International provider to cover growers
The details of the long-awaited risk mitigation insurance were unveiled at last week’s WAFarmers Annual Conference.
Last month CBH announced that as part of the Risk Mitigation Committee it would be launching an insurance scheme.
Last week it was announced international insurance provider Willis was backing the scheme.
CBH chief risk officer Rob Maurich said the company would be delivering the product through a newly established discretionary mutual fund called CBH Mutual.
The co-operative has committed $10 million of capital at risk to get the insurance off the ground.
Growers will be able to insure between 30 and 60 per cent of their total wheat and barley production, using the average 10-year yield and location of plantings to determine a cost.
Premiums for high-risk areas will be higher and for the time being the price per tonne of both cereals is locked in at $250 a tonne.
For example, a cropper at Kondinin who is planting 500 hectares of wheat averaging 1.5 tonnes and 500ha of barley averaging two tonnes will have premium of $9.44/ha if insuring at a rate of 50 per cent.
For a total production loss the payout would be $228,750. But while croppers might be able to apply for the insurance, not every grower would be accepted.
Speaking at the conference, Mr Maurich said growers could apply online and offers of acceptance would be sent out at the end of April.
Between 10 and 15 per cent of growers will be eligible for cover and payment is required by May 20.
“There is one very clear reason why we need to do this,” Mr Maurich said.
“The main risk we face with this type of product is that all the guys in one particular shire apply, and no-one else across the State does. We’re trying to avoid that because what makes this product work is its spread across the State.
“This is a trial basis this year, we’re not trying to go out and cover the whole State. If we need to tweak things at all we (will) welcome feedback during the year.”
Because CBH Mutual is a discretionary mutual fund it doesn’t attract sales tax and Mr Maurich said would be 10 to 11 per cent cheaper than other insurance policies.
“The members of CBH Mutual are the members who take out the policies of the mutual – they’re not CBH members,” he said.
“The profits and benefits of the mutual flow back to its members.”
For Newdegate grower and WAFarmers Corrigin-Lake Grace zone president Bob Iffla the insurance product represents the culmination of more than a decade of lobbying for a multi-peril crop insurance program.
“We’ve come a long way and it’s been 12 years in the making,” he said.
“The security it will give to farmers is well noted — it will give us farmers the security that is needed to plant crops.”
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