The private insurance industry is anxious to gain a share of the basic crop insurance business, but it faces a challenge convincing farmers to support the move, says a prairie insurance executive.
Rob Goeres, Regina-based president of Rain and Hail Insurance Service Inc., said Oct. 21 he understands some initial farm group reluctance about introducing private enterprise into what has been a subsidized government-run insurance system.
“The challenge is clear,” he said. “It’s to get the producer groups to recognize this may be something that could work. Then, the next challenge is the provinces. A pilot project is exactly what is needed.”
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Goeres was reacting to a pledge from federal agriculture minister Lyle Vanclief that the federal department would support a pilot project agreement between an insurance company and a provincial government to try private insurance.
For more than a year, the industry has been arguing that the government monopoly should be broken and the private sector given a piece of the crop insurance business.
Rain and Hail Insurance Service Inc. is the largest hail insurer in the United States and is involved in private crop insurance throughout the U.S.
Goeres said the company is still a small player on the Prairies with business worth $5 million to $8 million in annual premiums. “You could say we are a medium-sized company.”
But it is “keenly interested in expansion here in Canada” and crop insurance could be the ticket.
He said private companies could provide crop insurance services more efficiently and cost-effectively. However, federal and provincial governments would have to continue providing the almost $400 million they now pour into crop insurance and governments would have to provide catastrophe coverage.
“The private sector has all sorts of expertise in program design (and) administration, can provide improved services to growers … efficiency of administration,” he said. “We’re an advocate of speeding up program change. All private industry is saying is we want to be risk sharers as well.”
He said the first step could be a pilot project in one province in which a private company was able to compete with the provincial insurance crown corporation.
“In the early going, we could have a parallel project out there, drawing the same subsidies and let the farm decide,” said Goeres. “Would you like to purchase your crop insurance through Rain and Hail or would you like to buy it though Saskatchewan crop insurance? Let’s see where that goes.”
He said the provinces that seem most sympathetic to private crop insurance proposals now are Ontario and British Columbia.
