Insurance rebate scheme suffers poor uptake

Insurance rebate scheme suffers poor uptake | Insurance Business

Insurance rebate scheme suffers poor uptake
The Australian Government’s crop insurance rebate scheme, which was launched in March, has fallen short of its expected amount of applications, it has been reported.

According to figures obtained by The Weekly Times from the Department of Agriculture, the $20.2 million Managing Farm Risk program has approved $80,000 in rebates since its launch. However, this is significantly below the $3.6 million allocated for the program in 2015-16. So far, the department has received 38 applications to the program, with 34 approved.

The scheme provides eligible farmers across the country with one-off rebates of up to $2,500 for the upfront costs of securing, or attempting to secure, multi-peril crop insurance, to encourage more farmers to insure against drought, frost, hail, and fire, The Weekly Times said.   

Fifteen of the successful applications were from Victorian farmers, seven from NSW and South Australia, three from Queensland, and two from WA.

Andrew Trotter, chief executive of multi-peril provider Latevo International, said it was because of the Government’s late announcement and poor publicity that there were only a few applicants.

“[The Government] announced the program incredibly late… we advised them you can’t expect to launch a program five months late and get the uptake they want,” he said.

Darren McCrea, director of multi-peril insurer SureSeason, blamed the $2 million cap on revenue for farm businesses under the eligibility criteria as a possible cause for the low number of applications.

“It appears the Government has made a decision to offer the grants to smaller growers,” he said.

In related news, the NSW Government has announced that it will soon finalise a multi-peril crop insurance subsidy, The Weekly Times reported.

The NSW Government will implement key recommendations from the Independent Pricing and Regulatory Tribunal’s recent multi-peril crop insurance review, which probed the impact of a 50% premium subsidy of up to $30,000 per farm business for the first two years, sources told The Weekly Times.

The review’s draft report, released in July, said the proposed 50% subsidy was “likely to cost the NSW Government about $7 million to $8 million a year.” It also outlined the high cost of multi-peril premiums, which were estimated to be between $25,000 and $50,000 a year. 

“The NSW Government is committed to supporting our farming sector to be more resilient, and better able to manage risk — that’s why in 2015 we put in place the five-year, $300 million NSW drought strategy,” Niall Blair, NSW Primary Industries minister, said in a statement.

“One of the key actions in that strategy was to investigate ways the NSW Government could support growth of a commercial multi-peril insurance market, to provide another risk management tool for our farmers.”

Derek Schoen, NSW Farmer’s Association president, said that while he supports the multi-peril crop insurance subsidy, it is not the complete solution to farmers’ problems, and he believes government intervention still needs to “complement a broader integrated drought policy”, The Weekly Times reported.


Related stories:
Government unveils $20mn insurance rebate plan
“Opt-in opt-out” behaviour for multi-peril could lead to higher premiums