In this Monday, June 10, 2019 photo, Andrew Dunham harvests Hakurei turnips on his 80-acre organic farm, in Grinnell, Iowa. Like farmers throughout the Midwest, torrential spring rains turned Dunham’s land into sticky muck that wouldn’t let him plant crops this spring. But unlike other farmers, Dunham won’t get a piece of a $16 billion aid package to offset his losses, and he can’t fall back on federally subsidized crop insurance because Dunham grows herbs, flowers and dozens of vegetable varieties but not the region’s dominant crops of corn and soybeans. (AP Photo/Charlie Neibergall)
Farm insurance rates have skyrocketed this year. Black Press file photo

In this Monday, June 10, 2019 photo, Andrew Dunham harvests Hakurei turnips on his 80-acre organic farm, in Grinnell, Iowa. Like farmers throughout the Midwest, torrential spring rains turned Dunham’s land into sticky muck that wouldn’t let him plant crops this spring. But unlike other farmers, Dunham won’t get a piece of a $16 billion aid package to offset his losses, and he can’t fall back on federally subsidized crop insurance because Dunham grows herbs, flowers and dozens of vegetable varieties but not the region’s dominant crops of corn and soybeans. (AP Photo/Charlie Neibergall) Farm insurance rates have skyrocketed this year. Black Press file photo

Vancouver Island farmers facing massive insurance hikes

Industry says many factors causing dramatically increased premiums

A Vancouver Island couple facing a bill of more than double last year’s to insure their farm is not alone in their struggle.

Neil Turner and Arzeena Hamir of the Comox Valley’s Amara Farm have been scrambling to find about $7,000 to pay for farm and rural insurance this year after paying $3,200 last year.

“I’m almost double, regardless of getting through this,” said Turner. “For a lot of small farmers, three or four thousand bucks, on top of what you paid before, it could be your profit for the year.”

RELATED: Vancouver Island farmers upbeat about 2020, despite the pandemic

RELATED: Supply management key to survival of B.C. dairy industry, says B.C. farmer

Alan Fletcher, who owns 25 acres on Hornby Island, was looking at a $7,500 insurance increase from last year. After some back-and-forth with an agent, he agreed to add a home security system to cover fire and entry, which dropped the price from about $11,000 to $5,500.

“Still a lot of money, plus I have to pay for a security system ($1,000) and a monthly monitor of $40,” Fletcher said.

The B.C. Financial Services Authority says a “hardening” (period of higher rates and reduced underwriting capacity) in the Canadian and global commercial insurance markets is causing a spike in premiums. The hardening is related to losses from a prolonged underpriced market, reinsurance requirements and catastrophe losses.

For B.C., the authority said new research indicates higher potential losses from earthquakes.

“All these factors have created a situation where commercial insurers have repriced premiums higher to return to profitability,” the BCFSA said in a statement.

Commercial insurance, particularly in B.C., has been experiencing “some really significant market pressures,” said Rob de Pruis, director consumer and industry relations at the Insurance Bureau of Canada (IBC).

The pressures are due in part to an increase in property and liability claims, and to severe weather claims. He also notes macro-economic conditions, whereby insurance companies obtain capital either from premiums of policy holders (underwriting income), or from investment income.

“For many years, the insurance industry has not had sufficient underwriting income to pay all the claims,” de Pruis said. “Over a number of years, we’ve seen really low returns on investment, on average, for the insurance industry…It’s a common supply and demand issue.”

Another factor is the pandemic, which has affected every business and organization in Canada.

“The insurance industry is no different,” de Pruis said. “Across the country, there’s tens of thousands of businesses that are going out of business (and cancelling their insurance).”

The B.C. Finance Ministry notes that government does not set insurance rates or regulate pricing.

“However, we continue to monitor the issue and will consider what steps may be taken,” the ministry said. “The pricing of insurance is a business decision undertaken by insurers, based on analysis to anticipate the expected frequency and severity of future claims.”

Various factors come into play to calculate premiums, especially in the commercial insurance marketplace. de Pruis said policies generally fall into two categories: contents (machinery and equipment) and liability. Farm operations, for example, are exposed to various liability exposures, such as business interruption losses.

“Really, it’s about the type of policy that you choose and the limits you have,” he said.

Another factor is replacement cost of a property, which typically increases yearly, based on inflation.

de Pruis said government has a role to play by strengthening building codes and improving land use planning. Insurance companies can help by making products available at an affordable cost. Business owners also need to consider what they can do to reduce their chance of loss or damage.

de Pruis advises residents to regularly review their policy and coverages with their insurance rep.

“Know your risks, and understand what you can be doing to reduce some of these risks and lower your premium,” he said.

The IBC has created a National Commercial Insurance Task Force to better understand issues driving increased costs in commercial insurance. View an IBC-commissioned report here.

For more news from Vancouver Island and beyond delivered daily into your inbox, please click here.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Wayne Allen's graduation photo from Chemainus Secondary School. (Photo submitted)
Brother charged with murder in Chemainus teenager’s Ontario death

Jesse James Allen stands accused in the death of Wayne Allen, a 2020 Chemainus Secondary grad

Pamela Anderson was given a Ladysmith Heritage Award for the restoration work on the Arcady Auto Court property that she purchased from her grandparents. (Pamela Anderson photo)
PHOTOS: Star-studded Ladysmith Heritage Awards honour local commitments to heritage

Barrie McDonald, Pamela Anderson, John & Luke Marston, and the Ladysmith Maritime Society recognized

Kim McGregor died in the Feb. 14 hit-and-run accident in Chemainus. (Photo submitted)
Victim identified in Valentine’s Day Chemainus hit-and-run

Kim McGregor grew up in Chemainus and had recently returned to be close to his parents

Ella Donovan with mom Tina outside Fuller Lake Arena before heading onto the ice for practice. (Photo by Don Bodger)
Young Ladysmith skater watches and waits in battle against cancer

Ella Donovan’s tumour began a tumultuous time, but community support eased the burden

The Ladysmith Museum has two new exhibits open to the public. (Cole Schisler photo)
Ladysmith museum opens up with two new exhibits

The museum is featuring Prime Predators of Vancouver Island and ‘Red Flag, Red Flag’

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature. (B.C. government)
B.C. reports 10 additional deaths, 395 new COVID-19 cases

The majority of new coronavirus infections were in the Fraser Health region

Several BC Ferries sailings are cancelled Friday due to adverse weather. (Black Press Media File)
All B.C. Ferries sailings cancelled due to winds, adverse weather

Adverse weather causes cancellations across several BC Ferries routes

Bryan Adams with his mom, Jane Adams Clark, at Lions Gate Hospital. (Bryan Adams)
Bryan Adams gives shout out to North Shore hospital

The singer’s mom was in Lions Gate Hospital for care

Shoppers will be able to get their hands on signed bottles of Ryan Reynolds’ new gin at B.C. liquor stores this summer. (Twitter/Ryan Reynolds)
Ryan Reynold’s new Aviation Gin autographed and coming to B.C. stores

This summer 100 bottles will be available to the public for purchase across five B.C. liquor stores

Police in Nanaimo found multiple graffiti tags they allege were made by three men arrested for mischief in Maffeo Sutton Park on Feb. 15. (Photo submitted)
Graffiti taggers caught in Nanaimo with paint on their hands

Three suspects arrested at Maffeo Sutton Park last week

An official investigation will be launched after VPD officers were recorded posing near a dead body at Third Beach on Wednesday morning, Feb. 24. (Screen grab/Zachary Ratcliff)
VIDEO: Vancouver officers under review for allegedly laughing, taking pictures next to dead body

Two officers were caught on video by a local beachgoer Wednesday morning in Stanley Park

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature. (B.C. government)
‘Stay local’: Dr. Henry shoots down spring break travel for British Columbians

B.C. is reportedly working with other provincial governments to determine March break policies

“Our biggest challenge has been the amount of vaccine,” said FNHA acting chief medical officer Dr. Shannon McDonald. (First Nations Health Authority Facebook photo)
All First Nations on reserve to be vaccinated by end of March: First Nations Health Authority

Vaccinations continuing for B.C. First Nations amid shortages

(Delta Police Department photo)
B.C. youth calls 911 after accruing $7K in online gaming charges

‘Police spoke with the student about appropriate times to call 911’

Most Read