As if almost like clockwork, during the lead-in to every new year’s cropping season there is the inevitable discussion about crop insurance, in particular multi-peril crop insurance (MPCI). For many in the agricultural sector, the prospect of an attractive and affordable multi-peril insurance product is nothing more than an ‘old chestnut’ rolled time and time again.
For intensive agriculture, the long running discussion has not led to anything new and insuring against multiple perils is still only available for a select few winter commodities. For example, insurance products to help horticultural farmers ride out the unpredictable Queensland weather for the hundreds of high value crops they produce remain non-existent. Positively, there finally appears to be some momentum to properly develop insurance products that push the boundaries of traditional MPCI and give flexible options to a wider audience.
Governments, both state and federal, are showing a greater appetite to support the development of agricultural insurance. Currently the federal government offers a $2500 rebate for undertaking the assessment required by a multi-peril crop insurance provider or for analysing insurance options. Reports also indicate that the NSW government is considering recommendations from an Independent Pricing and Regulatory Commission (IPART) report to subsidise multi-peril insurance premiums – 50 per cent for the first two years capped at $30,000 per farm, falling to 25pc for next three years.
In Queensland, the state government is funding a joint project between the University of Southern Queensland (USQ), the Queensland Farmers’ Federation (QFF) and global reinsurer Willis Towers Watson. The research project has been designed to enable clear recommendations to be provided to agricultural industries, the insurance industry, and governments on how a more liquid and viable market for agricultural insurance products can be established and maintained for Australian rural industries. The project will focus on improving and expanding current insurance options available to cotton and cane growers, with an end goal to ‘road test’ any potential identified products. Cotton and cane growers interested in being a part of this project should contact the QFF office.
Although the level of funding for this research project is initially minor, it has importantly brought government, the agricultural sector, researchers and the insurance industry together with the express purpose to investigate product viability. Involving all key stakeholders in the development of new products with a focus on the end user increases the chance of getting the right products.
Continued collaborative effort will be required to create and expand a viable agriculture insurance industry. For its part, government must acknowledge that it has a longer term role to play in helping to maintain the current momentum. Continued investment in enhancing the information needed to support decision making that can facilitate new and existing product development, particularly for those commodities where options do not currently exist, is appropriate and will be important. By developing a broad range of sustainable insurance products, farmers will have better access to appropriate risk management tools for Queensland’s varied weather and climate events, which in turn will contribute to improved long term stability and outcomes for the agriculture sector.
Even though the ongoing ‘talk’ of multi-peril possibilities may continue to test the faith of many in the agricultural sector, be assured that progress continues to prove that ‘old chestnut’ wrong.
