You should pay attention to this when insuring your crop

Until the summer of 2018, broad weather insurance covered flooding, hail, storm or frost damage. In 2019 it is too drought (with last season fresh in our minds) almost literally a 'hot topic'. However, it is not obvious for everyone to sign again this year.

Benefit or no benefit?
Several entrepreneurs came home from a rude awakening, despite the fact that the crops were covered by broad weather insurance. For example, in reality the payment was lower, the damage threshold was not met and sky-high costs for irrigation were not reimbursed. According to insurers, these disappointments can be avoided by reading the conditions, obtaining information through an advisor, requesting quotes and, more importantly; to inquire with colleagues with experience.

Insurers went to The Hague last summer to point out that the high irrigation costs are a burden on entrepreneurs. However, in the end their request was rejected. The government ruled that it is not permitted to pay compensation for this; it creates unfair competition compared to companies that cannot irrigate and it cannot be controlled. Because, did a farmer start irrigating on time or not? How much did he irrigate and what was the effect?

"Arable farmers in the southwest of the Netherlands have by far the most damage," says one of the insurance experts. "They were often unable to irrigate. In Flevoland, for example, extra costs were incurred for irrigation, but they still have salable product in the shed. This allows those growers to benefit from the high market prices."

Transition year
Insurers and advocates had more success with the insurance tax. Menno Snel, State Secretary of the Ministry of Finance, promised to grant an exemption as of January 1, 2020. The sector would (even) prefer that this be introduced in 2019, but Snel first submits the proposal in Brussels.

Since other countries already have an exemption, it is assumed that the Dutch case is not objectionable. The measure, in which 21% insurance tax is no longer levied on the gross premium, costs the state €6,5 million. Insurers hope that this will lead to a major breakthrough.

What you should pay attention to when taking out broad weather insurance:

• Insurers use various thresholds before discussing drought damage. At Agriver this is a precipitation deficit of 252 millimeters on sandy soil and 317 millimeters on clay soil. Vereinigte Hagel applies a threshold of 250 millimeters for the whole of the Netherlands.
• Does the insurer pay out on the basis of financial loss or on the basis of the field yield and the insured amount? The field yield is finally determined in the field, before harvest.
• Paying out based on the financial return can have major consequences. If a yield loss of 50% is observed for the onions, but the sales price is 50% higher, no payment will be made. This is because there is no financial loss. This also applies to potatoes that are grown under contract or sold freely. LTO Netherlands is now in discussions about this with the insurer in question.
• There are differences in the compensation paid based on the insured amount. This is (standard) a maximum of 25% for drought or up to a maximum of 70% with a supplementary policy.
• Request a quote in advance and do not focus blindly on the total insured amount. Look at the costs per hectare. What is important is what is ultimately paid out and whether the valuation is practical.
• Read the small print carefully and look at the differences between the companies. There is a lot of difference.
• Insurers require that an owner takes good care of his plot and crops. This means, among other things, good drainage, with preventive ditches when possible, but also a good construction plan. Extra efforts such as irrigation are never reimbursed and serve as a preventive measure.

Participation in the Combined Assignment can be indicated while completing the Combined Assignment (between March 1 and May 15). The insurers use a 1-year or multi-year contract; often in combination with a loyalty discount, which amounts to between 5% and 10%.

Change details
It will be announced at the beginning of February which details will change in the broad weather insurance. It is possible that the damage threshold, under the influence of the Omnibus scheme from Brussels, will be reduced from 30% to 20%. The government subsidy will increase from 65% to 70%. This is not yet included in Dutch rules.

The budget for the broad weather insurance amounted to €2018 million in 13, of which €11,5 million is expected to be paid out. So there is still room. When the conditions change (2020), insurers may also adjust their insurance conditions.

Flemish disaster fund disappears
In Flanders, farmers could claim the agricultural disaster fund until last year. Dutch companies that cultivate land across the border can also claim this. However, Flemish Agriculture Minister Joke Schauvliege has announced that this fund will end on September 1, 2019. There is no alternative yet, but the minister does say that broad weather insurance is being developed. The parties that are also active in the Netherlands say are interested in offering their product in Belgium, but that is not easy.

Advocate farmers union is concerned about the transition from the disaster fund to broad weather insurance, because there is no plan yet. Chairman Sonja de Becker hopes that more will be clear before the May 2019 elections. The transition must be gradual, without leaving a gap between the two systems. Broad weather insurance is also being developed in other European countries.