Many farmers in Australia have said that they want crop insurance policies that run for three to five years so they can go with confidence to their banks. This would however require a change of mindset in the insurance industry, according to the Director of Agribusiness with UK insurance broker Willis Towers Watson (WTW), Mr Julian Robert.
"It is possible to have three to five-year policies; it's possibly even a failing of the insurance industry because typically, they run to annual policies and that is the mindset," ABC Online reported citing Mr Robert.
Queensland Farmers' Federation (QFF) project officer Ross Henry says that insurance policies that run beyond a year are necessary for crops that are not annual, as in horticulture.
"I think there is an education process that needs to happen at both ends... about the benefits of insurance within their business," he said.
"Both for the insurance companies — about new commodities and the new way that farmers want it — and for farmers.”
With funding from the state government, the QFF is working with the University of Southern Queensland and Willis Towers Watson to develop insurance products suited to Australian conditions.
Mr Robert also says that crop insurance has been available for decades in Australia but the uptake is low and something has to change.
"Something that is sustainable and affordable is critical to this; if farmers can't afford it, they are not going to take it up," he said.
On the question of government subsidies, Mr Robert says while American crop insurance plans are heavily supported by the US government, that is not necessary or desirable in Australia.
"Our programme is to leverage insurance without a subsidy.
"It seems to be a matter of policy: if you start subsidising one sector of industry as opposed to another then inequities can come in.
"Having said that, any subsidies that were available would be fantastic."
Mr Henry said: "What's needed are new structures that deal with the key risks of drought and other rainfall-related issues, either in an index format or a multi-peril format." He adds that the research has identified index-based insurance products for the sugarcane and cotton industries.
He says that less than 1% of Australian farmers have crop insurance compared to 90% in the US.