MOOSE JAW, Sask. – Saskatchewan’s farmer-owned hail company is too expensive for its owners to use, say some rural municipal officials.
Premium rates offered by Saskatchewan Municipal Hail Insurance Association are one-third higher than those charged by the line companies, one councillor told a recent Saskatchewan Association of Rural Municipalities district meeting.
“On big acreages, especially special crops, it amounts to a big buck,” the councillor said. He wondered why the rates were so high, when Municipal Hail was set up to benefit farmers.
Others expressed the same displeasure with the non-profit municipal organization, which is owned and controlled by ratepayers.
Read Also
Interest in biological crop inputs continues to grow
It was only a few years ago that interest in alternative methods such as biologicals to boost a crop’s nutrient…
Vice-president Arnold Petracek told the meeting rates are reviewed annually, by township, based on long-term experience. He said the association charges what it costs to provide the coverage.
“Sometimes we are higher than the competition,” he said. “We feel that this is actual costs. We are sticking by these rates.”
Petracek said private insurance companies aggressively competed against Municipal Hail this year, causing a rating war.
“There are a couple townships where we’re twice as much as they are,” he said. “We apologize for some of this but we felt the best process … (was to) keep your company afloat.”
He noted surcharges for canola were $2.31 through Municipal Hail but other companies dropped to $1.75.
“Do we drop the cost because we’ve got 50 to 60 percent of the business … just to react?” he asked. “If we have 100 percent of our clientele turn around and have a hail claim … where is our insurance company for the future?”
Municipal Hail has been in business for 81 years and pays out an average of 90.3 percent of premiums collected. The company has built a reserve of $83 million from investment income, Petracek said.
In 1997, the company wrote 55.7 percent of the hail insurance in Saskatchewan and handled 8,200 claims. Petracek said the areas with the largest hail losses were in the southeast. In the rural municipality of Oungre, the loss was priced at $1.275 million.
