Forage Rainfall Insurance Program Example

These examples use precipitation data to demonstrate the impact the monthly weighting and precipitation cap selection has on your FRIP coverage.

You enrol 100 grazing acres at $99/acre coverage. You are covered for a total liability of 100 acres x $99/acre coverage = $9,900.

Scenario A

Example at 30-30-30-10 and precipitation cap of 150 per cent:

Weighting Long-Term Normals  Monthly Precipitation  Monthly Precip/Long-Term Normal = % of normal (maximum of 150%) Value of Monthly Weightings % of Normal x Monthly Weighting = monthly weighed % of normal
April (30) 25 mm 40 mm 160% (cap reached) 30% 45.0%
May (30) 45 mm 32 mm 71.1% 30% 21.3%
June (30) 70 mm 33 mm 47.1% 30% 14.1%
July (10) 65 mm 16 mm 24.6% 10% 2.5%
          = 82.9% normal

With 150% cap percent of normal = 82.9%

Claim Calculation
SCIC will begin payment when rainfall drops below 80% normal.

In scenario A, the per cent normal is above 80 per cent so no payment will be made.  

 

Scenario B

Example at 30-30-30-10 and precipitation cap of 125 per cent:

Weighting Long-Term Normals Monthly Precipitation Monthly Precip/Long-Term Normal (max of 125%) Value of Monthly Weighting % of Normal x Monthly Weight = Monthly Weighting % of Normal
April (30) 25 mm 40 mm 160% (cap reached) 30% 37.5%
May (30) 45 mm 32 mm 71.1% 30% 21.3%
June (30) 70 mm 33 mm 47.1% 30% 14.1%
July (10) 65 mm 16 mm 24.6% 10% 2.5%
          =75.4% normal

Claim calculation
= (80% - 75.4%) x 2.5%  
= 4.6% x 2.5%
= 11.5% indemnity (claim)

Claim per acre                       
= $99 x 11.5%
= $11.39 per acre

Total insured acres                             
= $99 x 100
= $9,900 x 11.5%
= $1,138.50

The change in cap resulted in a claim of $1,138.50 on 100 acres.

 

Scenario C

Example at 20-40-40-0 and precipitation cap of 125 per cent:

Weighting Long-Term Normals Monthly Precipitation Monthly Precip/Long-Term Normal (max of 150%) Value of Monthly Weighting % of Normal x Monthly Weight = Monthly Weighting % of Normal
April (20) 25 mm 40 mm 160% (cap reached) 20% 25%
May (40) 45 mm 32 mm 71.1% 40% 28.4%
June (40) 70 mm 33 mm 47.1% 40% 18.8%
July (0) 65 mm 16 mm 24.6% 0% 0%
          =72.2% normal

Claim calculation 
= (80% - 72.2%) x 2.5% 
= 7.8% x 2.5%
= 19.5% liability

Claim per acre                     
= $99 x 19.5%
= $19.30 per acre

Total insured acres                              
= $99 x 100
= $9,900 x 19.5%
= $1,930.50

The change in weighting option resulted in a claim of $1,930.50 on 100 acres.