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5th March 2007

Would Lloyd’s underwriters pay £200 for a dead parrot?

Lloyd’s did pay such a claim when a bird belonging to a Turkish sultan passed away. Although £200 may not sound much today, this was back in 1905 when a blue macaw parrot could be insured against “all risks including mortality”.

Things have changed since then, but Lloyd’s appetite for unusual risks has not vanished.

Killer whales, polar bears, giant pandas, pygmy hippos and even a two-headed albino rattlesnake are still some of the most unusual animals insured in the market.

For underwriters, the challenge is to assess the risk accurately. According to Robert Wells, livestock underwriter at XL Insurance, the most fundamental challenge is to ensure that the farmer, owner and managers involved have the correct knowledge and experience of the animals in their care or ownership, and practice the highest levels of husbandry (the expert’s knowledge in looking after the welfare of the animals).

He says: “This always goes hand in hand with good risk management, reducing the chance or extent of a loss whether due to accident, sickness, disease or storm perils. So really we are underwriting the insured’s husbandry.”

Some practicalities may also have to be considered. For example, transporting a shark or a panda around the world can be an incredibly complicated task.

“The size and complexity of the transit obviously dictates the preparation needed,” explains Wells. “For example, transporting an alpaca from your farm to a local show would be fairly routine and not much planning would be needed.

“However, transporting a killer whale from South America to the US by both road and air would require a huge amount of research.

“The most important thing is to plan for the worst. When the sun is shining and everything is going fine transporting animals is relatively straight forward. It’s knowing exactly what to do when a problem occurs that usually separates the average transporters from the very good ones.”

Apart from transportation there are other factors that could cause a loss on a livestock transit such as overheating, accidental external injuries, stress and disease. And this is in addition to the usual type of transit risks such as fire, collision and sinking.

So while over 100 years ago an exotic parrot could be insured for £200, nowadays a Panda could be worth up to $1 million.

http://www.lloyds.com Last updated on 26 Feb 2007