New in­sur­ance models

Re­search wel­comed, but farm­ers not con­vinced of value for money

Gatton Star - - INTO RURAL - Dominic Elsome dominic.elsome@gat­ton­star.com.au

RE­SEARCHERS at Univer­sity of South­ern Queens­land have part­nered with the in­sur­ance in­dus­try and Queens­land Farm­ers’ Fed­er­a­tion to bet­ter un­der­stand the risks farm­ers are ex­posed to and pro­duce more ef­fec­tive crop in­sur­ance prod­ucts – and while farm­ers are in­ter­ested, a lot of ques­tions re­main.

USQ Deputy director of the Cen­tre for Ap­plied Cli­mate Sci­ences as­so­ciate pro­fes­sor Shah­baz Mush­taq said the project hoped to pro­duce in­sur­ance poli­cies that farm­ers would not only use but could also af­ford.

“We want to make sure that what we achieve is cheaper, af­ford­able and sus­tain­able and are re­ally tar­geted in­sur­ance prod­ucts,” Prof Mush­taq said.

He said in­sur­ance com­pa­nies had pre­vi­ously lacked an un­der­stand­ing of farm­ers’ risks, and this in­creased the prices.

One of the key find­ings to date has been the de­vel­op­ment of para­met­ric poli­cies – in­sur­ance prod­ucts that pay out an agreed cov­er­age when a pre­de­ter­mined ‘trig­ger’ oc­curs.

Prof Mush­taq gave an ex­am­ple of a pol­icy where if there were three con­sec­u­tive days of rain­fall above 5mm dur­ing har­vest sea­son, a farmer would be el­i­gi­ble to ac­cess a pay­out for lost in­come due to be­ing un­able to har­vest as a re­sult of the rain­fall.

While most of the re­search has so far fo­cused on su­gar­cane pro­duc­tion, sim­i­lar prod­ucts could also be de­vel­oped for Lock­yer Val­ley grow­ers.

But, many re­main scep­ti­cal.

Blen­heim farmer Linda Lerch said while the re­search was thought pro­vok­ing, a lot of ques­tions re­mained. “The big ques­tion is – what’s it go­ing to cost?” she said.

Ms Lerch said even if the costs of new prod­ucts were re­duced, many farm­ers would still strug­gle to jus­tify the ex­pense.

“The profit mar­gin in farm­ing is so low,” she said.

“I’m al­ready spend­ing on in­sur­ance for build­ings, ma­chin­ery, pub­lic li­a­bil­ity, ma­chin­ery break­downs. I’m spend­ing about $25,000 a year al­ready, and you have to have in­sur­ance on that sort of stuff.”

She also ques­tioned how the ‘trig­ger’ would be de­ter­mined and mon­i­tored, adding that flood in­sur­ance would be par­tic­u­larly tricky.

“You might have 10 inches of rain at the head of the creek and not a drop here, but you still get the flood.”

PHOTO: DOMINIC ELSOME

COUNT­ING COSTS: Blen­heim farmer Linda Lerch’s Laidley farm was se­verely af­fected by flood­ing as a re­sult of Cy­clone Deb­bie in March last year, and while she is in­ter­ested in new in­sur­ance prod­ucts, she said it all came down to cost.

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