WITH THE topic of farm income protection back in the spotlight, the Insurance Council of Australia (ICA) has issued a release highlighting five measures it believes will improve the uptake of farm income and crop insurance for primary producers.
ICA chief executive Rob Whelan said there were a range of actions that government could take that would see more farmers taking up the option of an insurance product to manage climatic risk.
Firstly, he said insurers needed access to better data, which he said would be critical if multi-peril insurance products were to move solely from crops to other farm industries such as livestock.
Mr Whelan suggested running a census on every primary producer to collect and publish critical data.
“More information is required on the agricultural sector to support underwriting of existing covered crops and expansion into livestock and non-cereal crops,” he said.
He said in other areas the government would not have to contribute new funds, just remove taxes that made it difficult to offer price-competitive products.
“The abolition of stamp duties for agricultural insurance products is one of five measures that insurers believe would help primary producers in times of drought,” he said.
Several states have already implemented stamp duty concessions for primary producers.
Mr Whelan also said tax reductions or offsets for farm income and crop insurance products would be a good way of providing a carrot for farmers to get a greater take-up of MPCI products.
Ultimately, he said this would reward government by reducing dependence on direct government support in drought years.
In terms of attracting re-insurers to participate in the fledgling Australian MPCI market Mr Whelan said a government guarantee facility for insurers offering farm income and crop insurance for 25 per cent of losses at the declared 1:60 to 1:100 year drought would assist insurers to maintain reinsurance cover in the global market.
The ICA also suggested changing government lending criteria through the Regional Investment Corp (RIC), saying it should be dependent on the primary producer holding adequate farm income or crop cover, in the same way that a private market lender will not lend unless the asset is protected by insurance.