The latest international outbreak of foot-and-mouth disease (FMD) first spread from China to Malaysia, and now Indonesia – close interaction with livestock and tourists in rural Bali is now a major concern for Australia and New Zealand.

Australia has been free from FMD for over a century, while New Zealand is yet to experience an outbreak. Considering the disease can survive for up to five days in dirt carried on the bottom of footwear, the risk of FMD spreading from airport terminals to farms and livestock is considerable and the potential consequences catastrophic.


FMD was first detected in Indonesia in May 2022, and the outbreak is the biggest since 1990. To date, 479,000 animals have been infected, more than 9,000 have been slaughtered to try and control FMD’s spread and another 5,189 have died from the disease.1

A massive vaccination programme has commenced, and the Indonesian government hopes to procure 29 million vaccines by the end of the year, with 840,000 doses already administered.2 While officials hope to have the outbreak under control by the end of 2022, in reality, it could take years to eradicate the insidious disease. It is possible that farms are not reporting or recognising the disease, which makes the level of suppression difficult to determine.

While FMD is not transmitted to humans by eating affected meat, there is evidence the disease is circulating. Several FMD fragments have already been found in an undeclared beef product brought into Australia by an airline passenger from Indonesia, and Chinese pork recently sold in Melbourne. If cattle, sheep, goats, camelids deer or pigs were to consume affected meat then this could lead to an outbreak.3


The Australian government has been swift to address the concern, establishing what the agriculture minister has claimed is the strongest biosecurity response in the nation’s history. A biosecurity taskforce has been examining Australia’s preparedness for FMD and lumpy skin; officials estimate the risk of the disease entering Australia within the next five years to be 11.6%, while for lumpy skin disease the risk was 28%.4 Travellers must now pass through 20 biosecurity touchpoints, including sanitation foot mats, passenger profiling, roaming biosecurity officers, x-ray/manual inspections and detector dogs.

An outbreak in Australia would result in the immediate loss of the export market for red meat and livestock and could cost the economy AUD 80 billion.5 On top of slaughtering animals, farms may be forced to lay off workers and would struggle to pay their supply chains. If FMD is detected in one animal, the entire herd, and possibly any herds in the area, will be slaughtered, and the government will likely enforce a 72-hour movement restriction across Australia.

New Zealand depends on agriculture, with its six million dairy cows and four million beef cattle, a widespread foot and mouth outbreak could have an estimated direct economic impact of around NZD 10 billion.6


The risk of outbreak has prompted an increase in enquiries regarding coverage from the region, but some clients have also been unaware they could purchase an insurance product that can respond to an FMD outbreak.

A FMD policy could offer some indemnity for the insured to help with the costs associated with a FMD outbreak. It could also help the insured recover the shortfall in government compensation up to a stated amount per animal. It is worth considering FMD cover if you want to help offset the financial burden a FMD outbreak could bring.

A more collaborative approach

Currently the Australian government’s level of compensation may not be clear enough. While statements in the media indicate its desire to provide generous financial support to the agricultural industry in the event of an outbreak, how much an infected farm can expect to receive will be dependent on the spread of the disease and what the government deems the animals to be worth at the time. Funds may also take some time to be paid – yet farms will likely need an immediate cash injection to ensure they can start operating again.

The UK outbreak of FMD in 2001 ravaged its agricultural industry. Caused by pigs being fed untreated swill, it led to the slaughter of six million sheep and cattle and the total cost to the nation was estimated to be more than GBP 8 billion (GBP 12.1 billion today).7 Today, FMD is a core insurance product for a majority of UK farms.

Gallagher wants to work with insurance markets covering risks in Australasia to establish a policy with a “forever outlook” on FMD. We want to help prevent a situation where clients could feel forced to panic-buy policies with potentially limited coverage in response to an outbreak. We can support clients in establishing a long-term insurance buying pattern, which would allow us to offer negotiable rates and broader cover. In our experience, there is currently limited capacity and appetite for a long-term solution and our approach will only be possible with the cooperation of the industry and insurers. Clients cannot purchase cover against all infectious diseases; therefore, they must examine their risk profile and ascertain where there is a sound rationale for purchasing insurance – in Australia’s case, it could be for FMD and lumpy skin.


The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher (UK) Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.