Weary of increasing insurance premiums, penalization for claims and dealing with insurers unfamiliar with their industry, Canadian agri-businesses are pooling their resources to create their own insurance program under an insurance purchasing group.

An IPG is an insurance program that protects a group of related businesses with similar loss exposure.

Called Risk Management Alliance (RMA), the IPG was formed by Kevin McCredie, President of Sylvite Financial Services and Bob McNaughton, President of Sylvite Agri-Services. Both firms are divisions of the Sylvite Group of Cos. in Burlington, Ont.

Lower prices and rate stability are among the top attractions of an IPG. “A company buying its own separate liability policy would present a much higher degree of uncertainty around risks and claims, pushing its premiums higher,” said McCredie, in a release. “With an IPG, there are many millions in premiums as a whole, so a single large loss wouldn’t have a dramatic financial effect on individual premiums.”

An additional benefit of dealing with an IPG is their ability to customize a plan for a special market niche. “When it comes to insurance policies for companies in this arena, a pre-packaged solution just doesn’t work,” McCredie said.

Sylvite says its RMA model has attracted large-scale agri-businesses from across Canada. “Members include top quartile companies who put a high priority on health, safety and training, have earned a solid reputation for exceptional business practices and have met the RMA’s rigorous benchmarking criteria,” McCredie said.

The RMA enables members to have direct access to underwriters, a rarity amongst traditional insurance models. “The underwriters we’re aligned with are committed to providing an insurance plan that offers superior terms and conditions, and mitigates risks while stabilizing rates. They also have a solid understanding of the agricultural industry, and actually accompany us when we tour members’ facilities and sites,” McCredie explained.

In addition, McCredie feels that in the wake of the adverse insurance industry publicity generated by the Spitzer inquiry in the United States, members see the RMA as a vehicle that ensures transparency and full accountability in the management of insurance premiums.