❓ A parliamentary question addresses concerns about crop insurance availability and affordability for WA grain producers, particularly regarding bushfire cover and the impact of global factors. The Minister acknowledges the challenges and ongoing work to understand the risks.
AnsweredQoN 552Legislative Council
QuestionView source ↗
CROP INSURANCE — GRAIN PRODUCERS
552. Hon COLIN de GRUSSA to the Minister for Agriculture and
Food:
I refer to crop insurance for grain
producers.
(1) Is the
minister aware of reports that insurers may be unwilling to offer bushfire
cover in some local government areas of the state?
(2) Is the
minister further aware of potential reductions in the size of the insurance
pool and also increases in premiums as a result of factors external to Western Australia?
(3) Has the
minister received advice on potential impacts of these issues for Western Australian
producers, and can the minister table such advice?
552. Hon COLIN de GRUSSA to the Minister for Agriculture and
Food:
I refer to crop insurance for grain
producers.
(1) Is the
minister aware of reports that insurers may be unwilling to offer bushfire
cover in some local government areas of the state?
(2) Is the
minister further aware of potential reductions in the size of the insurance
pool and also increases in premiums as a result of factors external to Western Australia?
(3) Has the
minister received advice on potential impacts of these issues for Western Australian
producers, and can the minister table such advice?
AnswerView source ↗
I thank the
member for some notice of the question.
(1)–(3) Yes,
we certainly are aware that crop insurance has become more challenging,
particularly this year. We know that it is re-insurance driven and buffeted
through global capacity. We are part of an international risk assessment
process. There has been increased demand for crop insurance across Australia
this year as a result of the record cropping
areas and the high yield forecasts, as well as high global prices. Insurance cover is based on statistical risk and it is often determined that we take the
global factors and Australian factors and then drill down into local government
areas. Some insurers will want to limit their exposure in any one area, which is a commercially prudent thing to do. It means
that this situation will result, given that in some areas more farmers
now want it than the insurance companies deem is prudent. The government was
advised that the farmers who were insured last year are likely to be able to
get coverage again and they will be given
priority, but it may well be that some of those who are seeking cover for the first
time, or who did not have it last year, may be affected. They may struggle to
find that insurance. This situation is not unique to Western Australia or to
bushfire-affected areas. It has long been said by people warning about climate change that one of the first challenges
that would emerge would be insurance because
insurers are looking at the risks of drought, fire and change in rainfall
patterns. A better understanding of the insurance risks and coverage
issues is being worked on. We hope in the next few weeks to have a fuller
picture.
member for some notice of the question.
(1)–(3) Yes,
we certainly are aware that crop insurance has become more challenging,
particularly this year. We know that it is re-insurance driven and buffeted
through global capacity. We are part of an international risk assessment
process. There has been increased demand for crop insurance across Australia
this year as a result of the record cropping
areas and the high yield forecasts, as well as high global prices. Insurance cover is based on statistical risk and it is often determined that we take the
global factors and Australian factors and then drill down into local government
areas. Some insurers will want to limit their exposure in any one area, which is a commercially prudent thing to do. It means
that this situation will result, given that in some areas more farmers
now want it than the insurance companies deem is prudent. The government was
advised that the farmers who were insured last year are likely to be able to
get coverage again and they will be given
priority, but it may well be that some of those who are seeking cover for the first
time, or who did not have it last year, may be affected. They may struggle to
find that insurance. This situation is not unique to Western Australia or to
bushfire-affected areas. It has long been said by people warning about climate change that one of the first challenges
that would emerge would be insurance because
insurers are looking at the risks of drought, fire and change in rainfall
patterns. A better understanding of the insurance risks and coverage
issues is being worked on. We hope in the next few weeks to have a fuller
picture.
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