Crop insurance is a global phenomenon that seeks to protect businesses much like insurance in any other industry. Yet crop insurance protection in Australia is currently underutilised. This market has attracted government support and insurers are now developing policies that specifically reflect Australia’s climate and environment. Current barriers to crop insurance are annual-policies which do not reflect growing cycles and poor uptake which has concentrated the burden of risk and raised premiums.
Earlier this year, the NSW Government engaged the Independent Pricing and Regulatory Tribunal of NSW to investigate crop insurance. The Review of Multi-Peril Crop Insurance Incentive Measures: Assessment against the Drought Program Evaluation Framework was publically released at the end of last month. IPART was tasked with investigating the efficiency of existing drought assistance measures which work to increase the uptake of multi-peril crop insurance. Such measures include an upfront premium subsidy, stamp duty waiver, farm business skills professional development program, additional weather stations and sharing information with insurers.
The Report found that the subsidy was the only efficient measure that actually increases uptake of multi-peril crop insurance. The farm business skills professional development program and additional weather stations were not found to induce uptake, however were useful resources to support the state’s drought framework. The stamp duty waiver was found to be too small to have any material benefit, whilst the information shared with insurers was found to provide no benefit as it was incomplete and did not diversely represent agribusiness.
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