There are signs the worst of the hard market may be over for Australia’s farmers, rural brokers tell insuranceNEWS.com.au.

Spencer & Bennett – Yenda Prods broker Renae Testoni says after requoting “more than we ever would normally” in the past year amid premium increases of 12%-30%, recent renewals have stabilised.

“One came through with a 4.7% increase and I was cheering,” said Ms Testoni, who is based in NSW’s Griffith. I was like, ‘Amazing, take it before they realise and change their mind.’ 

“I felt worse about the situation 12-18 months ago. It’s still hard, but premium-wise, it seems to be settling and everyone seems to be finding their place within the market again.

“I feel like the tide is turning and it is stabilising. In the last three months, I have seen that with my clients, that the increases have not been as big. I’m confident it’s petering out.”

Ms Testoni says underwriting guidelines have tightened, with insurers demanding plumbing and wiring overhauls at farmsteads, for example. And few offer flood cover even for the primary residence on a farm.

But signs the situation is easing include some insurers “chasing the renewal”.

“That’s very new. Where we couldn’t get any help 12 months ago at all, they are now reaching out to us and saying, ‘Can we help you?’

“Maybe some of them are starting to realise, ‘We’ve probably been a bit hard on this book of business for a couple of years.’ ”

At Insurance Advisernet in Merimbula, NSW, MD Kristy Martin says her dairy farmer clients are achieving some reductions. 

“We’re asking for discounts across every policy now at every renewal, and where 12-18 months ago it was a definite no, most insurers are giving us a little bit of room to move, which is really good,” she said.

After CGU cut commissions on crop cover from 20% to zero last year, other commissions have mostly stayed put, although Rural Affinity dropped its broadacre percentage earlier this year.

“They gave us fair warning and if we had all our crop policies in before July 31, it remained at 15%, but anything we wrote after that has dropped to 12.5%, and that will be the standard moving forward,” one broker said.

In Dubbo, NSW, BurMac MD Shannon Osborne says farmers are paying more for cover as the cost of equipment rises. For example, a crop header costs $2 million, up from about $300,000 a decade ago.

“For that risk transfer, the rate remains the same but the premium is obviously a lot more. If it’s not manageable, I discourage them to go and buy a new header,” he said.

“I think the book corrections have probably run their course and rates are generally stabilised. I’m seeing increases in line with inflation.”

Brokers say the volume of business may shrink in some rural areas after frosts in September slashed cereal crop yields.

One Spencer & Bennet – Yenda Prods client lowered their wheat and barley sum insured to $240,000 from $1.5 million in June, and other affected clients have said they may reduce cover to find savings.

“Yields are down to non-existent and some won’t harvest at all,” Ms Testoni said. “It was just when all the grains were starting to fill, and they just didn’t.

“That’s a common theme across our whole crop portfolio, those sort of decreases, which are huge for the client.”

One customer’s crop premium dropped to $3900, from $29,000 in June, due to the collapse in yields. 

“There’s not going to be a lot of crop premium written this year, and hopefully we don’t get any hail events or anything, because it will make that book unviable really,” Ms Testoni said.

“It’ll take them a little bit to pick themselves up. We had clients crying when they were giving us their final revisions. They’re devastated, and we feel that too ... We will feel those flow-on effects, and the insurers will too, because those clients that have taken such a hit in their crop campaigns will be looking at where they spend their money, and some may forego insurance altogether. 

“It’s such a huge cost to their business these days. That will play out over 12 months to two years.”