AgriRisk clients have always shown great interest in Multi Peril Crop Insurance (MPCI) that is available in a number of other countries, but not here in Australia. As the name implies, MPCI policies cover a broad range of perils and as a result comprehensively underpins a grower’s revenues.
So why haven’t we seen MPCI policies in Australia? The simplest answer is that because of the inherent volatility associated with agricultural production, they are expensive to provide, and as a consequence have really only been successful in countries where governments have subsidised premium costs. In the US for example, the level of subsidy provided by the Government is around 60% of the premium, last year costing the Government some US$7 billion!
The question is will the Australian Government ever come to the rescue of Australian primary producers? AgriRisk believes that this is highly unlikely given the public policy track records of both major sides of politics and the limited number of votes it would generate.
However, things appear to be changing. CBH in Western Australia is working with Swiss Re and The Climate Corporation to produce an MPCI program. We don’t know whether this program will be a traditional insurance program or a derivative but certainly they are working on the concept for a 2014 launch.
Latevo International has announced they have an MPCI program available for the current season. The product is based on a grower’s crop revenues as outlined in their financial records. There are three different levels of coverage and the product will be underwritten by Allianz.
AgriRisk will keep you updated on these products, but if you have any questions in the meantime, please contact John van der Vegt.