Stallion Infertility Insurance Coverages
• “ASD” - Permanent and total infertility caused by an Accident, Sickness or Disease which manifests itself during the policy period. Usually costs .5% to 1.0% per year. It can typically be added as an endorsement to either a Mortality or a First Season Infertility (FSI) policy. Most companies have similar policy wording.
• “FSI” - First Season Infertility coverage guarantees a new stallion will achieve a pre-agreed conception rate (typically 60%) during his first season at stud. The usual premium rate is between 5% and 6% of the insured value, depending on the expertise of the farm where the stallion will stand at stud, the breadth of coverage required and the total amount of coverage being purchased.
This coverage is not standard and is often custom-tailored to fit the needs of the stallion syndicate agreement or management preferences of the farm at which the stallion will stand at stud.
The determination of infertility is, by its very nature, imprecise and subject to interpretation. It is rarely a “dead or alive” issue like in mortality coverage.
It is imperative to tie the breeding contract and/or syndicate agreement to the terms of the FSI policy to alleviate problems for the stallion syndicate manager.
Key Policy Differences in First Season Stallion
• Rollover vs. Non-Rollover -- A “Rollover” policy is one where the company has the option to not pay the claim after the first year if it looks like the stallion can improve and reach the agreed fertility percentage in the second year.
A “Rollover” policy puts the depreciation risk on the stallion owner(s) rather than the company. Even if the stallion does improve in fertility the second year, the first foal crop will be small, thereby diminishing the stallion’s chance of success as a stud.
“Rollover” policies are particularly onerous for lower valued stallions (up to $10,000 stud fee). Mare owners will not risk their mares to a sub-fertile stallion unless there is a way to create a “bargain” by reducing the stud fee the second year. With a lesser valued stallion, one cannot drop the stud fee far enough to get quality mares the second year.
• Withdrawal of Mares Prior to End of Breeding Season - In most cases, a really fertile stallion will get 1 pregnancy for every 1.25 to 2.0 matings. A sub-fertile stallion will get 1 pregnancy out of every 5 to 10 matings. Obviously, in close calls, the underwriter will require that the mares remain available to be bred until the end of the breeding season.
This could cause conflict with the mare owners who will want to switch to a more fertile stallion so the mare will not be barren, or who simply don’t want a foal that will be born late in the next breeding season.
Under some policy provisions, withdrawal of mares without providing “substitutes acceptable to the insurance company” can void the policy.
Some insurance companies offer an optional endorsement offered at extra-cost whereby mares covered in 3 breeding cycles (other than the foal heat) can be withdrawn and still count against the stallion in the fertility calculation. This means that a maiden mare which is first bred in mid-February could be “excused” from the stallion’s book by early April (and still count in the fertility calculation as a not pregnant mare).
Note that without this option, if mares are withdrawn and cease to be “qualified mares” (for the purposes of fertility calculation), it will reduce the denominator, thereby improving the fertility percentage calculated. For example, if the stallion bred 100 mares and only 50 are in foal, the fertility rate would appear to be 50%. Since most policies guarantee a 60% First Season Infertility conception rate, it would appear that a claim would be payable. But, if the owners of 25 mares just decided not to breed during their mare’s last heat cycle or two, then the denominator in the fertility equation would drop to 75, thereby producing a fertility percentage of 67%. You can see from this example how important it is to tie together the stallion breeding contracts and/or the stallion syndication agreement with the insurance policy on a first year stallion.
Stallion owners should not pay extra to guarantee an excessively large book of mares in the first year. Most underwriters will now allow 85-90 mares if the stallion’s testicles are of normal size and the stallion is at least 4 years old. It doesn’t make sense to pay extra to guarantee more mares. If the stallion is impregnating the mares bred earliest at a satisfactory rate, then one doesn’t need to worry about the policy terms -- the stallion has already proven he is fertile. But, if the stallion starts off slowly, why compound the problem -- and risk irritating a number of mare owners -- by trying to overbreed the horse?
Many stallions that can handle 90 mares in the first year can handle 110 or more after another year’s maturity.
The definition of “qualified mares” has changed over the last ten years to where most underwriters require breedings in two heat cycles before a mare is counted. (For one thing, a two-cycle minimum will prevent tilting the fertility calculation against the insurance company by throwing on some “late” mares at the end of the season).