WESTERN PRODUCER — Saskatchewan Municipal Hail Insurance took a financial hit last year after more damaging storms.
President Wayne Black said 77 storms in 2021 affected 254 rural municipalities and cost $132 million.
“The damage of these storms was very widespread and amounted to 5,971 claims, which is higher than the five-year average,” Black told the Saskatchewan Association of Rural Municipalities annual convention.
About 2.7 million acres were affected, which is also higher than the five-year average of 2.4 million acres.
The cost more than doubled from the $62 million paid in 2020, Black said.
“The financial hit of $132 million is not insignificant to your company,” he told the meeting. “The underwriting loss of $55.3 million is offset somewhat by the $22 million that we took in in interest on investments, (which) mitigates the loss somewhat, so our final number of a loss last year was $32.5 million.”
Black said that isn’t a small number but it is manageable.
SMHI, including its businesses in Alberta and Manitoba, insured 16.7 million acres last year for coverage valued at $2.96 billion.
The total premium paid of $100 million represents about 55 percent of all hail insurance written in Saskatchewan, he said.
Black said crops didn’t recover well when hit early in the season because it was so hot and dry.
“A lot (of hail storms) came in August and there really is no recovery from storms that come that later in the year,” he said.
The RM of Cut Knife saw the most payments at $6.6 million, followed by Longlaketon at $6.1 million and the RMs of Pense and Kindersley at slightly less than $5 million each.
SMHI also paid 24 claims for fire damage during harvest for about $188,000.
SMHI’s basic indemnity last year started at $25 an acre and went up to $300. This year it will be available up to $375.
Black said that is based on a formula created by the provincial government.
“It’s one that we’re not extremely happy about because we think it restricts our ability as a board to manage the affairs of our own company,” he said. “We continue working with the government on that formula.”
Producers who require more coverage than $375 can buy additional municipal hail insurance up to $850 per acre.
He also said the average charge rate for hail insurance has dropped 42 percent over the last 10 years.
“Unfortunately, that probably has come to an end with the severe losses that were incurred by all the hail companies last year,” he said.
