Traditional multiple-peril crop insurance is not commercially viable “without significant and ongoing government support”, according to a new report.

“The cost of unsubsidised premiums is beyond what most farmers are willing to pay,” the National Rural Advisory Council (NRAC) told Federal Agriculture Minister Joe Ludwig in a review of current and potential insurance products for farmers.

The report says the volatility of Australian agriculture, climatic variability and insufficient data to underpin insurance will work against multi-crop products being developed.

CBH Mutual and Willis Australia offered a crop-yield insurance scheme for wheat in WA last year, but the NRAC says take-up was low and premiums were allegedly too high. The product was withdrawn at the end of the wheat season and has not been offered again. 

There are two commercially available index-based insurance products, and the NRAC says these may have potential for further development.

It also sees the government playing a role by helping agricultural industries become more self-sufficient and better at managing weather-related impacts. This includes providing better and more standardised data.

“This may have the added benefit of assisting the development of new and existing decision-support tools and products through access to user-friendly climate data,” the report says.

“A key challenge for industry and governments is to increase awareness of insurance options as part of a broader role in building capacity to manage risks.

“This could ensure agricultural training programs include modules on the full range of farmer risk-management options including index-based insurance.”