The reserve at Alberta’s Crown crop insurance agency will be tapped to offset the premiums charged to farmers for the 2021 crop year, and possibly for longer.
The province’s Agriculture Financial Services Corp. (AFSC) said Monday its farmer customers will get a 20 per cent discount on crop insurance premiums this year — which on 2,000 insured acres, for example, would translate to about $8,000 in savings.
The corporation’s crop fund reserve “is now at a point where it can help support discounted premiums, without posing significant risk to the overall program,” AFSC said in a release.
That said, there’s still enough in the fund to “mitigate a major event, such as a province-wide disaster in 2021 or beyond,” the agency added.
In all, the move amounts to about $55 million in savings for farmers in the 2021 crop year, AFSC said.
The discount is to be applied to farmers’ net AgriInsurance premiums, including premiums paid for hail endorsement, spring price endorsement and moisture deficiency endorsement.
Any farmers whose perennial-crop billings have already been sent from AFSC will get a revised bill with the reduction applied, the agency said.
The discount won’t apply to straight hail insurance, nor to the Western Livestock Price Insurance (WLPIP) program, neither of which are cost-shared by the federal and provincial governments.
While AFSC plans to apply the 2021-level discount each year over the next five years, it said the discount will be “revisited annually and adjusted based on the events of the previous year.”
Crop insurance rates are calculated on an “actuarially-sound methodology,” AFSC said, but agriculture can be “quite variable” in terms of where and when major weather-related problems appear.
Though some areas “have experienced the extremes of unharvested (acres) and/or drought, we have been fortunate to have had a favourable decade without a significant widespread provincial event.”
If such a major event hits the province, the fund’s balance would be depleted and the discount revisited, the agency said.
AFSC CEO Darryl Kay, announcing the premium cut, said he’s “proud that our healthy crop insurance program in Alberta can give producers a bit of a break when they need it most.” — Glacier FarmMedia Network