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

Ron Sivorot, business director at Kennametal’s Langford site, the Greater Victoria facility that made a component being used on NASA’s Perseverance rover on Mars. (Jake Romphf, Black Press Media)
NASA’s Perseverance Mars rover using piece made at Kennametal’s Langford site

The Greater Victoria plant’s tooth blank is helping the rover’s drill collect rock cores

A provincially appointed consultant has recommended a change to the funding formula for the VicPD that will save Esquimalt a significant amount of money. (Black Press Media file photo)
Esquimalt to save a bundle on policing costs under new formula

Provincial consultant studied funding model, resource deployment for VicPD

A rockfall closed Finlayson Arm Road and West Shore Parkway on Friday (March 5) afternoon. (Twitter/BC Transportation)
UPDATED: Malahat reopens following rockfall

Section of Trans-Canada Highway was scheduled for intermittent closures today for rock scaling work

A Victoria resident was scammed out of $1,700 after a fraudster impersonated a police officer and convinced the victim to pay a non-existent fine in Bitcoin. (Unsplash)
Fraudster impersonates Victoria police officer, steals $1,700 in Bitcoin

Phone call showed up as VicPD’s non-emergency line

The Tsartlip First Nation was outraged after Green MLA Adam Olsen revealed on social media that the community had been experiencing a COVID-19 outbreak – a fact the First Nation had chosen to keep private to avoid racist backlash as experienced by the Cowichan Tribes when an outbreak was declared there in January. (Black Press Media file photo)
Tsartlip First Nation ‘outraged’ after Green MLA revealed COVID-19 outbreak

Chief shares concerns about racist backlash, MLA Adam Olsen apologizes

Provincial health officer Dr. Bonnie Henry updates B.C. on the COVID-19 situation. (B.C. government)
Dr. Bonnie Henry predicts a ‘post-pandemic world’ for B.C. this summer

‘Extending this second dose provides very high real-world protection to more people, sooner’

Malawian police guard AstraZeneca COVID-19 vaccines after the shipment arrived in Lilongwe, Malawi, Friday March 5, 2021. Canada is expecting its first shipments of AstraZeneca vaccine next week. (Associated Press/Thoko Chikondi)
B.C.’s daily COVID-19 cases climb to 634 Friday, four more deaths

Currently 255 people in hospital, 66 in intensive care

A crashed helicopter is seen near Mt. Gardner on Bowen Island on Friday March 5, 2021. Two people were taken to hospital in serious but stable condition after the crash. (Irene Paulus/contributed)
2 people in serious condition after helicopter goes down on Bowen Island

Unclear how many passengers aboard and unclear where the helicopter was going

Surrey Pretrial in Newton. (Photo: Tom Zytaruk)
B.C. transgender inmate to get human rights hearing after being held in mostly male jail

B.C. Human Rights Tribunal member Amber Prince on March 3 dismissed the pretrial’s application to have Makayla Sandve’s complaint dismissed

Supporters rally outside court as Pastor James Coates of GraceLife Church is in court to appeal bail conditions, after he was arrested for holding day services in violation of COVID-19 rules, in Edmonton, Alta., on Thursday March 4, 2021. THE CANADIAN PRESS/Jason Franson
‘Law remains valid:’ Pastor accused of violating health orders to remain in jail

The Justice Centre for Constitutional Freedoms is representing the pastor

The Netflix logo on an iPhone. B.C. delayed imposing sales tax on digital services and sweetened carbonated beverages as part of its response to COVID-19. Those taxes take effect April 1, 2021. THE CANADIAN PRESS/AP, Matt Rourke
B.C. applies 7% sales tax on streaming, vaping, sweet drinks April 1

Measures from 2020 budget were delayed due to COVID-19

A lawyer wears a face mask and gloves to curb the spread of COVID-19 while waiting to enter B.C. Supreme Court, in Vancouver, B.C., Friday, Aug. 28, 2020. British Columbia’s highest court has sided with the land owner in a dispute over public access to public land. THE CANADIAN PRESS/Darryl Dyck
B.C. high court finds in favour of large landowner in fight over access to pair of lakes

The Nicola Valley Fish and Game Club launched legal action after the cattle company blocked road and trail access

Prime Minister Justin Trudeau holds a press conference in Ottawa Friday, March 5, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau holds firm on premiers’ health-care funding demands, COVID-19 aid comes first

Premiers argue that the current amount doesn’t keep pace with yearly cost increases of about five per cent

Free Reformed Church is seen as people attend service, in Chilliwack, B.C., on Sunday, Feb. 21, 2021. Lawyers for the British Columbia government and the Justice Centre for Constitutional Freedoms are back in B.C. Supreme Court today, squaring off over the legality of COVID-19 rules that prohibit in-person religious services. THE CANADIAN PRESS/Darryl Dyck
B.C. top doctor has power to restrict access to a place during health hazard: lawyer

Under B.C.’s Public Health Act, Jacqueline Hughes says, Henry can restrict or prevent entry to a place

Most Read