Hail insurance brokers say 2005 has revealed trends they expect will continue in coming years.
Higher values of individual claims from fewer producers, increased per acre insurance coverage purchases by growers and the potential of higher premiums will all be part of the future, say insurers.
Hurricane Katrina may not have directly damaged producer’s crops but it will affect their bottom lines next year because of its effect on the re-
insurance industry.
Rene McQueen of McQueen Agencies in Saskatoon writes hail policies for a wide group of brokers across Western Canada.
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“What is happening in Mississippi and around New Orleans will definitely cause re-insurers to increase their rates to us. This is a big world and we all share in its losses at some point,” he said.
Murray Otterson, chief executive director of Saskatchewan Municipal Hail Insurance Association, said his company expects to hear “a sad song” from the re-insurers next season.
McQueen and Otterson say it will depend on the hurricane season and the remaining weeks of the prairie hail season to determine the effect of claims and losses on rates.
Otterson said 2005 has been a relatively good year for the industry in Saskatchewan as far as claims go.
“Our (individual) claims on average are 40 percent larger than our five year average, but total claims are down about 20 percent,” he said.
McQueen, who writes policies in Alberta and Manitoba, said Alberta has seen an across the board increase in claims for 2005 with both the level of coverage being higher and the severity of the weather being worse.
“Manitoba, like Saskatchewan is down in claims this year, but there are other problems there,” he said.
Dennis Lynch of Co-op Hail in Regina provides insurance in Manitoba and said claims from the province were down in 2005 but cancellation of policies was significantly up.
“There were more cancellations of policies on more acres than I can ever remember. Flooded farmland after seeding and policies that were never purchased were way up,” he said.
All say the trends toward higher levels of insurance are on the rise as producers seek more risk management tools as margins in agriculture decrease. Traditionally Alberta farmers have insured to a higher level than Manitoba growers and Manitoba growers insure higher than Saskatchewan producers.
McQueen says those differences are evening out as “farming becomes very business focused.”
While no one storm caused a single major claim in 2005 July 16 storm struck across central Alberta on a southeast line through Regina.
Otterson said that storm alone caused $10 million in damage.
