New player in frost insurance

Arquus, the new company set up by agricultural data expert Richard Riddle and backed by SRG Corporate, has joined other crop and multi-peril crop insurance (MPCI) providers such as Latevo and Sure Season in offering frost insurance, which has seen a revival of interest following the impact of frost across the State in 2016.

However, SRG account director Norm Trethewey said the new product differed from other traditional MPCI products on the market as there was no indemnity clause to prove yield losses and it was weather, not yield, based.

Mr Trethewey said index-based weather insurance allowed a company or grower to insure against adverse weather conditions such as cyclones, drought and frost by tying a claim to weather data obtained from the Bureau of Meteorology (BoM).

If the agreed-upon rainfall doesn't eventuate in the nominated time period, or if a certain amount of minimum temperature days occur, growers can make a claim.

"The methodology struck me as being easily converted to other industries that have a weather sensitivity and most do," he said.

"It is totally transparent and objective - there is no quibble or no debate as it's based on the weather data."

The product has been used extensively for more than two decades in Australia, predominantly by big energy suppliers and producers, however mining companies such as Roy Hill have also put in place similar solutions to protect against cyclones.

While the product has also been used by corporate farmers in the past, this year will be the first time it is being offered to smaller or individual farmers.

Mr Riddle, who has extensive background in agricultural data and developed the Crop Manager program, said it was this experience and data that helped form the basis of Arquus' Protect and Prosper insurance product.

"I used to use the throw-away line that we knew everything on what was going to happen with the plant but the only thing we didn't know was what was happening with the weather," Mr Riddle said.

"That's the issue and the only way to solve that is bring in some form of investment or insurance for growers."

Mr Riddle said the product was designed so growers could take out insurance at certain times in the season, such as opening or finishing rains and for minimum air temperature, for a set-date period.

"It's a risk management process as opposed to an insurance because it allows farmers to invest in their paddock for the long-term," he said.

"The problems that growers have had with other multi-peril insurance products is that they are yield-based so as soon as you are looking like you might claim, you walk away from the paddock and you're not encouraged to keep on going.

"What we are saying is that if there's not enough rainfall you're going to get a payout but what is in the paddock belongs to the farmer so keep on farming and investing in it."

He said the company worked with growers throughout the season, allowing them to adjust insurance cover as needed.

For example, growers may want to ensure only for the start of the season to insure opening rains fell or during the key frost periods and towards the end of the season for finishing rains.

"That's the difference - we look at the weather events and how those weather events affect the season at the critical stages," he said.

"Frost is a unique beast but we've done a lot of work in the frost areas and we know the patterns.

"What varies from place to place is the trigger minimum temperature, so that's one of the reasons why we work with the grower to go through their data and relate these frost events back to the minimum temperature and tie those events to grid data or BoM data.

"If your risk is frost you can insure against that frost so that you could at least make sure that you can move ahead and out the debt position that you may be in and then move forward.

"That's why we call it protect and prosper because it allows you to do that."

While some areas may be considered uninsurable due to high-frost risk or drought, Mr Riddle said it could lead to growers looking at different options such as changing to a later seeding timing or crop variety to mitigate that risk.

"We can't influence what happens with the rain but we can influence what happens when it hits the ground," he said.

"We can invest in the soil to make that rain go that much further.

"Those are the kind of things that we're encouraging."