Insurers resist plans for farm virus cover

Farmers and insurers are preparing to resist government proposals to enforce compulsory insurance for foot-and-mouth to shift the financial burden of any future crises away from the taxpayer.

As the Conservatives accused ministers of trying to "smear" farmers over the high cost of compensation payments, the Government confirmed that the insurance scheme was one option being considered.

But the Association of British Insurers said: "There are very few compulsory insurance schemes for British business. It certainly isn't the standard way. Insurers would prefer to encourage farmers to take out policies."

There was a glimmer of hope in the foot-and-mouth crisis yesterday with confirmation that there had been no new cases since Saturday.

But the Government faced new calls for a public inquiry as the Conservatives accused ministers of leaking details of 37 farmers set to receive compensation payments of more than £1m.

"Ministers' refusal to admit the need for an independent public inquiry suggest they are afraid to face to the truth," said Tim Yeo, the shadow environment secretary.

Downing Street said yesterday that a commission to be headed by Lord Haskins to look at farming's future would examine the question of compensation payments.

But the National Farmers Union (NFU) is set to resist plans to replace state compensation for the cull of livestock with insurance schemes which the Government last night admitted was one option being considered. The NFU will also oppose the creation of new laws forcing farmers to take out insurance to cover income lost from foot-and-mouth.

The insurance industry and farmers are worried that any compulsory insurance scheme could "stigmatise" the agricultural industry and will prove highly unpopular in struggling rural communities.

About 10 per cent of farmers already have cover for loss of income if their livestock is culled from foot-and-mouth. But the numbers taking out insurance has fallen as farm incomes have slumped.

The insurance provides payments on top of compensation from the Government for loss of culled animals.

Exploratory talks were held earlier this year between the Government, farmers and insurers about encouraging farmers to extend this cover.

Now, as the bill for foot-and- mouth reaches £2.3bn, the Government wants to find ways to ensure it does not bear the full brunt of the cost in future.

The Chancellor Gordon Brown is keen that insurance schemes, possibly underwritten by the Government, should be introduced to cut the costs for taxpayers.

Ministers plan to consult farmers and insurers about the introduction of a central insurance fund into which the Government and farmers could pay. Another idea is to extend existing insurance that gives farmers cover for loss of income if their stock is slaughtered.

Movement restrictions have forced highland sheep breeders to use video footage of their animals for three Welsh sales next month.