Thursday, December 9, 2021

Can the ১০ 10 billion reinsurance pool help farmers cope with the drought?

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ARPC 200 Terror was established under the Terror Insurance Insurance Act 200 after the September 11 terrorist attacks in the United States. ARPC operates a scheme that provides insurance cover for businesses for losses in the event of a terrorist attack.

Read next: Insurance veterans apply to the government

The Treasury Department is currently reviewing whether the ARPC should continue. O’Brien, a fourth-generation veterinarian and colleague ANZIIF (Australian and New Zealand Institute of Insurance and Finance) wrote to the Department of Opportunity and suggested that a similar pool would be established to deal with the drought. He received a written reply from the Treasury earlier this month thanking him for his input and his advice.

The pressure on insurance cover for O’Brien’s drought-affected farmers began in early 2019 when he started his consulting firm.

“Initially it was the result of a lack of animal drought insurance products in the Australian mainstream market,” he said. “Australia’s mainstream specialist rural insurers do not provide an animal resource drought insurance product.”

He said it is a long-standing issue that the government does not subsidize rural insurance products as the government does in other countries where Australia has an agricultural system.

“The Australian government does not support or subsidize insurance products for agriculture in Australia, as the US or China regulates agriculture, for example. In the US, the subsidy rate is 50-60% and beyond, as well as in China,” he said. , But drought instead of terrorist attacks.

O’Brien said government discounts on insurance for farmers, including multi-hazard crops and farm packs, don’t go far enough.

“They’re not really paid,” he said. “The government does not subsidize insurance, usually handouts or bailout packages, or low-interest loans and grants.”

One argument against a reinsurance pool is that it will discourage farmers from reducing their drought risk by taking preventive measures. O’Brien disagrees.

“There really isn’t much evidence to support it. Looks like people like to mention things like these and price issues so why not do these things. And I say, ‘Let’s see the evidence’, ”he said.

O’Brien said that under the AGRP system he was proposing that farmers should take part and pay a premium which would then be supported by the government’s risk pool.

“So, if you decide not to take out insurance, you will not be covered by this kind of pool. We think veterinarians need to be held accountable. I adopt the same policy [as the ARPC] – That is, if farmers want to be covered for drought risk in the end, they have to buy insurance, for which there are not many at present.

O’Brien said several insurers mainly support his plan and want government support to better help farmers cope with the drought through insurance.

Read next: Is the government’s reinsurance plan effective for North Australia?

“Australia has a special market that will provide cover diversification for this but we are talking about the mainstream insurance market and what I have discussed is similar to how the government would deal with terrorism – that insurers would be happy,” he said.

Farmers are also on the board.

“Priests from the East Sea, NSW and Queensland are much behind it. The pastors are on board too much based on that price right, ”he said.

In May, the ARPC welcomed the government’s plan to establish a ১০ 10 billion reinsurance pool for cyclone and cyclone-related flood events in Northern Australia. The federal government says its reinsurance pool will also reduce premiums by বছরে 1.5 billion over 10 years. This scheme will start from July 2022.

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