Cyclones are part of the farming landscape in Queensland and as the cyclone season begins this week, farmers are looking at their risk management tools to manage uncertainty and maintain business viability. Where insurance is concerned, calls for tax incentives to entice more farmers to take out multi-peril crop insurance (MPCI) are positive. However they are only one piece of the puzzle to progress the insurance market.
The Queensland Farmers’ Federation continues to push for innovation and development in crop insurance options to better equip farmers for the vagaries of life on the land. Through the Queensland government’s Drought and Climate Adaptation Program, QFF, the University of Southern Queensland and Willis Towers Watson are assessing and modelling parametric insurance options for farmers across the state. Cyclone insurance has been developed and could be taken up by anyone who wants to protect against cyclone risk.
Parametric insurance differs from traditional forms of insurance in that payouts are not determined by actual losses on farm and do not require proof of damage. Simply, a payout results if a pre-agreed trigger event, such as a cyclone occurs. QFF has been testing the application of cyclone insurance on a number of farms. It is expected some sophisticated farm businesses will consider using this pilot product for the upcoming cyclone season, with broader interest expected over the next 12 months as understanding increases.
QFF is currently developing case study examples of how the cyclone insurance product works across different crops in different locations. The more the product can be tested, the more it can be understood and determined if what is on offer is right for farmers. For more information visit the insurance page on the QFF website or to participate in the project contact QFF project manager Ross Henry on 0455 025 250 or at firstname.lastname@example.org.
Agricultural insurance remains an underdeveloped risk management tool for farmers. But with the right policy settings, government support to remove stamp duty on premiums, strategic investment in weather infrastructure and funding to support QFF’s work, options will increase. – Stuart Armitage, QFF president