When it comes to extreme weather events in Queensland, it's not a matter of if, but when. With destructive bushfires burning, cyclone season well under way and a protracted drought continuing across the state, farmers can never be too prepared. But a recent report by global brokerage firm Gallagher has predicted that it will become more challenging for farmers to take out crop insurance, as lenders deem the sector 'too risky'. A probable increase of premiums and gaps in the market leading to growers who either can't access cover or can only access limited cover for their crops, means that underinsurance will likely be unavoidable.
The Queensland Farmers' Federation continues to push for innovation and development in crop insurance options to fill those coverage gaps and better equip farmers for the vagaries of life on the land.
Through the Queensland Government's 'Drought and Climate Adaptation Program' QFF, the University of Southern Queensland and Willis Towers Watson are assessing and modelling parametric insurance options for farmers across the state. Together with Queensland's agriculture industries, we intend to move forward with a pilot program and establish a Discretionary Mutual Fund (DMF) to pool risk, reduce the cost of parametric cyclone insurance and provide farmers with a long-term industry owned tool for managing risk.
With climate projections suggesting more frequent and extreme weather events, farmers are looking to better understand, develop and adopt risk management strategies to manage uncertainty and maintain business continuity. Insurance has an important role to play, but there is work to do to develop appropriate insurance products for Queensland's primary commodities and provide more affordable and relevant insurance options for farmers.
Agricultural insurance remains an underdeveloped risk management tool for farmers, but with the right policy settings, government support to remove stamp duty on premiums as a priority, strategic investment in weather infrastructure and funding to support QFF's and our partners' work, viable options will increase.
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