A recent Government report on the feasibility of multi-peril crop insurance (MPCI) has created a “huge opportunity” for insurance brokers across Australia.
The draft report, released by The Independent Pricing and Regulatory Tribunal (IPART) of New South Wales, underlined the Government stance on MPCI in a bid to increase the uptake of the coverage.
The draft report found that a proposed subsidy on MPCI was most likely to drive a higher uptake, which could create an opportunity for brokers.
“This is a huge opportunity for regional insurance brokers. This is the biggest opportunity they have had in twenty years,” Trotter told Insurance Business.
“This is the most exciting change in insurance in regional Australia in modern times. Where else have you had a new product? This is a brand new market.”
Trotter said that the report offered “a well-designed and targeted nudge policy that has passed the independent review status in the New South Wales Government.”
“We applaud IPARTs approach to increasing the uptake of multi-peril crop insurance in Australia,” Trotter continued.
IPART Chairman Dr Peter Boxall said that while a subsidy would most likely increase the uptake of MPCI, it would not have an impact on Government assistance programs.
“Our draft finding is that while providing an upfront subsidy could increase the take-up of insurance, it would not reduce reliance on government assistance programs,” Dr Boxall said.
“This is because insurance is unlikely to be offered at affordable premiums during periods of drought, and because currently the main recipient of Government farming assistance is the livestock sector, which is not covered by multi-peril crop insurance.
“While the other measures provide varying benefits, none meet the criteria in terms of promoting greater uptake of multi-peril crop insurance.”
Trotter noted that a policy for livestock coverage is “doable but it is going to take more time.”
”We have been fully focused on the cropping industry to get the model right for cropping before we step across to livestock and other sectors,” Trotter said,
Shane Peasley, a farmer based in New South Wales and a MPCI policy holder for the last three years, told Insurance Business that the idea of Government assistance was “absolutely fantastic” as the cover has helped provide security for his business.
“I can’t understand why more people haven’t taken it up,” Peasley said.
“I think they haven’t got their head around what having an insurance policy will actually do for them, they just think it is another expense. I think with the Government backing, it will open their eyes and think that it deserves a better look than what they’ve been giving it.
“I think that if brokers pick it up and run with it, then people with a trusted insurance broker, they might take it on and they’ve probably got a rapport with their broker so there would be a higher uptake again.”