Cost of Crop Insurance

[tweety]

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

There shouldn't even be insurance - especially with the huge government subsidy - and only costly private if you wanted it. It would be the best risk management strategy ever to hit agriculture.

This guaranteed income crap just makes the herd weak.

[malleefarmer]

We had a company run a series of insurance seminars exact same set up but our govt doesn't pay a razoo all funded by farmers.

Depending on coverage could amount to 10% of your cropping costs.

Another stumbling block was a $10,000 one of audit fee of your finances and farm business and yields, going back 5 years.If figures stacked up they would insure you.

[farmaholic]

We aren't in GARS or Crop Insurance. A neighbor said I should join and build my own average by just insuring one small acreage crop each year....because the reports you would send in would have the results of all crops you grow every year. That really isn't insuring against a major loss but only establishing your own averages and premium discount if there's no claims. Depending on how they start increasing your own averages against area's. ...by the examples posted here it may take too long. Unless they would allow us to build our own averages using very accurate Ag-Stability inventory reporting numbers.

I am embarrassed to admit we are still in Ag-Stab. Its useless but better than nothing although not by much! Hopping in and out would be a pain in the ass having to submit unreported numbers of previous years when you wanted back in. Also, in case there was ever anything ad-hoc(wishful thinking these days) all the info would be on file. Although numbers need to be submitted for AgInvest anyway. Premium is a small fraction of what our Crop Ins premium would be so its not like I'm spending a pile. Strong financials enables us to more or less self insure. ...although I understand lending institutions don't make that an option for everyone....they want you to cover their ass in their investment in you--makes sense.

Insurance isn't supposed to be "profitable".....for the insured!

[farmaholic]

I guess its risk management. ....so I guess I never had to manage that much risk over the years that I felt the need or was forced to take Crop Ins. But we did increase the farm size by three times and bought iron over the years using borrowed money. Wasn't operating on the edge of a cliff I guess!

I think its time to move closer to the edge again....but should it be on or off farm?

[farming101]

Sure Tweety sure

Do everything right and the hail storm will go somewhere else. Oh boy

1.278 billion is due the SCIC from the GRF

[Klause]

Sure tweety...


Except that the supposed 3rd we pay is actually more like a whole and plus some. SCIC actually provides money to the government... and not the other way around.


Farmer premiums pay into a profitable business (for the government)


Insurance doesn't need to be profitable but if it doesn't cover your expenses what's the point?

If you've been farming for 30 years growing crops on summer fallow and and little input expenses you get rewarded with low premiums and still decent for your management style coverage.


If you're a high input high production farmer and you started recently you get shorty coverage and rediculous premiums.

What am I missing here?


When 42 inches of rain floods out your crop or two hail storms in two weeks roll through your farm that's not really something you can plan for or manage through...

[farmaholic]

I don't think you're missing much Klause.

Also... Ya, I think this is going to be a tough year on the Government's commitment to 2016 crop insurance.

[bucket]

Klaus and farmaholic

The provincial deficit in the news has been mentioning the cost of crop insurance payments.


No mention of premiums contributing to revenues in previous years.

Lyle Stewart saying what exports were worth last year.

My thoughts.....agriculture is worth protecting. 1 in 8 jobs.


Probably worth more to the Canadian economy than the intervenous money fed Bombardier. ....yes I said that in my outside voice.

[Klause]

I think it's more than 1 in 8 when counting the value chain.


I know here in Humboldt the dealerships have been very quiet... as have input suppliers and the rest of our um service providers.

[Guest]

The problem with crop ins is when youre young and really need the protection its not there because you need to build it up . It sure helped us out this year with the kick in the nuts we recieved . As i said before we are covered for $435 /ac on canola for quite a reasonable premium , i think $11/ac .interesting though , we did not collect on regular canola , but sure did on IP canola .i wouldnt dream of dropping it unless we have a few uears like this and premiums become to high . But its to bad it wasnt geared more to help the young guys starting out . I agree somewhat that you cant be completely covered . There has to be some incentive to farm to the best of your ability .i remember years ago watching farmers "farm crop insurance" until they couldnt anymore !

[Guest]

and I dont believe for a minute that govt is paying half tge premium .as klause it is a profitable venture for govt and then they whine with one bad year

[Klause]

They "pay" a premium as any investor would... however they also get revenue back as profits.

Right now the SCIC is owed over 1.2 Billion from Sask's GRF (general revenue fund)


Interestingly if you look at a premiumayout ratio agristability pays out better than crop insurance.

[AlbertaFarmer5]

They "pay" a premium as any investor would... however they also get revenue back as profits.

Right now the SCIC is owed over 1.2 Billion from Sask's GRF (general revenue fund)


Interestingly if you look at a premiumayout ratio agristability pays out better than crop insurance.

Now that is the numbers I was looking for. So in Sask, every producer should receive double what they pay in premiums over the long term.

Insurance shouldn't be profitable, but when government covers 2/3 of the premium, it should be very profitable. Most insurance companies pay out more than the premiums due to investment income. So why does no on admit to making money on crop insurance? Someone must be making a fortune, it is no one I know.

[dmlfarmer]

Interesting numbers in the charts. Based on these numbers a number of points are clear:
-Taxpayers subside the crop insurance of Sask farmers to the tune of 60%! (compare premiums to the government transfers under revenues; or to total revenues)

-Farmers receive more in indemnity payments for losses than what they pay in premiums! (compare first line under revenues with first line under expenses)

-Farmers should not expect to make money from insurance even though indemnity payments exceed premiums. (just like fire insurance on a house, it is only when there is a loss that you receive payment. Most people will not lose their house to a fire therefore will never collect and for those few unfortunately to lose their home to a fire it is likely the value to replace their house would be more than the total premiums paid over time.)

-But the most interesting question arising from the data is why with a 1.302 Billion dollar accumulated surplus as of March 31, 2016 SCIC continues to budget for a surplus. It could be they are building a nest egg in case of a province wide total crop failure in which case the 1.3 billion surplus would not cover the entire crop loss (grain receipts for Sask I believe are more than 8 billion annually and even if just those carrying crop insurance were paid for losses it would likely exceed the fund. But you also need to remember that SCIC reinsures to cover such disasters so this should not be needed.

-Or is it a case that SCIC and the Government of Saskatchewan are actually using shell game tactics to rip of the tax payers of Canada. If they inflate the premiums of farmers, (who pay roughly 40%) then the government portion can also be increased. The feds are committed to roughly 67% of governmental contributions. So by overcharging farmers they can inflate the federal contribution enough to offset the Saskatchewan commitment thereby nullifying the entire cost of crop insurance to Saskatchewan taxpayers. As a result farmers end up paying a a little more, the feds pay a lot more, and Saskatchewan taxpayers pay nothing. Great Ponzi scheme! And only possible if SCIC surpluses go to the GRF which Klause claims they do.

[Klause]

Here's the proof from the same annual report.

Now in the event of a huge claim like frost or drought or another mega flood... the re-insurers are the ones on the hook... and the

Profit stays with the government so basically the province is making profits in the backs of the federal government and sask producers?