Canada Production Insurance Regulations (SOR/2005-62)

Interpretation

Marginal note:Definitions

1 The following definitions apply in these Regulations.

Act

Act means the Farm Income Protection Act. (Loi)

actuarially sound manner

actuarially sound manner, in respect of premium rates under an insurance plan, means that the premium rates provide for all costs associated with the transfer of risk and are an estimate of the expected value of future losses under the insurance plan. (saines pratiques d’actuariat)

actuary

actuary means a Fellow of the Canadian Institute of Actuaries. (actuaire)

coverage level

coverage level means the percentage of the value of production of an agricultural product that is insured under an insurance plan. (niveau de protection)

exposure unit

exposure unit means a unit of measurement of an agricultural product that is used to determine the amount of insurance coverage and related premiums under an insurance contract. (unité d’exposition)

farm enterprise

farm enterprise means all exposure units of agricultural products that are produced by a producer or by two or more producers who have a common interest in the agricultural products. (exploitation agricole)

insurance plan

insurance plan means a set of insurance features under an insurance program for an agricultural product. (régime d’assurance)

insurance program

insurance program means a crop insurance program that provides insurance coverage that is based or not based on yield and that may provide for wildlife compensation. (programme d’assurance production)

insured producer

insured producer means a holder of a contract of insurance who has an insurable interest in one or more agricultural products covered by the contract. (producteur assuré)

national certification guidelines

national certification guidelines means guidelines, developed by Canada in consultation with the provinces, as amended from time to time, that describe the work and documentation needed in preparing the certifications required by these Regulations and that are available on request from the Minister. (lignes directrices nationales sur les certifications)

new agricultural product

new agricultural product means an agricultural product for which protection is offered under an insurance plan at a coverage level that does not exceed 70% of the value of production of the agricultural product and for which insufficient data exists to meet the national certification guidelines. (nouveau produit agricole)

production guarantee

production guarantee means the amount of insurance protection provided under an insurance contract for an agricultural product, based on the probable yield of the agricultural product, the exposure units insured and the coverage level established under the contract. (garantie de production)

production insurance agreement

production insurance agreement means an agreement entered into by Canada and a province to allow contributions to be made by the parties to an insurance program. (accord sur l’assurance production)

responsible officer

responsible officer means, in respect of any province, the person or persons designated by the province to be responsible for the administration of the province’s insurance program. (agent compétent)

risk area

risk area[Repealed, SOR/2018-118, s. 1]

risk-splitting benefit

risk-splitting benefit means insurance coverage benefits that are deemed to be risk-splitting benefits in accordance with subsection 4(4). (garantie de fractionnement du risque)

wildlife compensation

wildlife compensation means an amount that is paid to producers to compensate them for damage that is specified in a production insurance agreement and that

• (a) is caused by wildlife specified in the agreement; and

• (b) is not included as part of an insurance plan. (indemnités pour les dommages causés par la faune)

General Provisions for Programs and Plans Based or Not Based on Yield

New Agricultural Products and Changes to Insurance Plans

Marginal note:Eligible agricultural products

• 2 (1) A production insurance agreement shall provide for the agricultural products eligible for coverage under the insurance plan.

• Marginal note:Provincial submission

  (2) The agreement shall provide that any proposal by the province, that is intended to take effect in the following year, for the introduction of an insurance plan for a new agricultural product, or for a change to an insurance program or insurance plan, that has a financial impact shall be submitted by the responsible officer of the province to the Minister, in writing, with complete operational details and an estimate of the financial impact at least 60 days before the proposed date of implementation, unless otherwise agreed to by Canada and the province.

• Marginal note:Eligibility of provincial proposal

  (3) The agreement shall provide that Canada shall

  • (a) inform the responsible officer of the province in writing, as soon as possible, whether the proposal is eligible for contributions; and

  • (b) outline any elements of the proposal that are not in compliance with the Act or these Regulations.

Coverage Levels

Marginal note:Maximum coverage levels

3 A production insurance agreement shall provide that the manner of determining the percentage of the value of production of an agricultural product that may be insured, as set out in the agreement, shall be subject to the following maximum level:

• (a) 90% of the probable yield for insurance plans based on yield;

• (b) 90% of the value of production for insurance plans not based on yield if production of the agricultural product is reduced by weather or other agricultural perils; and

• (c) for all other insurance plans not based on yield, as covered under section 15, 100% of the value of production minus the long-term average loss percentage for the agricultural product or 90% of the value of production if the long-term average loss percentage cannot be determined.

Determination of Losses

Marginal note:Insured perils

• 4 (1) A production insurance agreement shall provide that all insurance contracts to which the agreement applies, except those covering losses specified in paragraph 15(c), shall provide insurance against more than one of the perils specified in the agreement.

• Marginal note:Determination of losses

  (2) The agreement shall provide that losses of a farm enterprise, with the exception of the losses referred to in section 15, shall be determined by subtracting the total production of an agricultural product, adjusted for any quality losses, from the total production guarantee for the agricultural product on all exposure units of the farm enterprise.

• Marginal note:Agricultural products to be distinguishable

  (3) The agreement shall provide that, for the losses in respect of an agricultural product to be determined separately under an insurance plan, the agricultural product shall meet the following criteria:

  • (a) the agricultural product can be distinguished from other like agricultural products;

  • (b) the agricultural product has a separate market price from other like agricultural products;

  • (c) the agricultural product has different productive capabilities or production risks from other like agricultural products; and

  • (d) there is sufficient volume of production and availability of data to ensure the financial viability of an insurance plan related to the agricultural product.

• Marginal note:Exception

  (4) The agreement shall provide that any insurance coverage benefit under an insurance contract that is an exception to subsections (1) to (3) is deemed to be a risk-splitting benefit.

• Marginal note:Level of premium support

  (5) The agreement shall provide that the risk-splitting benefit shall be subject to the level of premium support from Canada that is associated with high-cost production coverage, as set out in the agreement, and shall be supported as being feasible by documentation that demonstrates that the following conditions are met:

  • (a) standards and procedures for adjusting losses are in place;

  • (b) administrative resources agreed to as adequate by the parties to the agreement are available;

  • (c) administrative costs associated with the risk-splitting benefit are reported separately from the other administrative costs associated with insurance plans; and

  • (d) there is sufficient volume of production and availability of data to ensure the financial viability of the risk-splitting benefits.

• Marginal note:No double indemnity

  (6) The agreement shall provide that if there is a risk-splitting benefit under an insurance contract, there shall be loss adjustment and payment processes to ensure that damage is paid for only once or that any indemnity payable under a risk-splitting benefit is deducted from any other indemnities payable under an insurance contract.

Marginal note:Risk-splitting benefit

5 A production insurance agreement shall provide that a risk-splitting benefit may be subject to the level of premium support from Canada that is associated with comprehensive production coverage, as set out in the agreement, if one of the following conditions is met:

• (a) the province can prove that the risk-splitting benefits arise from third-party intervention;

• (b) the province demonstrates, by a statistical analysis, that operating a risk-splitting benefit results in indemnity payments that are less than would otherwise be paid under the insurance plan; or

• (c) the total costs of the risk-splitting benefit are less than the total costs for the same perils and coverage level under an insurance plan that does not provide risk-splitting benefits.

Manner of Determining Premium Rates

Marginal note:Premium rate methodologies

• 6 (1) A production insurance agreement shall provide for premium rate methodologies and shall provide that

  • (a) premium rates shall be determined in accordance with those methodologies; and

  • (b) those methodologies shall be subject to the national certification guidelines.

• Marginal note:Additional requirements

  (2) Those premium rate methodologies shall reflect the following requirements:

  • (a) premium rates shall be established in an actuarially sound manner;

  • (b) premium rates shall provide for an amount to be applied to the repayment of a deficit under the insurance program;

  • (c) premium rates for risk-splitting benefits shall be determined separately from the premium rates for other benefits in the insurance plan;

  • (d) all elements of an insurance plan or program that have cost implications shall be included in the determination of premiums; and

  • (e) premium rates shall include a margin for building reserves.

Marginal note:Actuary’s opinions

• 7 (1) A production insurance agreement shall

  • (a) require the submission of

    • (i) an opinion, signed by an actuary, certifying that premium rate methodologies have been established in an actuarially sound manner, and

    • (ii) an opinion, signed by an actuary, certifying that the insurance program is self-sustaining; and

  • (b) provide for the date for meeting the requirements of paragraph (a).

• Marginal note:Failure to submit opinions

  (2) Until the opinions required by paragraph (1)(a) are submitted, Canada shall limit its payments toward premium and reinsurance payments under the agreement in respect of the relevant fiscal year and subsequent fiscal years to the following amounts:

  • (a) 90% of the amount otherwise payable under the agreement if one of the requirements of paragraph (1)(a) is met; or

  • (b) 80% of the amount otherwise payable under the agreement if neither of the requirements of paragraph (1)(a) is met.

• Marginal note:Qualified opinions

  (3) If the requirements of paragraph 1(a) have not been met, premium receipts used for calculating a payment from the Crop Reinsurance Fund shall be determined by the Minister using the estimated premium receipts that would have been collected if the opinions had indicated that the requirements of that paragraph had been met.

• Marginal note:New agricultural products

  (4) The opinion referred to in subparagraph (1)(a)(i) is not required with respect to the manner of establishing premium rates for new agricultural products.

Coverage Based on Yields

Probable Yields

Marginal note:Probable yield methodologies

• 8 (1) A production insurance agreement shall provide for probable yield methodologies and shall provide that

  • (a) probable yields shall be determined in accordance with those methodologies; and

  • (b) those methodologies shall be subject to the national certification guidelines.

• Marginal note:Statistical measure of yield

  (2) In establishing those methodologies, a statistical measure of yield that is based on actual yields per seeded area shall be used. That measure may be adjusted to reflect the demonstrated productive capability of producers and may take into account the average level of quality produced related to the levels of quality of the agricultural product provided for in an insurance plan.

• Marginal note:Data sources

  (3) If insurance data is unavailable or unrepresentative as a data source for determining the probable yield of an agricultural product, other data sources may be used, as agreed to by the parties to the agreement.

Marginal note:Actuary’s opinion

• 9 (1) A production insurance agreement shall

  • (a) require the submission of an opinion, signed by an actuary, certifying that the probable yield methodologies result in probable yields that accurately reflect the producers’ production capability for the agricultural product;

  • (b) if that opinion is qualified, require the disclosure by the actuary of the extent and sources of any bias in the methodology; and

  • (c) provide for the date for meeting the requirements of paragraph (a).

• Marginal note:Failure to submit opinion

  (2) Until the opinion required by paragraph (1)(a) is submitted, Canada shall limit its payments toward premium and reinsurance payments under the agreement in respect of the relevant fiscal year and subsequent fiscal years to 75% of the amount otherwise payable under the agreement.

• Marginal note:Qualified opinion

  (3) If the opinion of the actuary indicates that there is a bias in the probable yield methodology, payments by Canada shall be limited to the amount that would otherwise be provided for under the agreement.