Bloodstock insurance
Insurance of the mortality and certain losses of value of racehorses and breeding stock, whose value can reach millions; an old London market specialty.
A top racehorse or breeding stallion can be worth several million, and its value rests on a single living being exposed to accidents, disease and surgical complications. Bloodstock insurance, a specialty of the London market and the major equestrian centers, first covers mortality: death by accident, disease or euthanasia required on humane grounds, certified by a veterinarian. It can extend to theft, transport, notably by air on international trips, infertility of a stallion or mare, which destroys its breeding value, and loss of use for a sport horse. Underwriting relies on a veterinary examination, the animal's history and its value, supported by a purchase price, race winnings or a stud fee. The insured value is a potential fraud issue, hence limits and checks. The market also handles a very specific fertility risk: first-season covers, which pay if a young stallion turns out unable to breed. The product illustrates property insurance in which the insured object is alive, blending veterinary expertise, knowledge of a niche market and moral hazard.
Textbook case: a stallion bought for 4 million euros for breeding proves subfertile in his first season. His fertility cover pays the loss of value, set as the gap between his purchase price and his value as a leisure horse, after confirmation by two independent veterinarians.
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