A sugar cane farmer who lost his crop to a bushfire in November 2018 has lost his bid to have his payout increased after a dispute ruling determined his insurer’s settlement offer to be fair.

IAG-appointed inspectors estimated the bushfire-affected area at around 50 hectares and measured 60 tonnes of sugar cane per hectare, totalling 3000 tonnes.

The insurer determined its pricing calculations based on the Queensland Sugar Limited (QSL) harvest pool price and offered a cash settlement of $91,800.

The complainant disagreed with IAG’s offer, believing 4000 tonnes of sugar cane was lost and that the payout should be based on a higher price per tonne.

The Australian Financial Complaints Authority (AFCA) panel found IAG’s actions were consistent with the terms of the fire-only crop policy, which required the insurer to cover costs at either a set indemnity limit of $35 per tonne of cane or 90% of “the basis of valuation sugar cane,” depending on whichever value had been lesser.

The policy defined the “basis of valuation sugar cane” as the price of sugar cane per relevant sugar cane payment provisions. IAG said the QSL harvest pool price had been the industry standard and, at the time of the bushfire, was $34 per tonne.

The insurer calculated that 90% of the sugar cane's assumed value was $30.60 per tonne, which was less than the policy indemnity limit. The complainant argued that the insurer base its settlement on the indemnity limit of $35 per tonne.

The claimant said that for ten years, he had fallowed about eight or nine hectares and calculated that the correct measurements were closer to 75 tonnes per hectare rather than the insurer’s 60 tonnes per hectare.

The farmer stated that he planted canes in the fallowed area, which were available to harvest in 2018, and argued that based on this unaccounted-for area, 1000 tonnes should be added to the insurer’s estimation.

The man said that due to factors out of his control, he had been unable to harvest this crop and that unharvested cane would become a standover crop that would be grown for two more years before it had been destroyed in the fire.

The panel was unconvinced by the complainant’s arguments, saying the insurer’s calculations had been accurate and that the policy did not cover crops that were not expected to be harvested in the upcoming season.

AFCA also called into question the insured’s assertions that he had additional cane stored, saying there had been “no substantive evidence to support” the claim.

The determination ruled that the insurer’s offer of $91,800 was a fair amount based on the evidence presented.

Click here for the full ruling.