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Crop hail payouts of $256 million in 2016

Preliminary estimates show 2016 payouts to Western Canadian farmers for crop hail claims of just over $256 million on nearly 20,000 claims. Producer premiums totalled just over $300 million for an industry-wide loss ratio of 84.8 per cent. Premiums paid increased significantly year-over-year, from $274 million in 2015 to just over $300 million in 2016. Claims increased from 13,222 in 2015 to 19,854. The estimated total payout of $256 million at time of reporting is well above last year’s figure of $167 million.

Manitoba was hardest hit in terms of loss ratio, at 142.5 per cent; a figure well above the 108 per cent loss ratio reported for that province in 2015. Alberta followed with a loss ratio of 81.8 per cent, compared with a 2015 ratio of 66.3 percent, while Saskatchewan’s loss ratio is estimated at 70.8 percent, up from the 45.6 per cent reported in 2015.

This was a year of contrasts and challenges. Hot and dry conditions during planting season were followed by excess moisture across widespread areas throughout the growing season and above average rainfall during harvest. The number of storms reported in each month, July through August, was up from last year but the overall severity of the storms was not as great. Hail claims reported throughout the season were up over previous years, but the cost per claim was below average.

Good growing conditions resulted in high yields across the Prairies, but weather-related delays have slowed the harvest and created difficulty for both farmers and crop insurance adjusters. Late-season storms resulted in hail damage reports through September and into the first week of October. An unusually large number of claims are still being assessed, hampered by wet weather and poor field conditions.

Alberta hail claims up from 2015

The Alberta provincial harvest is estimated at approximately 70% complete at time of reporting. Recent wet weather across the province has stalled harvest with areas north-east and north- west of Edmonton experiencing excess moisture. Standing water is preventing machinery access to many acres. Yields this year are being reported at 25 to 30 percent (approximate) above those reported in 2015, but quality has declined in those areas where harvest has been delayed.

This was an extremely busy year for hail claims right across the province. The first storm reported was May 18, and the last one on October 1. Inspectors continue to finalize claims from the late storms, observing higher damage counts on those ready-to-harvest crops. Total payouts in Alberta this year are reported at $64 million, as compared to $50 million paid out in 2015. Total number of premiums was recorded at $79 million, up slightly from $75 million a year ago. Preliminary reports show total policies at 7,369.

Saskatchewan reporting higher than average losses

Heavy rain and snow over the past two weeks has stalled harvest. Saskatchewan Agriculture’s weekly crop report indicates eighty-one per cent of the 2016 crop combined (at October 10) and 15 per cent is swathed or ready to straight-cut. The five-year average for this time of year is ninety-three per cent combined.

Hail losses in Saskatchewan tracked above the five-year average in 2016. In general, the percentage of policies that received hail is also higher than last year. Most of the significant storms resulting in hail loss occurred in July and the total number of storm dates was well above the average. A large number of producers claimed loss in more than one hail storm over the season.

Total sums insured were $4.06 billion, as compared to $3.6 billion in 2015. The average charged rate was down from previous years and premium income totalled $176M, as compared to $160M reported for 2015. Payouts of just over $124 million over 11,001 claims resulted in a 70.8 per cent average, up from 45.6 per cent in 2015.

Manitoba hail claims are well above the five-year average

Hail losses in Manitoba in 2016 are reported at significantly above the five-year average. The total number of policies was 7,868 and a higher than average percentage of total policies claimed hail damage. Storms during the Labour Day weekend and again in the third week of September all resulted in hail claims. Another storm system in the first week of October also delivered hail, but severity of the storm and resulting damage was not severe, particularly because harvest was well underway in most affected areas by this date. Many Manitoba producers received hail damage from more than one storm during this growing season.

Over 7,868 total policies, premiums totaled $47 million which was just slightly above 2015. Total losses are being reported at $67 million, which is a sharp increase over 2015 totals of $46 million and resulted in a loss ratio of 142.6 percent. Last year’s loss ratio was recorded at 108.6 per cent.

The Canadian Crop Hail Association represents the companies that sell crop hail insurance to producers in Western Canada. The Hail Report is released every two weeks during the hail season to provide information on storms, claims and related issues. This will be the last report issued for the 2016 season.

Media Contacts:

Jackie Sanden, Agriculture Financial Services Corporation (AFSC)

Rodney Schoettler, Saskatchewan Municipal Hail Insurance Association (SMHI)
306-569-1852, ext 110

David Koroscil, Manitoba Agricultural Services Corporation (MASC)

Canadian Crop Hail Association Members
Additional Municipal Hail Ltd.
Agriculture Financial Services Corporation Butler Byers Hail Insurance Ltd.
Canadian Hail Agencies Inc.
Co-operative Hail Insurance Company Manitoba Agricultural Services Corporation McQueen Agencies Ltd.
Farmers Hail Insurance Agencies, Ltd. Rain and Hail Insurance Service, Ltd. Henderson Hail Agencies Ltd.
Wray Agencies Ltd.

Posted: October 26, 2016

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