PECAN TREE CROP INSURANCE PROGRAM

Transcription

1 PECAN TREE CROP INSURANCE PROGRAM TRI STATE PECAN CONVENTION JUNE 22,

2 Pecan Tree Program Summary o Pecan Revenue Program (Previously Available) o Pecan Tree Program Insures the Tree (First offered 2018) Tree Based Dollar Amount of Insurance Tree Reference Prices by Stage (Based on Trunk Diameter) Coverage levels from 50% to 75% Optional Coverages Comprehensive Tree Value Endorsement (CTVE) Occurrence Loss Option (OLO) Photo Source: Stock.XCHNG

3 Insurance Period Sales Closing Date: May 15 th Insurance Period Begins: July 1 st Insurance Period Ends: June 30 th (Unless insured tree is lost prior) 3

4 Program Availability 233 counties Photo Source: Texas Pecan Board 4

5 Insured Pecan Tree Types Types by rate class based on resistance to wind & ice Group I Improved Varieties Group II Improved Varieties Group III Improved Varieties Group IV Native Pecan Trees Group V Seedling Pecan Trees 5

6 Insurable Varieties Group IV = Natives; Group V = Seedling

7 Tree Stage Trunk Diameter and Stage At the Beginning of the Crop Year Inches Original Stage 6 I II III IV > 20.0 V 7

8 RM1 vs. RM2 o Producer must elect one of two reference prices by stage at SCD RM1 Will remove the entire tree, including stump RM2 Will reset new tree near old stump

9 Tree Reference Prices $350 Grant Parish, LA, Improved Variety, NI $300 $250 $219 $211 $250 $234 $288 $268 $200 $186 $167 $150 $100 $96 $86 $50 $0 Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 W/ Stump Removal No Stump Removal

10 Insured Causes of Loss Wind (Tornado, Hurricane) Freeze damage on trees that are: In the third through fifth crop years after the crop year in which the trees were set out, or Native trees that are between 3 and 7 inches in diameter (trunk); Freezing rain (ice damage) Drought (if allowed by the SP and resulting in dying or death of the tree) Flood Fire, unless weeds and other forms of undergrowth have not been controlled or pruning debris has not been removed from the orchard Failure of the irrigation water supply if caused by an insured peril that occurs during the insurance period or there are salt levels in the water supply sufficient to cause damage (dying) or death of the trees.

11 Base Policy Example Quote Grant Parish, LA Improved Variety (Group 2) (Caddo, Stuart, Sumner) Non-Irrigated Trees/Ac = 4,500 Trees $211/TREE Reference Price 7-10 year old trees = Stage III (10-15 trunk diameter) Basic Unit Discount Coverage Level: 50% 65% 75% Liability: $475,000 $617,000 $712,000 Producer Premium: $542 $1,139 $1,667

12 Canopy Loss Appraisal Method o Adjuster will classify each tree as one of the following: Undamaged Partially Damaged Fully Damaged Destroyed 12

13 Canopy Loss Appraisal Method The percent of canopy loss is based on the adjuster s visual estimation by comparing with other undamaged trees, or by gaging the undamaged limbs of the tree to estimate canopy volume before the damage or a similar comparison.

14 Undamaged Tree

15 Partially Damaged Tree

16 Fully Damaged Tree (Dehorn/Reset) (Reset applicable to Stage I III Trees Only)

17 Fully Damaged Tree (Eligible for Resetting >10 but <45 Leaning)

18 Destroyed Tree (Destroyed if >90% Canopy Loss)

19 Destroyed Tree (No longer upright with an exposed root system)

20 Claim Example (Grant Parish) Wind (Hurricane - September) damage to Pecan Trees 100% damage (destroyed) to 1,200 stage III trees No prior losses during crop year 20

21 Claim Example Base Policy o o 75% Coverage Level Base Policy Example Indemnity Calculation (Grant Parish, LA) Unit Value = $712,125 = Amount of Protection Unit Deductible = $237,375 = [949,500] x 25% Damage Value = $253,200 (based on RM2 reference price) = (1,200 Stage III trees x $211 x 100% damage) Damage Value Unit Deductible = $15,825 = $253,200 - $237,375 Indemnity = $15,825 Producer Paid Premium = $1,667 NET $14,148 21

22 Occurrence Loss Option Optional Coverage o Modifies the indemnity trigger (*essentially eliminates deductible) o Trigger equal to 2% of the unit s value Indemnity paid for each tree damaged due to insurable causes once threshold is met Each loss event must meet threshold o Indemnity = Tree Reference Price Coverage Level o Available with additional premium o Not available with CAT

23 Occurrence Loss Option (OLO) Base Policy Deductible Guarantee Guarantee Deductible OLO 23

24 OLO Example Quote Grant Parish, LA Improved Variety (Group 2) (Caddo, Stuart, Sumner) Non-Irrigated Trees/Ac = 4,500 Trees $211/TREE Reference Price 7-10 year old trees = Stage III (10-15 trunk diameter) Basic Unit Discount Coverage Level: 50% 65% 75% Liability: $475,000 $617,000 $712,000 Producer Premium: $11,139 $17,991 $22,784

25 Claim Example (Grant Parish) Wind (Hurricane - September) damage to Pecan Trees 100% damage (destroyed) to 1,200 stage III trees No prior losses during crop year 25

26 Example of Claim with OLO o o 75% Coverage Level OLO Claim Example Calculation (Grant Parish, LA) Unit Value = $712,125= Amount of Protection 2% of Unit Value = $14,242 = $712,125 x 0.02 Damage Value = $253,200 = (1,200 x 100 percent of damage x $211) Amount of Insured Damage = $189,900 = $253,200 x 75% Amount of Insured Damage > 2% of Unit Value ($189,900 > $14,242) Indemnity = $189,900 Producer Paid Premium = $22,784 NET $167,116 26

27 CTVE Purpose o Background: The CTVE was originally developed by AgriLogic for the Florida Fruit Tree Program which became available in It is also available with the TX Citrus Tree Program and the Hawaii Fruit Tree Program. o The CTVE allows a producer to insure a tree s value as a business asset, compensating the producer for a portion of the future revenue lost as a result of tree death or destruction 27

28 Pecan Insurance Overview Insurance Pecan Tree Replacement Pecan Tree Insurance Policy Insurance Pecan Nut Production Pecan Revenue Policy Comprehensive Tree Value Endorsement Replacement Tree s Production Timeline Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Hurricane Destroys Mature Tree Replacement Tree is Planted and Grows to Maturity 28

29 Comprehensive Tree Value Endorsement (CTVE) Optional Coverage o Producer may also increase coverage by providing producer-level historical revenue o Available with additional premium o Not available with CAT o Base policy coverage level also applies to CTVE o Not available for Stage I trees o Indemnity paid in two steps for destroyed trees 50% at claim settlement; 50% after replant

30 Comprehensive Tree Value Endorsement (CTVE) For all trees considered destroyed, to receive the full indemnity under this endorsement: An equivalent number of trees must be planted within four (4) calendar years of the date of the removal or destruction. The trees planted do not have to be the same crop as the destroyed trees but must be grown to produce fruit or nuts intended to be sold for human consumption. The trees must be planted in accordance with good farming practices and in an area within the state considered to be suitable for the production of the specific fruit or nut crop. 30

31 Comprehensive Tree Value Endorsement (CTVE) DESTROYED TREES: Policyholder will receive 50% of the indemnity within 30 days after claim approval and the remaining 50% upon verification by insurance provider that the requirements of this section have been met. (Destroyed trees only). FULLY DAMAGED TREES: 100% of indemnity is paid within 30 days after claim approval. CTVE claim will only be payable if an indemnity is paid on the same unit under the PCT (base) policy. If no indemnity is due under the PCT policy, then no indemnity will be due under this endorsement. 31

32 Comprehensive Tree Value Endorsement (CTVE) CTVE Value $155 Total Insured Tree Value = $366 x 75% = $ Base Policy Tree Value $211 32

33 Nicole Gueck Risk Management Specialist P: (913)