The Insurance Council of Australia (ICA) says multi-peril crop insurance would only be viable with significant government subsidies.

“All studies to date have concluded that multi-peril crop insurance, including drought or drought and rainfall insurance, is not commercially viable without very significant government subsidies,” spokesman Paul Giles told insuranceNEWS.com.au.

“[Viability] issues still remain today and were clearly outlined by the Productivity Commission in its report on government drought support which was released in 2008.”

One of the reasons cited in the report is the inability of insurers to spread risk among a large group of clients.

It says there could be a situation where farmers purchase insurance to receive more than they pay in premiums.

Mr Giles says multi-peril crop insurance has been introduced in Canada and the US, but indemnities paid to the public insurer plus administration costs are three times greater than the premiums paid by farmers.

It is 10 years since the issue was last examined by the Federal Government, ICA, state governments, farming bodies and insurers.

He says the council would be willing to participate if the Productivity Commission decides to re-examine the subject.