Margin Insurance the way of the future?

[gustgd]

Full disclosure. I liked it so much I bought the
company. Well about 2%. So when ou pay your
premium I might get a beer out of it.

I think that with the gutting of agristability and the
problems that Sk crop insurance has GARS is a
much more bankable program. We do use it as
security on our line of credit with Affinity Credit
Union.

As far as only picking "good" farmers, or farmers
who have historically good margins. If you we're
using your own money who would you insure?

If you think it's worth the effort to get a quote take
a look. If your books are good you might have a
very good quote for $100 worth of coverage over
your gross margin. If your books aren't as good or
your margins are down maybe they will only cover
you for expenses, or maybe not at all.

Best way I have heard it described is not all good
farmers are in GARS but 100% of poor farmers
are in crop insurance.

One of the "best" farmers I know self insures and
doesn't see the value. Yet he is also the only guy
I knows who writes a cheque to fill his war chest.

[Hopperbin]

If the gov't does not help out this insurance company then how can they compete with crop ins. does crop ins have such waste? Anyway as a farmer that have gone completely without insurance in the past I have a hard time getting around how gars can do it as I think I should be able to self insure, I am in a high risk business so I don't get myself into the position where I cannot handle some sort of 2 year problem, been through frosts, droughts, 6 inch down pours at the worst of times, high inputs, low comodity prices, hail, wind, divorce, people not showing up for work or quitting, shit happening, pretty sure missed a few things. I think I can handle self insuring maybe in the end I will be better off as possibly some corp like gars is not making money off of me. guess it would not hurt to check them out as on the video it does not cost anything to check them out. Maybe the accountant would send a small charge. for anyone who is using them how well and thorough do they audit the farmers they insure as It seems there is room for fraud here with inputs and such.

[cottonpicken]

You own 2%

Really .............

[mbratrud]

We had to provide 7 years of Accrued financial statements.

Just to give a little more detail. If I cover myself for 80% crop insurance with my 1/3 pulse 1/3 Oilseed 1/3 Cereal crop basket my average cost would be about $14 per acre. Gars comes in at just over $15 and that would be for $100 Margin of Seed, Fert and Chem costs.

Every farm is going to be different on quote and Margins and Yes Freewheat some are unlucky we seeded 80% in 2010 and 45% in 2011. I believe thats why they look for 7 years of Numbers, to try and get the real picture about your op.

As for self insuring as a young farmer heavily in debt I cannot afford to self insure. Or rather in light that I have yet to make a major crop insurance or Agristabilty claim, a can't afford to find out if I can self insure.

If you make on average Between $150 - $250 over the cost of your seed Fert and Chem it is worth getting a quote from GARS IMHO.

[freewheat]

So using gars 100 dollar margin coverage
over seed, chem, fert, at 15 an acre,
how does your regular crop insurance
stand in terms of comparison, mbratrud?

Because for my farm, my crop insurance
would give me a lot more than 100 dollar
basic margin over expenses at least at
this years numbers. And for less than 14
bucks an acre, closer to 10. Canola at
80% other crops 50 - 70% depending on
crop.

My point is, to get 100 dollars coverage
it is 15 buck premium, correct? So is it
exponential if you go for 200 dollar
coverage, or is it linear progression?
IE if 100 costs 15, would 200 cost 30?
Or more like 23 or something???

The irony for my farm, is that because
of 4 years in 6 unseedable to wet, my
yields, and experience discounts were
not affected, and so I have fairly
strong coverage for yields.

With current coverage levels on my farm,
agstability is simply not gonna happen.

Unless gars has competetive premiums for
same coverage, how will they compete? It
is too bad if they can not.

[Hopperbin]

Trying to clearify are they insuring you for your expenses only? Or your gross margin only of say 150 dollars over the seed fert chem fuel wages etc. Or both? There is something there for increased expenses not really clear to me. For 15 dollars per acre they would not be charging enough for my farm. What margin decline and margin of what would you need to trigger a payment? OK 15 dollars per acre on my 4000 acre farm is 60,000 per year or 600,000 per 10 years. Or 1.2 million in my 20 years left farming. What is the triggers for payments may as well tell us now, why go through all the rigamaro?

[rhoff]

From what I have heard some of the main banks
are looking at lending against gars. To Wd9 I
have to ask why on earth would you criticize
somebody for spending money to manage there
risk? Every good business that lasts manages its
risk. WD9 would have fit in well with the corporate
culture of Lehman bros. and Bear Stearns.sure
you sound like a real hero but that won't mean
much when all your prudent neighbors pick over
your farm after you become inssolvent because of
a crop failure.

[freewheat]

Thought of another thing though. So gars
would cover this margin, regardless of if
you use ridiculous amounts of fertilizer
for example? Even if it makes no sense?
The margin would allow for really pushing
yields then would it not?

Which could be a good thing to an
extent...

[Hopperbin]

there must be some sort of margin decline trigger worked into the formula also just guessing. And am pretty sure gus is right to invest in an insurance company cause they have the numbers all figured out. There is more to it than meets the eye here.

[mbratrud]

So to Clarify if I spend $150 per acre on Seed/Fert and Chem and buy $100 Margin I am covered for $250 per acre on a 4000 acre farm that is $1000000 coverage. What triggers a payment anything that causes my numbers to bellow that. Frost, Drought, Flooding, Price Callapse.

Your quote always atarts with your expenses, which could cost you say $5 - 10 per acre depending on the farms strength. then you can buy $25,$50,$75 or $100 Margin. the little over $15 i refered to in our case would be for expense plus $100 Margin.

Freewheat, Bingo if you have this Insurance it covers those costs and allow you to focus on production, instead of holding back on Fert if you are concerned about drought for example you can go ahead and put the groceries down to grow a good crop.

The more research I do the more GARS makes sense, but It still makes sense to carry 50% crop insurance. If anything cut back on Hail.

Somthing else i like about GARS is its stand alone so benefits from other insurance sources don't hurt your benefit with GARS in the case of a claim.

As far as GARS abilities to handle a catostrphic event, all the insurance is reinsured, through at least 9 large multi nationals.

Leaning heavily towards GARS right now, they are working on getting premiums lowered, and are talking to reinsurers over the next while. Likely won't be making official quotes until Dec, so they say. My quote was using last years numbers which they are very hopefull will be better come Dec.

[mbratrud]

Hopper, There is no doubt they are out there to make money, and that is why they are a bit more selective on who they offer insurance to. My chances of collecting will be extreemly low, but at the end of the day If i know X$ coming in regardless what happens does give peace of mind and the abiillty to make business decisions based on that. The best description I have heard it refered to as is business interuption insurance.

[freewheat]

Thanks for the info. I do feel more
inclined to look into them a bit more
with that info. I do know though, that
for now, crop insurance is cheaper, and
will cover for a fair amount more. But
as a stand alone program, of course I
could do both, if I choose. Is 100
margin their maximum coverage? I do also
like the price drop feature, heaven
knows we would take a beating if we saw
3 dollar wheat 8 dollar canola, and 2
dollar barley. regular crop insurance
would do diddly . I do like the push
your agronomy factor with no
limitations. I like pushing my land.

Some positives and some negatives. Less
negatives though than I originally
supposed.

[Hopperbin]

Arrrrg this makes no sense at all.

OK Mark you said,
Your quote always atarts with your expenses, which could cost you say $5 - 10 per acre depending on the farms strength. then you can buy $25,$50,$75 or $100 Margin. the little over $15 i refered to in our case would be for expense plus $100 Margin.

OK unless your margin is actually 150 in which case you cannot collect unless you drop below 100 margin is that correct? What was your margin would help to clearify?

so if that is so, then I can see how that can work for the insurance company, plus your accountant is going to charge you a fee also am I correct or is the ins company going to pay for that also. Anyways why don't they put it all on a website so one can decide for themselves before talking to them. I kinda don't like to do business that way as you know. Soon your talking to a high pressure sales man that only wants to make the sale, and has no skin in the game afterwards, sorta like FBC accountants firm works.

[mbratrud]

Insurance is the toughest dollars we spend on the farm it seems like a complete fn waste.

If you are well established farmer towards the end of you career maybe you can choose not to insure. Some day I hope to be in that position. For now though we are to valnurable to see all our hard work in our young farming careers to see something out of our control take it all away. So we have to do something even though it is a painfull check to write. All we can do is walk down the tool isle and decide which ones are best for our toolbox.

[mbratrud]

Yes so Hopper, Your Margin is dollars over your seed fert and chem costs. It makes total sense that they just use these three, most consistant costs between farms. So if your 1000 acre farm sells $300000 worth of Grain and your Chem/Fert/Seed costs are $100000 your Margin is $200000 or $200 per acre. If you were insure through Gars at cost $100 Margin using those Numbers I would be insured for $200000. Now if it was too wet and I didn't seed and only had a little Chem bill for the year my coverage is $100 margin plus the Chem bill. Clear like mud? Thay have actually made it very easy to administer, if you are already using Accruel accounting its really easy.