OTTAWA – Private insurance companies should receive government subsidies so they can compete with subsidized provincial crop insurance programs, a spokesperson for the private industry recently told MPs.
“We would like to be involved in crop insurance,” Norman Lafreniere of the Canadian Association of Mutual Insurance Companies told the House of Commons finance committee Oct. 31.
But the private sector cannot compete because the industry is controlled by “10 monopolies” in the form of provincial crop insurance corporations.
“We could compete and even offer better service if we had a level playing field,” Lafreniere told the committee.
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He said the mutual insurance companies he represents already hold $250 million in farm insurance policies, more than 20 percent of their business.
But they cannot compete in the crop insurance business because the government monopolies make sure Ottawa pays one-third of the premium and the provinces pay one-third.
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“We cannot compete,” the spokesperson for private insurance companies told MPs. “We are asking you to take a serious look at the crop insurance industry. We could be very competitive if we had the same rules.”
Canadian Federation of Agriculture president Jack Wilkinson assumed Lafreniere meant that farmers should lose the government support. He was not impressed.
Without government subsidy, rates would increase 300 percent, he said.
“We believe it is important to keep government support in order to keep enrolment high and to avoid disaster,” Wilkinson said.
But Lafreniere said in a later interview the CFA president missed the point.
“We are not suggesting government get out of it or that there be higher rates,” he said.
“We are saying if government is involved, the idea of 10 provincial monopolies is not right. We could offer better services, cheaper, if we had the same subsidies from government.”
