annual report 2011/12 - Manitoba Agricultural Services Corporation

Hail InsuranceA separate policy covering spot-loss hail damage isavailable to producers who participate in AgriInsurance.Producer premiums fund all Hail Insurance costs,including administrative expenses. Premium rates aredetermined based on AgriInsurance risk areas, rather thanby township as is done by private insurers. Coverage canbe selected at any time during the growing season, andis available in various dollar amounts depending on thecrop. Hail Insurance also provides coverage for loss due toaccidental fire.The Continuous Hail Insurance Option (CHIO) allowsproducers to automatically insure all eligible cropswithout an annual application. Producers are eligible foran increased premium discount (above the base 2%) ifthey maintain their CHIO coverage for more than twoyears. Now in its fifth year, CHIO continues to be very wellaccepted with 54% of all hail contract holders participating.Figure 3 – Hail Insurance Premiums and Indemnities($ millions)25201510502007/08 2008/09 2009/10 2010/11 2011/12PremiumsIndemnitiesMASC insured 3.5 million acres in 2011/12 for a totalcoverage (liability) of $493 million. Premiums prior todiscounts were $17.1 million, with indemnities of$4.8 million, resulting in a loss ratio (loss as a percentageof premium) of 28%. Figure 3 provides a summary of HailInsurance premiums and indemnities for the past fiveyears. In 2011/12, MASC’s Hail Insurance represented 55%of Manitoba’s crop hail insurance market.After accounting for CHIO discounts and early paymentdiscounts totalling $0.9 million, interest revenue of$1.0 million, reinsurance premium of $1.1 million andadministrative expenses of $2.2 million, Hail Insurance hadnet income for the year of $9.1 million. As a result, the HailInsurance reserve increased from $57.9 million to$67.0 million.2011/12 Annual Report 17