There will be additional competition in the hail insurance market this year.
A company called AG Direct Hail Insurance Ltd. says it will reduce hail insurance premiums significantly by using an online delivery model.
Bruce Lowe, an entrepreneur with roots in Saskatchewan, is the driving force behind the new concept. He has backing from a major insurance provider, Allianz Global Corporate & Specialty.
Lowe claims that commissions paid to hail insurance agents and brokers add 10 percent to the cost of policies. Producers will be able to log onto the AG Direct Hail website, check the hail premiums in any township and sign up online should they decide to proceed.
Many producers are routinely doing their crop insurance policies online, so the concept for private hail insurance would seem to be long overdue.
Lowe said his company will also save money by spending less on operating costs, including administration and advertising. Don’t expect a Christmas card or a free hat, but that’s a small sacrifice if you can get reliable hail insurance at a reduced cost.
Lowe said the company also plans to streamline the claim adjustments process and insists it will not be at the expense of fair and just loss awards. However, he can’t yet provide the specifics.
Some producers will likely be hesitant to use AG Direct Hail until they believe that loss adjustments will be equivalent to those from current insurers.
Lowe said his loss adjustments will be on par with what producers would typically expect from government and municipal providers.
Producers aren’t always happy with their loss adjustments or with some company policies, but there’s no doubt that many of them have a degree of loyalty to established companies, or at least loyalty to a particular agent in a rural community.
As the new kid on the block, AG Direct Hail will not be popular with the hail insurance establishment. It will be interesting to see if the company can deliver on its promises and carve out a chunk of the market.
There are a couple of caveats for insuring with the new provider.
In Manitoba, producers must have already bought at least $200 per acre in hail insurance from the Manitoba Agricultural Services Corp. before it can buy from AG Direct.
In Alberta, $150 an acre is required from the Agriculture Financial Services Corp.
Any such requirement is yet to be determined in Saskatchewan, but AG Direct is hoping for clarity in the near future.
As well, AG Direct Hail will limit the number of applicants in each township to manage its risk. This isn’t unusual. Many private companies also have maximum liabilities per township. Ag Direct’s coverage in the first year will be capped at $200 an acre.
Lowe has put together an aggressive town hall meeting schedule in Manitoba and Alberta in March to explain his product directly to interested producers. Meetings will be set up in Saskatchewan as soon as all the insurance requirements are ironed out.
AG Direct will post its rates around May 1, and producers will be able to see for themselves whether the promised savings are real.
Producers who leave their contact information on the website will receive notification as soon as rates are posted.
Competition and alternatives are always welcome, but to capture business, the company will need to demonstrate the savings that are being promised.