Cost of Crop Insurance

[AlbertaFarmer5]

Read through the thread on GARS and crop insurance, and today the AFSC Yeild magazine arrived. According to their own numbers the total premium collected in 2016 amounted to $464,986,000 And Total indemnities paid to insurance clients was $358,700,000. So premiums exceed indemnities by over $100,000,000.

It doesn't indicate if the total premiums includes the government portion, I assume it does? So if farmers portion is 1/3, then they paid $155,000,000 and got 2.3 times that much back $2.30 for every $1 invested. Does that sound accurate to anyone on the receiving end?

If it doesn't include government portion, then for every dollar paid in premiums, farmers got $0.77 back.

Either way AFSC has a tidy surplus, unless they have thousands of employees?


I've yet to meet anyone who consistently turns a profit from crop insurance, whereas in theory, in the long run farmers should all be getting nearly 3 times what we put into it.

[AlbertaFarmer5]

I'm in a similar situation as Klause in the other thread, no established yield history with AFSC, in an area where the supposed average yields are pathetic. I'm not in crop insurance for those two reasons, I would have to pay in for 5 years with almost no chance of collecting just to establish a yield history. I've had some of what I consider big catastrophes, but even then, yields wouldn't have been nearly low enough to trigger a payment.
My bank of course insists we carry crop insurance, so we have to conveniently miss the deadline every year, they have finally agreed with my assessment of the futility of investing in something which I cannot collect.

I would like to carry hail insurance, but the cost for straight hail is hard to justify, since it is not subsidized, and then I would be at the whim of the adjusters, instead, I can repurpose the crop and salvage as much value as possible, when I want.

[ajl]

You do realize that the primary purpose of crap insurance is to protect your competition from you competing with them. I am also well aware of the fact that crap insurance is subsidized by you and me. What I do is take 60% option with the hail endorsement. That way the premium is not too high and you can collect if you get some light hail coming through. I had some canola assessed last summer at 17% and did get a small payout. I do have some canola out in the field as well but have delivered enough to exceed my coverage so will not be receiving anything on what is still out there as well. So far the dry winter gives me hope to get most if it in April.

[Hopalong]

Recall a few years back when Alberta farmers used to pity (maybe crocodile tears) us in Sask for a less generous program. This was when Sask crop insurance ended spot loss hail coverage.

[GDR]

Here is my experience with afsc crop insurance. I started as a non believer at 50% coverage level but have bumped up a bit each year and now take 80% with extra straight hail on barley. It has become a significant input cost, I'm in the neighbor hood of $45 an acre on canola so it's pricey. Used to figure I was spread out enough that I should self insure, also have livestock so figure feed salvage an option too.

In 2009 we had a major hail storm cut a swath through central AB about 30 miles wide. I was 100% hailed out, adjuster never got out of the truck anywhere and we have land 15 miles apart. Only salvage we had was regrowth canola by mid October that we silaged. Got paid every dollar insured for. Not sure how I would have faired without it.

Generally I don't buy extended warranties, take minimal insurance on things with high deductibles etc. Crop insurance has been well worthwhile here, in the last 15 years I bet only 5 years we didn't receive more than the premium back. Overall way ahead on crop insurance but only once had a claim that wasn't hail related.

With hail I feel adjusters always are very generous. Farmers like to complain about their assessment and often hear "I only got 50%" yet come harvest their yields really aren't much different than unhailed fields.

Average yield is a problem till you get 6 or 7 years in, I don't think I grow the best crops in the area but my yields are likely 40% higher than their avg yields. Get audited every couple years and there reason is high yield audit.

Years like last year that started too dry then too wet then shitty harvest put a lot if stress on you whether you know it or not, also on your spouse, helps me sleep better knowing there is a minimum amount of revenue guaranteed. As others have said ag stability is useless.

My opinion, only way it makes sense to opt out is if you are a huge bto farming in multiple townships and farming with cash.

[sumdumguy]

I wish Sask Crop Insurance would go back to spot-loss hail coverage. It is criminal what hail insurance companies are getting away with now.

[bucket]

Wasn't that a saskparty election promise way back when?

[ajl]

Average yield can remain a problem for a long time if you get that crop flattening hail storm across your land in those first seven years. BTDT.

[Klause]

The problem is how they do yield calculations for crop insurance.


It's not Historical yield = 30; your yield = 40, so raise your individual yield by 10% per year till you hit 40.


No... what they do is


Your yield = 40;
Area yield that year = 39
Historical yield (used for your calclulations) = 30.



They go 40/39.5 = 1.013
so then your yield for the next next year (1 year lag built in) is
30 * 1.013 = 30.38

[makar]

I t can get more stupid than that klause, years ago i grew cps for the first time, area forty, my crop fifty, thought, my average was going up, wrong they cut me to 85%, they said i only grew 50 to an area average of 80. Records from themselves now show that years average was 50ish. Senseless.

[makar]

To clarify my 50 bushel crop took my 40 bushel area average to 85% of 40.

[Klause]

To clarify my 50 bushel crop took my 40 bushel area average to 85% of 40.

You're right! That's retarded.


The way it "should" work is the last five year average should be used as the base coverage, and the adjust the producer off of that... However, that would increase coverage way too much and make the program, though effective, too expensive.

[makar]

Now in alberta it seems to work better. Took years for me though.

[tweety]

So what do you want Klause?

If the government stopped paying 2/3 of the premium, would you still take crop ins?

[makar]

I think klause wants what i did twenty years ago, honest insurance based on real yields, why are you chipmunking.