New push for crop insurance
An insurance revolution is underway in WA as the private sector and the Government band together to kick-start risk management insurance.
This year’s failed season renewed calls for a risk management crop insurance scheme, but hopes appeared to be dashed after Agriculture Minister Terry Redman repeatedly ruled out the Government underwriting any schemes.
But unknown to most farmers, two risk management insurance products were already on the market and the Department of Agriculture and Food WA (DAFWA) has been working towards facilitating other schemes most of this year.
Yield Shield, from the Primacy Underwriting Agency, which insures against yield losses from too much or not enough rain, was launched in 2009 without fanfare.
The company’s Peter Book said it had been trialled for three years in WA as a pilot until they could determine how the market would receive it.
The product uses an agronomic yield simulation model to determine yield potential based on rainfall received up until June or July.
Meanwhile, Weatherpro has been pricing in WA for eight months and offers a range of weather-based certificates for industries ranging from agriculture to events and construction.
Its dry season certificate pays a pre-defined amount for every millimetre of rainfall below a specified level.
Corporate relations manager Jonathon Barratt said the company was “feeling its way in WA”.
“For us we felt that it’s always been very hard for insurance companies to price these products,” he said.
“If it was industry specific we might not get the uptake we need.
“With a generalised weather product it covers all industries and that makes the numbers work.”
Behind the scenes, DAFWA has been chipping away at examining how these types of schemes fit the needs of farmers through a taskforce of economists and data analysts.
DAFWA Grains Industry executive director Peter Metcalfe said the industry had moved on from the idea of a multi-peril crop insurance scheme and had more certainty on the Government’s role.
“There is a very clear role for government (to) provide access to data and independent analysts, assist with weather station infrastructure and assist with developing crop models to underpin those,” he said.
That includes rolling out in excess of 50 new weather stations to improve data collection, with the Government in the process of securing funds, and working with YieldShield on a yield model for WA conditions.
But while there are two insurance products already operating in WA, Mr Metcalfe said there was probably room in the market for another four, including something similar to the cost of production model touted earlier this year by Liberal MLC Nigel Hallett who believes that deregulation and seasonal variability had prompted industry to look at how to manage risk.
But insurance schemes aren’t a silver bullet.
“Some people are of the view that insurance will fix all of the problems,” Mr Metcalfe said.
“That’s not the case and this will just be another risk management strategy on top of the others already employed by farmers.”
Get the latest news from thewest.com.au in your inbox.
Sign up for our emails