Relatively high numbers of hail insurance claims in Alberta and Saskatchewan in 2007 and 2008 translate to higher overall premium rates for 2009 in those provinces.
And the Canadian Crop Hail Association, a group of 11 hail insurers, also reported Friday that many insurance companies, based on their claim history, have also increased their surcharges for insuring specific crops in 2009.
For example, the association said in its report Friday, some companies have gone from a 1.75 to a 2.0 surcharge for canola. If the base premium rate in a particular township is three per cent, the actual rate on canola is six per cent (base rate of three per cent times the surcharge of 2.0).
These decisions on premiums and surcharges follow a crop year in which “considerably more” was paid out to Saskatchewan and Alberta producers in hail claims than was collected in premiums, the group said. Hail insurance rates in Manitoba for this year remain “similar” to 2008 levels.
Given this spring’s cool weather and the delayed development of crops, producers are just starting to make their 2009 hail insurance decisions, the association said.
“With the slower start to the sales season, insurance purchase decisions may occur in a compressed time frame,” the group said, and warned farmers not to hesitate for long.
Many companies have liability limits for specific areas, the association said, meaning they are likely to sell out. Industry-wide capacity “should not be an issue,” but capacity at the lowest premium cost could be, the group warned.
As well, any early storms before insurance is purchased can limit the opportunity to buy hail insurance coverage after the fact. Buying insurance early does not cost any additional amount and it increases the length of time coverage is in effect, the group noted.
In Manitoba — where claims were “relatively light” in 2008 compared to Saskatchewan and Alberta, after heavy hail claims in all three Prairie provinces in 2007 — excess moisture has “seriously delayed” 2009 seeding in a number of areas and some land will go unseeded.
In western Saskatchewan and much of Alberta, meanwhile, dry conditions are “a big concern” and without rain in the next couple of weeks, many farmers in the affected areas might cut back on their hail insurance coverage or forego it altogether, the association said.