A NEW form of crop income protection launched by Landmark recently is set to change the mood of farming, by potentially relieving the pressure associated with trying to grow a successful crop every year against the vagaries of market trends and weather events.
The product, which focuses on wheat, barley and canola crops, is being offered by Landmark through insurer WFI and its parent company IAG, Australia’s largest insurer.
Speaking at an invitation-only soft launch for growers and industry professionals in Subiaco recently IAG/WFI national portfolio manager – rural insurance Phil Heath said in acknowledgement of the high rates of depression and suicide in farming communities, and in alignment with his company’s desire to do something about it, they had been delighted to work with WFI and pilot farmers on this product which could directly reduce stress levels.
Mr Heath said Landmark’s resulting Crop Income Protection (CIP) package allowed growers to insure by variety, all or part of a crop with yields based on the property’s five year average and an assumption of four good years and one bad year in that period.
“Unlike a lot of other insurers we don’t require your annual P & L statements, just proof of your average yields over the past five years,” Mr Heath said.
“Once we have this information we can, via our app, give you a free quote in 15 to 30 minutes.”
Participating growers will be insured for a guaranteed yield which includes cover for weather events such as frost, fire, flood, drought and hail, even insect attack and more.
In the event of a claim the insurer would pay out any deficit to the guaranteed yield versus the achieved yield.
Mr Heath said the system relied on geographic diversity and there was limited capacity in each of the designated shires with a fixed-dollar amount allocated to each shire for take-up on a strictly first-in, first-served basis.
“This dollar amount varies from shire to shire and may vary from year to year but it is a finite amount and once the quota in any given shire is used up in any given year then that is it,” Mr Heath said.
In addition he said premiums savings could be activated by lowering price or yield parameters.
“This is a risk management tool and we are looking for annual subscribers, not those who opt in in bad years and jump out in good years, so we will incentivise renewals.”
Mr Heath said the product had been piloted in WA, South Australia, Victoria and New South Wales over the past 12 months and it was now ready for the market.
Questions from the audience focused on proposed costs of premiums and specifics on payouts.
With regard to premiums Mr Heath said growers would be given a ball-park figure based on the information they provided, but they had the ability to lower premiums by lowering their yield and tonnage price parameters.
One attendee queried the rule of thumb pricing.
“If I insure 35 per cent of my crop what is the cost?” he asked.
“Is it 10pc, 20pc or what?”
Mr Heath said it would be much less than 10pc.
Another question related to the scenario of this year where a number of northern growers had already sprayed out poor crops because of the ordinary season.
“We reserve the right to do an audit at any time and it is up to you, the grower, to maintain good farm management practices,” Mr Heath said.
“If the crop is a write-off then you will be paid accordingly.
“But if you have turned the paddock over to another use such as cutting it for hay after frost or to agistment, we will take the income from this into account at settlement.
“This is not about super-normal profits for you or for us, it is to tide you over year-to-year,” Mr Heath said.
