Field to fork

Farmers have a lot more to worry about besides the weather and commodity prices. Add big government and personal injury lawyers to the list of perils.

That's why two executives at Lykes Insurance have formed a specialized group within the insurance company to focus on food safety. Founded in 1925, the insurance company is a subsidiary of Lykes Brothers, the Tampa-based privately held firm that owns thousands of acres for cattle, citrus and other agriculture operations throughout the state.

While Lykes Insurance has traditionally brokered agriculture-related insurance, Bill Taulbee and Christopher Tritt formed Taulbee Tritt & Associates at Lykes Insurance to specialize in this area. “It's not just about agriculture,” says Taulbee. “It's about the food industry.”

Indeed, federal legislation approved by Congress in 2011 is about to take effect as administrators promulgate new rules later this year. These rules empower the Food & Drug Administration to inspect all food on the supply chain, from the fields to the grocery store.

Penalties for food contamination are steep, and they may include criminal prosecution, never mind the economic damage shareholders and employees may suffer. Taulbee Tritt has devised a 21-point checklist for firms that handle food to evaluate their exposure to government penalties and civil litigation that might arise from contamination that hurts people.

“There's no standardized form,” says Tritt. “This is a very immature market.” There are just eight insurance companies that underwrite this kind of risk and each evaluates the risk differently. “There's not a lot of case history and claims scenarios,” he says. “It's almost like the Wild, Wild West.”

Obtaining coverage for this kind of risk requires food-related businesses to show insurers that they are compliant with complex federal regulations by creating a food-safety plan, reporting their procedures, monitoring their facilities and devising corrective actions should they have a problem. “We try to analyze their exposure to loss,” says Taulbee.

Clearly, additional compliance burdens are a big expense to smaller operators, those generally below $15 million in annual revenues. Taulbee acknowledges that may further force industry consolidation as costs spiral higher. “The better companies have been doing this for a while,” says Tritt.

Taulbee and Tritt are part of a team of five people at Lykes Insurance who specialize in food contamination and recalls. “This is a Lykes Insurance endeavor to recognize something that's important,” says Taulbee. “There's no one that specializes in this space,” adds Tritt.

Taulbee Tritt currently serves Florida clients, but the pair says they could expand nationwide as the law takes effect. The target market is food-related companies in the range of $20 million to $500 million in annual revenues.