WLPIP Frequently Asked Questions

WLPIP Questions

Why are producers limited to the amount of insurance they can buy (why is there a need for thresholds)?
Why does the premium change from one sale day to the next if the coverage remains the same? 
If I purchase a policy and see the coverage is better the next day, can I “roll up” my coverage?

Are the insurance premiums subsidized like those in Crop Insurance?
Will there be discounts on premiums when the ‘pool of money’ gets big enough? Or if I insure continuously?
Where does funding from the Provincial government come in?
Is there any ‘bleeding’/ ‘pooling’ of insurance products (i.e. from calf-to-fed, etc.) or provincial fund accounts?

Does WLPIP utilize the futures to offset program risk?
What happens if the weather turns and I can’t get my livestock to market in the claim window?
What if the border closes? What happens to the policies that I currently hold and will I be able to purchase coverage during this crisis?

Is this similar to the “Set-Aside” program during BSE?
This program sounds better than AgriStability. Should I drop out of AgriStability and just buy WLPIP insurance?

WCPIP Questions

I want to sell my cattle prior to expiry or claim window for my insurance policy; does this void my contract?
Do I need to provide sales receipts for my cattle when making a claim on my policy?

What if I decide to retain ownership of my calves?
What if some of my cattle die; is my policy adjusted?

What if I sell my cattle at a higher weight than what I insured?  Do I get the extra money?

If I have 75 calves to sell, can I insure 100? Can I insure 50?
What if I know in August/September that I’m going to have heavier calves; can I ‘buy up’ (purchase additional insurance at a higher coverage level)?

What if I calve in June; can I still purchase WCPIP-Calf
Will I be able to use CPIP to insure my cows or bulls?
I am buying feeder heifers to breed and sell as replacements. Can they be insured?

How do I insure the light-weight calves in the fall that I have just purchased and am wintering to take to grass? 
What slide is being used to calculate the WCPIP-Feeder Settlement Index?
Why is there no slide for the CPIP-Calf Settlement Index? 

What if a producer weans really heavy calves (800 lbs.)?
Will I be allowed to resell my CPIP policy back to AFSC if I don’t want it anymore?
Why are there two regional Coverage options for WCPIP-Calf and WCPIP-Feeder?
Why is there only one WCPIP-Fed Coverage option?

How do I choose between the different coverage options in WCPIP-Calf and WCPIP-Feeder? And, can I choose one based solely on the fact it has higher coverage and/or lower premium?

WHPIP Questions

Why is there no claim window for WHPIP?  
Why are there three Coverage options for WHPIP?  
How do I choose between the different coverage areas in WHPIP? 


WLPIP Answers

Why are producers limited to the amount of insurance they can buy (why is there a need for thresholds)?  Default thresholds are placed on the amount of insurance producers can buy as a starting point to match a producer’s actual need.  Daily and aggregate thresholds can be adjusted within the system to allow for either a temporary increase or a permanent increase based on the actual production.  The second reason for thresholds is that it allows for equal access by all producers, big and small, to this price insurance program without the fear of several large producers buying up all the available insurance at any one time. System daily and system aggregate thresholds also add a degree of early warning to the overall liability risk from the program for the Program Administrator.

Because a major program disaster will be financed by the government after premiums have been used for indemnity, an upper liability limit needed to be placed on each program for each province. Insurance cannot be sold beyond this limit of liability, which means producers need to be limited on an individual level so that one business cannot purchase the entire day’s threshold and not give other producers access to the coverage. If a producer’s production exceeds that which can be covered by the threshold, they can apply for an increase through their provincial insurance office.

Why does the premium change from one sale day to the next if the coverage remains the same?  Premium and premium changes are linked largely to volatility in the commodity futures markets.  The futures prices may have changed (as did the underlying volatility), but when incorporated into coverage calculation, the change did not have a large enough influence to impact the coverage. The premiums were still impacted however which is why coverage may change but premium does not.

If I purchase a policy and see the coverage is better the next day, can I “roll up” my coverage?  As stated in the Contract of Insurance, a producer can cancel a policy by providing written notification to AFSC. However, they do not receive a refund on the premium of the original policy. If they choose to re-purchase insurance, they will have to pay the new premium just like any other purchase.

Are the insurance premiums subsidized like those in Crop Insurance?  No, unlike other crop insurance programs, there is no government cost-sharing of WLPIP premium or indemnity. The program is designed to comply with trade agreements and therefore, over the long-term, the premiums collected will fund the indemnities paid. However, government funds will cover the cost of program development and administration, as well as provide deficit financing.

Will there be discounts on premiums when the ‘pool of money’ gets big enough? Or if I insure continuously?  This question stems largely from the expectation that this program works similar to Crop Insurance. No, this program is not subsidized, nor does it give individual discounts.  However, if the fund balance does reach a certain level, premiums will reduce in price (less volatility and loading of the premium to recover from disaster).  Remember that this program is based on the industry-wide market and individual usage does not affect your premium – therefore there are no continuous participation discounts or early payment discounts.

Where does funding from the Provincial government come in?   Under the current program (a GF2 pilot ending in 2018), costs are split 60% Federal and 40% Provincial. This includes Provincial costs (hiring of WLPIP-specific staff, advertising and promotion) and shared administration costs. The administration costs are split among the provinces based on industry size (with Alberta paying the most and BC paying the least).

Is there any ‘bleeding’/ ‘pooling’ of insurance products (i.e. from calf-to-fed, etc.) or provincial fund accounts?  No, there isn’t any pooling of risk between products or provinces. Because of this, if one product or coverage area experiences a large payment, it won’t impact the premium in the others.

Does WLPIP utilize the futures to offset program risk?  No, neither AFSC nor the provincial/federal governments take offsetting futures positions in an attempt to hedge against WLPIP losses. Although WLPIP utilizes the futures in setting coverage there are other variables (namely basis) that could still impact fund losses that CME futures cannot cover. Instead, the long-run modelling of the program is such that premiums collected will offset payments made to producers.

What happens if the weather turns and I can’t get my livestock to market in the claim window?  If the insured livestock cannot be marketed in the claim window, there is no adjustment made to the producer’s WLPIP policy. The producer can go ahead and claim if it pays to do so but are encouraged to make an effort to match their claim to the closest possible time they will market the cattle. The 4-week claim window is designed to allow this flexibility. Also, this is why producers are encouraged to match their policy length to the estimated marketing date of their cattle, and not just choose the highest coverage policy length.

What if the border closes? What happens to the policies that I currently hold and will I be able to purchase coverage during this crisis?  In the event of a border closure, policies that are already in effect will be honoured although there may be a delay in calculating indemnity until such time that sufficient data has been received to calculate a settlement index (so some policies may be settled retroactively).  The ability to purchase further policies will depend on the situation and whether the Insurers (Provincial/ Federal Governments and AFSC) feel that the risk going forward is something that they wish to insure.

Is this similar to the “Set-Aside” program during BSE?  The “Set-Aside “program was designed to react to a specific industry crisis (BSE) and prevent a dumping of finished cattle on the market.  While Price Insurance is designed to assist producers in the time of a market decline, it is meant to be a proactive program, NOT reacting to a situation that has already occurred.

This program sounds better than AgriStability. Should I drop out of AgriStability and just buy WLPIP insurance?  This is a conversation that you need to have with your provincial Crop Advisor or AgriStability specialist, but from a program perspective, AgriStability and WLPIP are very different. AgriStability is a ‘whole farm’ risk management program based on an individual/farms 5-year historical margin. WLPIP, on the other hand, is a sector-specific insurance program that protects forward-looking market prices for the short-term (i.e. 12-36 weeks into the future). Thus, the two programs are considerably different. AgriStability reporting will capture production losses while WLPIP will not. Also, since AgriStability is a whole-farm program, the losses in an enterprise in one year may be offset by gains in another, thereby preventing payment. Like any other traditional risk management tool, WLPIP should complement AgriStability by supporting a producer’s reference margin up in the event of a market downturn, which is to the producer’s benefit if the market disruption/depression were to continue.

WCPIP Answers

I want to sell my cattle prior to expiry or claim window for my insurance policy; does this void my contract?  No, selling livestock prior to policy expiration or claim window period does not void the contract. The program is not meant to change marketing decisions for the insured, only to offset risk. However, producers must ensure that they meet the eligibility requirements to be in compliance with their Contract of Insurance (60 continuous days of ownership for Feeder and Calf, and the 4 weeks prior to the claim window for CPIP-Fed).

Do I need to provide sales receipts for my cattle when making a claim on my policy?  No, there is no requirement to notify program administrators if you have sold your cattle or provide sales slips/receipts. Remember that this is an index-based program that measures and makes payment on the overall cash market. It is not based upon individual producers’ sales.

What if I decide to retain ownership of my calves?  Because this is an index-based program and is not based on the individual price received for cattle, there is a chance that a producer can retain their livestock while also receiving a payment from their policy. There is no need for producers to notify either AFSC or their insuring province that they intend to retain ownership of their cattle. The producer can also re-insure those cattle with a Feeder policy if they so choose.

What if some of my cattle die; is my policy adjusted?  No, if insured cattle die, there is no adjustment made to a producer’s policy. This insurance is market price insurance, not mortality or production insurance. Producers are required to read and understand their Contract of Insurance when creating a WLPIP subscription.

What if I sell my cattle at a higher weight than what I insured?  Do I get the extra money?  On the cash market sale of the cattle a producer will probably receive more dollars per head as the cattle increase in weight (typically heavier cattle will bring more $ per head but less $ per pound). However, from an insurance perspective, no, WLPIP will not “top-up” the producer’s insurable weight to coincide with the weight that they ended up have producing/selling. By insuring fewer pounds than what was actually sold, the producer has in effect only insured a portion of their production which from a program perspective, is fine.

If I have 75 calves to sell, can I insure 100? Can I insure 50?  The program does not allow producers to knowingly over-insure. Because this is a program that is backed by both provincial and federal tax-payers dollars, it is necessary to ward against speculation. On the other hand, there are no minimum purchase amounts on the insurance so it is acceptable for a producer to under-insure (even just insuring  one head or  hundred-weight) if they choose.

What if I know in August/September that I’m going to have heavier calves; can I ‘buy up’ (purchase additional insurance at a higher coverage level)?  No – once a producer is beyond the deadline for the WCPIP-Calf spring insurance sales season, they are unable to buy additional insurance

What if I calve in June; can I still purchase WCPIP-Calf?  Producers calving in June can still insure with the calf program, however they must comply with program eligibility that requires a minimum of 60 days ownership within the policy length.  Because of the program deadline at the end of May, this means that producers could potentially be purchasing an insurance policy prior to calving.

Will I be able to use CPIP to insure my cows or bulls?  No, CPIP is not designed to insure mature breeding stock. None of the programs represent the value or market price of breeding stock.

I am buying feeder heifers to breed and sell as replacements. Can they be insured? Yes, breeding heifers can be insured under CPIP-Feeder. However, coverage and settlement are based on the average weekly price of an 850 lb feeder steer (over the entire coverage area) so it is not a price guarantee for the producer’s heifers. Indemnity will be based on the published settlement price and how this covers an individual’s price risk depends on how the price of the cattle they are marketing has moved in relation to the index. Remember that WCPIP insures overall market price.

How do I insure the light-weight calves in the fall that I have just purchased and am wintering to take to grass?  If a producer is purchasing light feeder calves in the fall (with the intent of growing them on grass in the upcoming year) and wishes to insure them, there won’t be a policy length long enough to insure the desired sale time off of grass in the following year (remember that WCPIP-Feeder policies are a maximum of 36 weeks). These calves could be insured with a spring settling CPIP-Feeder policy and then re-insured for the fall as long as the producer insures the weight that they are expected to be at each policy expiration. Remember too that the correlation between the light feeder cattle in the spring and the 850 lb. Feeder Settlement Index will potentially be less and that the producer will be paying two sets of premium on the same cattle if he wishes to purchase an addition fall-settling policy.

What slide is being used to calculate the WCPIP-Feeder Settlement Index?  The slide used for the WCPIP-Feeder program changes with movement in the market. From the auction market data obtained each day, the slide for feeder steers (750 to 950 lb. steers), is determined and applied to bring all prices to that of an 850 lb. steer. These daily prices are aggregated to generate the weekly Feeder Settlement Index. The weekly slide can be found under market information documents on www.wlpip.ca.

Why is there no slide for the CPIP-Calf Settlement Index?  A slide on calf data was discussed in the initial program development. However, statistically it was found that sometimes the slide would have a negative impact on the index. It was decided that, because the data only uses a 100-pound weight range and the program is so seasonal, the average weight for the settlement index ends up being 600 lbs (+/- 5 lbs.) and therefore adding a slide was an unnecessary step.

What if a producer weans really heavy calves (800 lbs.)? If weaning heavy calves, a producer could use either the Feeder or Calf program, but it is the producer’s decision to decide which is more applicable to his cattle and offers the best protection against his price risk.

Will I be allowed to resell my CPIP policy back to AFSC if I don’t want it anymore?  No, CPIP policies are nontransferable and nonrefundable. Please refer to the Contract of Insurance.

Why are there two regional Coverage options for WCPIP-Calf and WCPIP-Feeder?  With the development of Cattle Price Insurance across the four Western provinces regional differences in market price were recognized. However, to offer the insurance in a consistent manner, the area for data collection needed to be big enough to allow for the full breadth of policy lengths and settlement options. Therefore, the solution to offer an Alberta Index and a Saskatchewan/Manitoba Index for both WCPIP-Calf and WCPIP-Feeder, was chosen.

Why is there only one WCPIP-Fed Coverage option?  Because the majority of Western Canada’s feedlots as well as the two major killing facilities for finished cattle are located in Alberta, it was felt that the Alberta cash market was the best representation of fed cattle prices for all Western provinces.

How do I choose between the different coverage options in WCPIP-Calf and WCPIP-Feeder? And, can I choose one based solely on the fact it has higher coverage and/or lower premium?  Although producers can choose to insure under either coverage option (AB or SK/MB), they are encouraged to select the option that best reflects the market in which they will sell their cattle as this best insures the market risk that they face.. For example, a Saskatchewan producer that operates in close proximity to the Alberta border may choose to insure his feeder cattle using the Alberta WCPIP-Feeder option rather than that of Saskatchewan/Manitoba. By not choosing to do so, the producer may not receive the indemnity that best relates to the cash market decline he has experienced while selling his cattle (leaving himself open to additional market risk).

WHIPIP Answers

Why is there no claim window for WHPIP?  There is no claim window for hogs for two reasons: First, because of the continuous production flow associated with pigs, it was acceptable to offer monthly coverage and still provide effective protection against market price risk.  Second, the hog market is more volatile by nature and thus has higher premiums associated with coverage. Averaging the daily prices into one monthly settlement index lowered those premiums on the hog coverage. This program feature was developed in consultation with industry.

Why are there three Coverage options for WHPIP?  Similar to the additional indices available on the feeder and calf programs there are three indices available under WHPIP for hog, but for different reasons.  With cattle the decision to provide indices is dependent upon availability of sufficient price data to settle.  Hog data is formula driven off of U.S. hog pricing data and while more indices could be provided it was felt that three would be sufficient at this time. 

How do I choose between the different coverage areas in WHPIP? And, can I choose one based solely on the fact it has higher coverage and/or lower premium?  Although producers can choose to insure under any coverage option, they are encouraged to select the option that best reflects the market in which they will sell their hogs as this best insures the market risk that they face. By not choosing to do so, the producer may not receive the indemnity that best relates to the cash market decline he has experienced while selling his hogs (leaving himself open to additional market risk).  Each index is geographically representative for the producers selling to these select slaughter plants.  The three indices are Olymel – Red Deer, Maple Leaf / Signature 4 – Brandon and Maple Leaf / Signature 3 - Brandon.