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Despite Recent Losses, Insurers Like Crop Insurance

Although indemnity losses paid by crop insurers are expected to hit record levels for the third straight year, many large U.S. insurers have no plans to abandon the line.
February 13, 2013

Although indemnity losses paid by crop insurers are expected to hit record levels for the third straight year, many large U.S. insurers have no plans to abandon the line. Indemnity losses for 2011 totaled a record $10.8 billion and the U.S. Department of Agriculture (USDA) says they have exceeded $12.3 billion so far for 2012, with some estimates putting the figure closer to $20 billion. The worst drought in five decades has taken a toll on crop insurers, and they are fighting efforts by the USDA to cut premiums paid by corn, soybean and wheat farmers, insisting that such a move would put a damper on their ability to manage the risks associated with crop insurance.

Still, insurers indicate that despite the drought, crop insurance has performed better than other property/casualty products, and they can lower risk by boosting the amount of reinsurance obtained from the Federal Crop Insurance Corp. However, some uncertainty remains given that Congress has yet to pass a five-year Farm Bill package and President Barack Obama has called for a bill addressing climate change.

Crop Insurance Still a Hot Product for Insurers (BestWire 2/6/13) (subscription)

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