Violent cyclones in 1945 precipitated events. Action at governmental level in London and in Mauritius, and at the Chamber of Agriculture led to Ordinance no. 53 of 1946 with the formal establishment in October of that year of a Cyclone and Drought Insurance Fund.
The main features of the latter were (Sauzier G.: Chamber of Agriculture, Centenary Book, 1953, Port Louis, pp 187-194):
- Sugar Insurance became compulsory, covering all cane planters and millers;
- The insurance premium payable was 4 1/2 % of the value of the average quantity of the sugar harvests of three preceding ‘normal’ years (i.e. years exempt from cyclones or droughts). The premium, payable before the 31st December of each year to cover the cyclone and drought risks of the following year, was paid by the Mauritius Sugar Syndicate, the sole sugar marketing agency, for and on behalf of each cane planter and miller from the proceeds of the latter’s harvest.
- Compensations were payable on official declaration of ‘event’ years (i.e. years in which cyclone and/or droughts have been officially deemed to have taken place), wherever and whenever shortfalls in sugar crops took place because of cyclones or droughts, except for a first tranche of 5% of total loss which had to be borne by the insured. The compensations were to cover not only the production costs of cane growing (and milling), but also the profits associated therewith.
- The Fund could refuse to pay compensation for cane fields deliberately neglected or abandoned. Officials of the Board governing the Fund were entitled to enter and inspect all cane fields accordingly.
- There was an obligation for all cane growers and millers to provide relevant information to the Board.
Over the years, changes have taken place concerning the premium percentage payable. Currently the latter (varying from 8.8% of the value of the insurable sugar to 5.5%), the ‘first loss’ borne by the insured (from 16.0 to 4.0%) and the ‘value percentage shortfall’ (i.e. that part of the production shortfall which is compensated by the insurance fund) are all linked to the ‘ranking’ of the producer (from the lowest set at 5 or less, to 15.0). Such ranking alters with the claims’ history of the producer depending upon the compensation/premium applicable each (previous) year.
As a producer moves down the ranking table (from say a ranking of 10 to that of 9), the premium percentage increases (from 7.7 to 8.0 as at July 1984 onwards) and there is fall in claimable losses (from 65.0% to 62.0%, again as at July 1984 onwards). Up the ranking table, the premium percentage and the first loss decreases, while the value percentage increases. However, movements up and down the ranking table are not necessarily symmetrical.