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Prairie hail claims well ahead of premiums paid

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Hail insurers expect to pay out $52 million more to Prairie farmers this year than the companies will collect in premiums.

Preliminary estimates from member companies in the Canadian Crop Hail Association, released October 24, put their total payments for 2008 to Prairie farmers at over $341 million, “the most ever,” to cover over 29,000 total claims. Farmers paid in about $289 million worth of premiums, the association said.

The association’s members’ loss ratios were “very high” in Saskatchewan and Alberta – likely high enough to put “upward pressure” on premium rates for the 2009 season – but were “considerably lighter” in Manitoba, where total payouts are expected to be below total premiums collected.

Alberta producers filed over 4,800 hail claims worth an estimated $98.6 million for the 2008 season, just “edging past” the province’s record claim year in 2007. Alberta farmers paid in $66.5 million in premiums this year. The claims are for hail insurance over and above crop insurance endorsements.

The province’s biggest storm was July 15, centered on the Bow Island area.

Saskatchewan also set a new record for hail insurance payouts at about $228 million, the association said, for which farmers paid in about $176.5 million in premiums. The payouts are to cover almost 21,000 claims, which itself is not a record, though the number of acres affected is a record.

Many Saskatchewan farms were hit with hail on two or more occasions and these were combined into one claim, the association said. “As well, many farms are larger than in the past and that reduces the number of claims.”

Most regions of Saskatchewan were hit at some point during the growing season, the association said, with the heaviest damage in seen in southwestern and south-central parts of the grain belt. “Virtually every day of July” produced hail claims somewhere in Saskatchewan, the group said, noting that claims from “massive” storms July 9 and 10, pounding many of the same areas, are themselves estimated at about $80 million.

Manitoba hail insurance payouts, however, will be well below the premiums collected. Payouts are expected to total about $16 million, while farmers paid in about $46 million collected in premiums.

Manitoba saw over 3,500 hail claims, which is above that province’s five-year average, although the average payout per claim was “much lower” than in Alberta or Saskatchewan.

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