It is a relentless process. As these small farms come to the market there is a ready supply of neighbouring farmers all too willing to pay over the odds for a few extra fields to add to their landholdings, consigning the traditional mixed farm to folklore as their own agri-businesses expand.

Our 200 acre farm employed 11 people between the wars – it still does – but not one of them is on the land. Our neighbours provide the knowhow and stock, contractors cut the silage; we finance any inputs and we maintain the infrastructure. We share any profit equally from growing grass and receiving government support.

Those 11 people that are employed on our farm are involved in a ‘diversification’ project, a natural paint business that occupies the old cattle byres, beet shed, loose boxes and Dutch barn.

the Specialist Spring 2020

Edward Bulmer, Landowner

Court Of Noke, Herefordshire

So if we were to sell the land the new owner would probably be one of two ‘types’ – the progressive farmer or the agri-businessman.

I have come to realise, that while we may yet sell, I am resolved that it would only be to the first type. It all comes back to recognising the privilege that is land owning. Land ownership is deeply rooted in this country’s political and social hierarchy. From early times it was what the Crown expected by right and what it granted to subjects to build the support network that consolidated its power, namely the aristocracy. Since then, though we have liberalised society, created a form of meritocracy and redistributed a good slug of our land mass, the fact remains that 50% of it in the UK is still owned by 1% of our population.

There are obvious arguments that underpin the political dogma regarding the fairness of this and the tax system has made many ‘corrections’ over the last century. However, I see no reason why a new owner or an inherited owner is any more desirable than the other if they are not a responsible owner.

This is what, after 25 years of owning land, I have realised – the privilege brings responsibility.

I am responsible for managing my land well on behalf of society.

I am not the deserving recipient of state hand-outs if I just see them as a subsidy without which farming can’t make me any money.

So, what should that responsibility entail and how can it become integral to modern farming and land management?

Aftermath of potato growing – Two Trees Field; once part of Noke Farm. The current owner grows potatoes in short rotation.

The trees that gave it its name have been grubbed up. Years of pesticide applications, de-stoning and compaction have denatured the soil. This year’s rains resulted in run-off taking much of the top soil through neighbouring fields and gardens and onto a lane that remained partially flooded for months.

Humanity is at a crisis point – we have globalised many of our systems through what is euphemistically called Free Trade. It is free in the economist’s sense of the word – a market mechanism that judges performance purely in financial terms, free of a raft of ‘unseen’ costs. Economists assume that resources are a given, pollution is a shared problem, working conditions do not have to be equal, continuous growth is both possible and desirable and, last but not least, enterprise rewards everyone through the ‘trickle down effect’.

The land is at the root of everything. Without it we starve, we have no shelter, or domain, or even air that we can breathe. How we use the land regulates our entire eco-system. So, let’s start with the land, by reorienting our support and taxation system to recognise this.

Let every landowner be required to achieve some basic essentials for society, measured in terms of nutrition delivery, absence of pollution, carbon sequestration, biodiversity, fair access, employment opportunities, food and bio security. It would be worth the taxpayers’ while to provide support if these ‘services’ were delivered whilst failure to do so would soon weed out those who are not able to accept the responsibility that land ownership bestows.

I really believe that at this crossroads for humanity it is time to get back to the land and properly face up to our shared responsibilities.

the Specialist Spring 2020

Business Interruption – often overlooked Business interruption (BI) has been thrust in to an unaccustomed limelight in the last few months.

It has sometimes had a tendency to slip down the agenda when clients and their advisers are reviewing the cover they need. Although the lockdown caused by a pandemic is beyond the scope of most policies, it is still highly relevant for many other eventualities.

Why is BI overlooked? There is sometimes a misconception that the section of a policy covering the buildings and their contents will also cover the loss of income suffered by a business. This is not so.

The buildings section will remedy the physical consequences of say a fire or flood but it will not pay for the loss of business or additional cost of working in the aftermath.

What is BI insurance? Quite simply BI policies are designed to provide the continued financial support a business needs to return to its previous level of activity. Even after a property has been reinstated it can take a significant time for a business to win back lost customers, train new staff or integrate new equipment, and in the meantime it may have had to incur additional cost by operating from alternative premises.

Do all businesses need BI insurance? No, not necessarily. It comes down to whether the business can continue to trade uninterrupted following a catastrophic event such as a flood or fire. If the answer is no then BI cover is strongly recommended.

What indemnity period to take? The indemnity period is the amount of time for which claims payments will be forthcoming following a loss. If the indemnity period expires – be it 12, 18, 24 or 36 months – then claim payments will cease, even if the actual sum that has been insured has not yet been exhausted. Therefore, selecting a sufficient indemnity period for the business is as important as calculating the correct sum insured.

It does make sense to budget for the worst case scenario, taking into account all the factors that can add significant time and expense to a business’ recovery.

• Thinking and decision making time • Making planning enquiries and applications • Tackling environmental issues • Meeting listed building requirements • Delayed planning decisions, or the insistence on additional requirements

• Long lead times for replacing plant, machinery and other essential property

• Discovery of hazardous materials, such as asbestos • Potential Health and Safety Executive (HSE) enquiries or proceedings

• Recruiting and retraining of staff • Seasonality – a loss may cause a business to miss important trading periods

• Difficulty in winning back lost customers and opportunities Business Interruption cover is a complex subject but the key to making sure that it provides the right indemnity is to be realistic over income projections, to consider the risks and exactly what would happen if a catastrophic event prevented a business from operating as it is accustomed.

TO FIND OUT MORE WHY NOT GET IN TOUCH:

wjohnson@weatherbyshamilton.co.uk 01768 877355

Employers’ Liability – who is my employee?

Any individual or firm which is construed as having employees is legally obliged to carry at least £5m worth of Employers’ Liability (EL) cover. This is only a minimum and we would urge any client to ensure that they have at least £10m.

If a farm or estate employee is injured at work, or becomes ill as a result of that work, the employer could be held to be at fault and have to pay damages or compensation. EL insurance will meet the cost of this, including legal expenses incurred, if negligence is proved against the employer.

Insurers base their premiums on wage roll and the employees’ activities, with a forestry worker for example being more expensive to insure than a farm secretary. Almost all high net worth household policies automatically include cover for domestic staff, such as a cleaner or gardener, without the need for a declaration.

A question that is often asked is; who qualifies as an employee?

Just because someone working for you acts as if they are selfemployed does not necessarily mean that he should not be included under your EL policy. It will all depend on whether he has a contract of service with you and what the terms of that contract are. The definition is broadened by the fact that the contract does not have to be in writing and can be spoken or implied. Whether you choose to describe the contract as one of employment or for services is also largely irrelevant, as is the tax status of the person. What matters is the real nature of your working relationship and the degree of control that you have over the work that they do.

The following tests can help to decide whether the law regards a person as an employee. If any of the answers are yes, the chances are that he needs to be covered under your EL insurance.

Do you deduct N.I & Income Tax from the money you pay them?

Do you have the right to control where and when they work and how they do it?

Do you supply their work materials & equipment?

Do you have the right to any profit they make?

Do they work exclusively for you?

Do you require them to deliver the service themselves without the ability to provide a substitute?

Do they do the same work under the same conditions as someone else you employ?

In most cases EL insurance is also required for:

Volunteers Students, even if they are unpaid Youth or adult training scheme participants Work experience candidates You may not need EL insurance where the person: Does not work exclusively for you Supplies most of the equipment and materials for the job themselves Clearly works for a business that is one in its own right Can supply a substitute when they are unable to work themselves Does not have NI & Income Tax deducted from your payments to them

the Specialist Spring 2020

Household insurance – making claims easier to settle Storms Ciara & Dennis hit the UK on 2nd and 13th February this year and have been quickly followed by the national Coronavirus lockdown. This has led to the insurance industry reorganising systems and technology so that staff can work from home and whilst most brokers and insurers have adapted to this remarkably well, claims management can be particularly under stress.

With the lockdown, the reinstatement of damaged buildings is suffering delay, costs are increasing and insurers and adjusters are faced with more complicated processes.

The storm related claims have largely been confined to damage caused to roofs and walls, falling trees, flooding from natural water courses and ingress of water where gutters or drains have not been able to cope with rainwater volume or run off.

In addition there are of course all the other claims that you would expect in a normal winter.

In order to manage expectations and to present a claim to an insurer in as “easy to settle” manner as possible it is worth summarising what a High Net Worth household policy generally does and does not cover.

Cover is invariably on an All Risks basis and allows for the majority of incidents, subject of course to various conditions & exclusions. These conditions usually require a claim to be notified as soon possible and for all reasonable steps to be taken to mitigate the loss. Submitting photographs of the damage or incident when it is first discovered pays dividends time after time.

Typically policies will exclude: Loss as a result of an inherent defect The cost of any routine maintenance, defective design, workmanship or gradual deterioration Loss or damage caused by storm or flood to gates, hedges or fences and/or the cost of removing any tree, branch, telegraph pole, lamp post or pylon

In addition to covering physical damage to the buildings, policies also regularly include benefits such as: Temporary alternative accommodation or loss of rent where owners or occupiers are displaced The cost of replacing the spoiled contents of refrigerators and freezers caused by accidental failure of the unit In the event of loss or damage caused by the escape of water, fire, flood or storm, insurers may also pay towards the cost of improvements designed to mitigate or prevent a future occurrence When they are attributable to a valid claim, regulatory compliance and clean-up costs will be included, as will decontamination costs, emergency access repair & attributable travel costs Increased water charges and electricity reinstatement costs Naturally, we would all rather not suffer the loss in the first place and though we may grow weary of hearing the advice, it is worth repeating some of the things we can all do to improve our chances of either avoiding one, or making sure that the claim runs as smoothly as possible when it does happen.

Make an annual inspection of trees, drains, gutters etc to ensure that they are in good condition and drains and gutters are not blocked or damaged In the event that there are a large number of trees on the property and there is a risk that they could fall on to a third party’s premises, keep a regular professional record of inspection Have buildings and contents regularly valued in order to ensure correct current sums insured

Loss or damage where a property is unoccupied, usually for in excess of 60 days

Ensure that all recent purchases/improvements are noted on the policy

Damage caused by water or oil escaping from any fixed water or heating system, washing machine, dishwasher, refrigerator, freezer, water bed or fish tank if a property is unoccupied and the heating is not left on (usually to a setting of 5˚c or above)

Leave the heating on when you go away for a winter holiday and turn the mains water off

Insurers will always require that all reasonable steps are taken to prevent or reduce loss of, or damage to, property and to maintain it in a good condition and state of repair So, if the loss or damage is not compromised by one of these exclusions, the chances are that it will be covered.

Have an emergency action plan in place. Know where stop cocks and fire extinguishers are; which items to save first; how to remove them or make them safe; and have details to hand of emergency contractors such as plumbers and electricians Seek the advice of a risk specialist for preventative and mitigation measures. This is especially applicable to large houses, art, antiques and jewellery collections In houses with smart technology, change passwords regularly and ensure that systems are serviced and up to date

TO FIND OUT MORE WHY NOT GET IN TOUCH:

mwright@weatherbyshamilton.co.uk 01793 847333

Look at flood and escape of water prevention measures such as back up valves in drains and leak detection technology Ensure alarms and detection systems are operational and fully serviced according to their specification Don’t leave easily moveable items in the open Most of all be prepared and take the time to review your policy with your broker to make sure that it reflects the cover that you want.

the Specialist Spring 2020

Into the future Just when working from home has become the new norm it might seem rather incongruous to be talking of opening new offices.

West Sussex office

Any reservations about the effectiveness of working from a dining room, spare bedroom or study have been well and truly banished under the regime imposed on us by Coronavirus and doubtless some of this change will turn out to be both permanent and positive.

However, it does not alter the way that we want to grow our business and our desire to be as local as we can be to our clients.

We know that it makes a big difference to the service that we can offer if we are able to visit our clients easily, when and where they want, and puts us in a far better position to help them if we have seen what it is we are insuring.

As a result Weatherbys Hamilton is opening two new offices in May and June; Edinburgh under the direction of James Innes and in West Sussex under the leadership of Guy Baxter. Both will complement the other five offices that we already have in Newmarket, Swindon, Wellingborough, Penrith and London and means that there aren’t many corners of mainland Britain that we can’t get to quickly and easily.

In Edinburgh our office is within Weatherbys Private Bank’s building at 2 Rutland Square at the west end of Princes Street. The Bank has established a strong following in Scotland over the last five years under the leadership of Duncan Gourlay and it is a very logical step for Weatherbys Hamilton to emphasise its close links by sharing a building in Scotland’s capital city. James Innes, who joins us after a career with Lycetts in Charlbury, Oxfordshire and then latterly Edinburgh, is already well known for household and farm & estate insurance and is a natural addition to our partnership both in terms of culture and expertise. We are very excited about his appointment and the combination of James in Edinburgh with Will Johnson in our Penrith office only reinforces the strength of our offering in the North.

Our office in West Sussex is in the converted stables of Newbuildings Place, the home of Lord and Lady Lytton, a few miles east of Billingshurst and next door to Knepp Castle, the pioneering re-wilding estate. Although our Newmarket and Swindon offices are little more than two hours away, London and the M4 corridor form both a physical and psychological barrier to being regarded as local. We have long wanted to develop a stronger following in Kent, Surrey, Sussex and Hampshire and the opportunity to do this from Billingshurst is ideal. Guy Baxter joins us in June, after a successful career in private client and farm & estate insurance with Marsh and Lycetts, and, like James Innes, is a natural fit with the other partners. Both are only in their late thirties and will help to ensure Weatherbys Hamilton’s success long in to the future.

We feel that our independence, culture and partnership structure enables us to provide what our clients want at a time of extraordinary consolidation amongst our competitors. In March, Aon announced its intention to acquire Willis to form a £23 billion mega broker. This follows hard on the heels of Jardine Lloyd Thompson falling to Marsh in a paltry £4.3 billion deal and so, at a stroke, reducing the four largest brokers operating in the UK to two. But this activity is not just confined to the goliaths of the market. Global Risk Partners, an aggregator funded by venture capital, has hoovered up smaller brokers at an extraordinary rate over the last few years. At the last count it was well over 50 and has recently included Gauntlet Heritage, which Harry Fitzalan Howard had built up in to a well respected insurer of historic houses over the course of the last 35 years. The stock line is always that these deals are great news for the clients who can look forward to enhanced service and products. The real beneficiaries, namely the shareholders, are rarely mentioned and the benefits to clients and staff are often less obvious.

Over the next decade and beyond, artificial intelligence will undoubtedly play an increasing role in how insurance is sold and serviced. This may well be part of the rationale behind some of these deals if it becomes more valuable to regard clients as commodities than real people. Weatherbys Hamilton’s strategy is, and always will be, to use the best technology available to support the service that it provides but never to be a servant to it. We are confident that there will continue to be a demand for advice and service that is provided in person and the rarer this becomes the more it will be valued. Humans sit astride the animal kingdom for a number of good reasons, but not least for their superior ability to communicate and the ability to show empathy and understanding at times of stress.

We don’t really see that going out of fashion.

Edinburgh office

Penrith – William Johnson 07966 030832 (Mobile) wjohnson@weatherbyshamilton.co.uk 01768 877355 (Office)

London – Clare Bethell cbethell@weatherbyshamilton.co.uk

07827 297072 (Mobile) 0207 292 9029 (Office)

Wellingborough – Matthew Haxby 07764 153234 (Mobile) mhaxby@weatherbyshamilton.co.uk 01933 440077 (Office)

Edinburgh – James Innes jinnes@weatherbyshamilton.co.uk

07526 252857 (Mobile) 0131 285 5064 (Office)

Newmarket – Alec Moore amoore@weatherbyshamilton.co.uk

07503 671649 (Mobile) 01638 563444 (Office)

Billingshurst – With effect from 2nd June 2020

Swindon – Martin Wright mwright@weatherbyshamilton.co.uk

07747 763045 (Mobile) 01793 847333 (Office)

www.weatherbyshamilton.co.uk

Weatherbys Hamilton LLP is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 582708 Registered office: Sanders Road, Wellingborough, Northamptonshire NN8 4BX Registered Number OC373141 Disclaimer - The views and opinions expressed in this Newsletter are solely those of the Partners of Weatherbys Hamilton LLP and do not claim to represent those of any other company or third party.