AWB FROST COVER 2018
The following does not apply to everyone but still may be of interest.
AWB is offering frost cover this year as an optional extra to your fire and hail insurance. Some dot points about the product follow:
- Must insure whole area of the same crop type
- Fire and hail standard; frost is an additional extra, as is crop establishment
- Fire and hail have a 5% excess; frost a 20% excess
- Yield and price are determined by the farmer
- Final revision date varies, but has been around the end of October for the quotes my clients have
- Pre or post-harvest premium determination available
- 70% to 150% spread for post-harvest declaration from final revision date numbers
- Frost event determined by farmer notifying AWB who will appoint a loss adjustor – no temperature requirement – but obviously loss adjustor will look at local weather stations etc to decide
- Final date to obtain quote 8th August
- Pricing varies by shire and risk but quotes have been between $9.50 to $11.50 for the frost component of the insurance (around 2.5% of sum insured after excess deducted)
One way you might evaluate the potential payoff would be as follows:
- With a 20% excess you need more than 20% loss for a payout
- If history says that on average you lose 30% of crop once every five years and your wheat average is 2.5t then this equates to a payout of 30% minus 20% excess x 2.5 tonnes, once every five years. At an average price of $275 for wheat then this equates to a payout of $68.75. If your premium was (say) $11/ha then over five years you would have paid $55/ha.
Obviously, the hard thing to do is calculate what your average frost loss is. If you are in an area where you get a little bit of frost often, then you might never get a payout given the excess is 20%. AWB has said that they will reduce the excess for an increased premium but I have not seen a quote for a lower excess.
The good thing about this product is that it could help you avoid the catastrophe if you are in an area where frost can cause massive crop damage, which is the main reason we use insurance.
I hope the recent rainfall has made it to your farm (Ben Curtis, Esperance).