In the hail insurance industry, business is only as good as the rates, says Murray Bantle of Canadian Hail Agencies and Lombard Canada, from the companies’ head office in Saskatoon.
“Hail insurance is a commodity,” Bantle said.
“It’s totally price competitive. Farmers want the best price, period.”
He said the hail insurance industry on the Prairies has what it calls “adequate capacity in the marketplace,” which means farmers have an abundance of hail insurance options from which to pick. Basic supply and demand theory dictates that this creates a price competitive situation.
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“Plus we still have the provincial governments involved in Manitoba and Alberta, and Saskatchewan looking at getting back into hail. We have many companies with many pricing options, so basically, it becomes a price-driven commodity.”
Bantle said farmers showed more loyalty to one hail insurance company when the local elevator agent was only 10 or 20 kilometres from the farm. As well, it was much easier in those days to buy hail insurance on four or five quarter sections than on the 20 or 30 quarters that is often more typical today.
Pricing was also more consistent from one company to the other, so there wasn’t much reason to go insurance shopping.
“In addition to losing local agents, the other significant point is that the rate structures have changed a lot in the last few years. We’ll have townships where we are a three and another company is a five or vice versa. That’s two bucks on a hundred. You’ll see a lot of situations like that, which of course prompts the farmer to do a more thorough price shopping today.”
Bantle said companies such as Ehail Online Canada, which was formed four years ago by three farmers from Wilkie, Sask., make price shopping easier.
However, he said it’s still not clear if on-line hail insurance helps or hurts insurance companies. While agencies such as Ehail represent all the major companies to potential buyers, they also put the rates of each individual insurance company in front of a larger number of farmers.
He said local agents are not likely to carry all seven companies, which means the internet now allows more farmers who have never dealt with his two companies to see their rates. As well, more of their traditional customers get to see every other company’s rates.
“So far, it works out about the same for us, I think. But the internet really does force a situation where your business is only as good as your rates.”
He said hail insurance companies can sell only through agents and not directly to farmers.
“Ehail Online Canada is one of the agents for Canadian Hail Agencies and Lombard Canada. But Ehail is also an agent for the other companies, so you can see how the farmer benefits from their web service.”
Bantle said the instant service offered by the internet seems to attract customers.
“You can start your fields at 50 bucks an acre. Then, a few weeks later, if you see some new potential in some fields and you want to top them up to a hundred bucks an acre, you click on your computer and it’s a done deal. A lot of farmers like to use their credit card because of the other benefits they get through that form of payment.”
Bantle said high-speed internet access is generally good in rural Saskatchewan and is also good in most areas of Manitoba and Alberta.
“More and more farmers are on-line more often watching commodity pricing, weather and even conducting business on-line. It’s changing the way farmers do business. On-line farm business transactions are the way of the future, as far as I’m concerned. It won’t be long before we see fertilizer, chemical and other inputs negotiated and transacted on the internet.”
On-line hail insurance is available from Ehail Online Canada of Wilkie, Sask., at www.ehail.ca and Webhail.com of Vonda, Sask., at www.webhail.com.
