Hail Insurance Sales Start Slow

SASKATOON - Jun 5/09 - SNS -- The Canadian Crop Hail Association reports that this year's hail insurance sales are off to a slow start, possibly influenced by rate hikes following two years of heavy claims in the industry.

Growers generally make their decision to buy hail insurance in the spring. With the cool weather this spring and the delayed development of crops, producers are just starting to make hail insurance decisions.

In Manitoba, excess moisture has seriously delayed seeding in a number of areas and some land will not be seeded. In western Saskatchewan and much of Alberta, dry conditions are a big concern. Without rain in the next couple weeks, many producers in the dry areas may reduce or forego hail insurance coverage.

With the slower start to the sales season, insurance purchase decisions may occur in a compressed time frame. The Canadian Crop Hail Association reminds producers that there are a number of advantages to getting hail insurance in place early in the growing season:

"Many companies have liability limits for specific areas, meaning they are likely to sell out. While industry wide capacity should not be an issue, capacity at the lowest premium cost could be. Buying early means a better chance at the lowest premium rates," the industry said in a press statement.

"Early storms before insurance is purchased can limit the opportunity to subsequently purchase hail insurance coverage. Buying insurance early does not cost any additional amount and it increases the length of time coverage is in effect."

Hail claims were high across the Canadian Prairies in 2007. In 2008, claims were high in Alberta and Saskatchewan. In those provinces, considerably more was paid out to producers in hail claims than was collected in premiums. In Manitoba, 2008 hail claims were relatively light.

As a result of the claim history, overall premium rates for 2009 are higher in Alberta and Saskatchewan, while rates in Manitoba are similar to last year.

Many companies, based on their claim history, have also increased the surcharges for specific crops. For instance, some companies have gone from a 1.75 to a 2.0 surcharge for canola. If the base premium rate in a particular township is 3.0 per cent, the actual rate on canola is 6.0 per cent (base rate of 3.0 per cent times the surcharge of 2.0).