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Insurance Reciprocal Expected to Offer Lower Premiums

by 5m Editor
1 June 2004, at 12:00am

CANADA - Farm-Scape: Episode 1527. Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council and Sask Pork.

Manitoba Pork Council


Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

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Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork.

Farm-Scape, Episode 1527

A Manitoba based Chartered Accountant says, insurance reciprocal, like one being proposed for Manitoba's swine industry, can offer participants substantial premium reductions.

Manitoba Pork Council is looking at the feasibility of an independently run reciprocal barn insurance program to address rising insurance premiums.

Reciprocal insurance allows individuals to share the business risks they face with those involved in similar enterprises.

Jim Peters says reciprocal insurance costs less to administer, limits risks, and gives participants control over where premiums are invested.

"Insurance companies invest huge sums of money that they collect on premiums and these are invested in the stock market or where ever you want to invest them.

The major reason for the huge increases in insurance premiums has been the drastic fall in the stock market.

As a reciprocal, you're not subjecting yourself to the risk of the stock market going down affecting your insurance rates as a hog farmer in Manitoba.

The people I have talked to, a lot of them feel and I think correctly so, that their rates rising has not been due to the increased risk of losses in the hog business.

Those increased losses are coming from elsewhere and how has the risk of a pig barn changed in the last three years?

I don't think the chance of a pig barn burning down today are any higher than they were five years ago"

Peters says a reciprocal insurance program he helped develop for aerial applicators in 1997 cut 1996 premiums by 30 percent and those rates have remained unchanged since.

He says the hope is to have a program ready to present to swine producers by later summer or early fall.

For Farmscape.Ca, I'm Bruce Cochrane.

5m Editor