Alberta Premium Reduction Q & As
Alberta farmers will receive a 20 per cent reduction in crop insurance premiums for the 2021 crop year.
The Alberta Premium Reduction will save farmers more than $55 million on their crop insurance premiums in 2021. This will mean significant savings for individual farmers as a farm with 2,000 insured acres will save about $8,000 this year.
Q: Why am I getting this discount?
A: For the last decade we have had a number of years where the premium collected has exceeded the payments, which has resulted in a healthy crop fund reserve.
This fund protects against any future insurance payments, and is now at a point where it can help support discounted premiums, such as the 2021 premium reduction (20 per cent), without posing significant risk to the overall program. This also means that there is enough money in the fund to mitigate a major event, such as a province-wide disaster in 2021 or beyond.
Q: Is AFSC charging too much for insurance?
A: No. Rates are calculated based on an actuarially sound methodology. Agriculture can be quite variable in terms of when and where weather-related events occur, and even though some areas have experienced the extremes of unharvested and/or drought, we have been fortunate to have had a favourable decade without a significant widespread provincial event. If a major event occurred in the future, then the fund balance could be depleted and the reduction strategy would be revisited.
Q: What programs will receive the premium reduction, or discount?
A: The reduction is for AgriInsurance premiums—including premiums paid for Hail Endorsement and Moisture Deficiency Endorsement as well.
The discount does not apply to Straight Hail Insurance or Livestock Price Insurance as these programs are not cost-shared by the federal and provincial governments.
Q: This mainly benefits crop producers; what about livestock farmers?
A: The discount also applies to perennial crop insurance programs that support the livestock sector.
Q: How will I get my discount?
A: The discount will be applied to your net premiums for the 2021 crop year.
Q: Will I get the same discount next year?
A: The plan is to apply this level of reduction for a five-year period to ensure producers can take advantage of it. It will be revisited annually and adjusted based on the events of the previous year.
Q: How did you arrive at 20 per cent?
A: AFSC analyzed the current fund balance against historical losses and made the determination that we could discount premiums for 20 per cent for the next five years without affecting the sustainability of the program.
Q: How is the 20 per cent Alberta Premium Reduction reflected in the estimates producers receive?
A: The Alberta Premium Reduction is applied to your crop insurance statement of coverage and premium, rather than to your insurance proposal. Once you have made your insurance selections, AFSC will apply the discount to your insurance premium bill.