Surplus of Funds
Surplus funds (calculated as funds remaining after payment of claims, overheads and expenses) shall remain in the fund to build resilience for further years. No dividends or payments to members shall be made until such time as the Board determines that the Mutual is sufficiently capitalised to provide reasonable assurance of meeting future claims without outside assistance or reinsurance, in order to ensure sufficient future security for Mutual members.
Shortfall of Mutual Funds
In the event of claims in any one cropping year exceeding available funds in the Mutual, all claims shall be subject to a 10% Deductible.
In the event of further shortfall, claims shall be subject to a further proportional adjustment as determined by the Board to ensure continued solvency. In the event of such “proportional adjustment event”, the Board has resolved that shortfalls from such further proportional adjustment applicable to “five-year members”, shall be carried forward into the subsequent year for consideration for payment from any surplus therein (to be calculated following payment of claims applicable to that cropping year). Shortfall payment considerations may be rolled forward for up to four years, but remain at the discretion of the Board at all times.
The role of the sub-committees
Each major agricultural region/state will have a grower member sub-committee. The key role of the sub-committee’s is to assist in the management of moral hazards with the Latevo Farmers Mutual Farm Income Protection program, especially in reviewing decisions to not plant or dry plant.
Sub-committee members are regional advocates for Latevo Farmers Mutual and the Latevo Farmers Mutual Farm Income Protection program.
Dry Planting Conditions
Advisor approved Establishment Sub Limit: If Category 1 is greater than $180/ha protection will be limited to $180 Ha if successful Germination and Establishment is not deemed to have occurred. This is defined by an EVI limit of 0.14 by July 25th, otherwise Category 1 applies.
Non Advisor approved Establishment Sub Limit: If a grower elects to dry plant a paddock without sign off from their agronomist or advisor the whole dry planted area must reach an EVI of 0.14 by August 10th to qualify for the Advisor approved Establishment Sub limit of $180/ha. If the EVI 0.14 limit is not reached by the August 10th your protection fee will be refunded.
In cases where Category 1 is higher than $180 a further EVI limit of 0.27 must be reached by August 30th to qualify for your Category 1 coverage.
Peer Review: In addition to the conditions above the grower advisory panel (sub-committee) will be reviewing all dry planting decisions as part of the LFM model program.
Latevo Farmers Mutual Capitalisation
LFM operates a self-funded proportional discretionary mutual model.
Latevo Farmers Mutual has employed a self funding approach to ensure the long term success of the mutual. This replaces a traditional upfront capitalisation strategy where members would normally be required to make a substantial capital injection.
As the Latevo model has been commercially tested since 2014 and is configured to run a surplus in approximately 85% of years therefore we are able to adopt a self funding approach.
To ensure that Latevo Farmers Mutual has the financial ability to deliver member services and the highest degree of claim payments we are including a 15% capitalisation fee in all protection fees.
Please review the Product Disclosure Statement for more information.