Producers hope they never have to use it – but when they do, they're glad it's there. Production Insurance has provided Ontario producers with reliable, affordable coverage for 50 years and it's still a great value. More than 14,000 Ontario producers count on it every year to offset financial shortfalls when perils like adverse weather, pest infestation, disease and wildlife cause reduced yields or production losses.
Stable premiums despite increased liability
Production Insurance is designed to be a stable, sustainable and affordable program. Despite substantial increases in the liability covered by Production Insurance, premiums have remained very stable over the years, making it an affordable risk management option. Over the past 10 years, while claims have been manageable, the value of insured acres has more than doubled, mainly due to strong market prices. When comparing liability to premium rates, Production Insurance actually provides more value than it did a decade ago.
How do premiums remain affordable?
The provincial and federal governments pay 60 per cent of the premium cost, so producers pay only the remaining 40 per cent. In addition, the program is designed to spread out the impacts of severe claim years over a longer time period, so one bad year won't lead to premium spikes.
Agricorp maintains the Production Insurance fund, which is used to pay out claims, at a healthy level to help stabilize premiums. Following high-claim years, any excess reserves in the fund are used to minimize premium increases.
This year, premiums are decreasing in many cases.
Production Insurance costs only a fraction of an average harvest. For example, it costs the equivalent of about 2.7 bushels of corn to insure one acre that produces about 150 bushels. After 50 years, that's still a great value.
Know all the risk management options
As producers plan their risk management coverage for 2016, they should be aware of all the available programs. Producers who are renewing or signing up for Production Insurance should also think about AgriStability and RMP. This is
application and renewal season, which is the ideal time for producers to consider all their farm risks and choose the best options to help mitigate those risks. Securing Production Insurance is a great place to start.