Crop Insurance Today Second Quarter 2019 - 22

2018 Crop-Hail Premium and Loss Ratios
Figure
16.
2018
Premium
Figure
16.Perils,
2018 Crop-Hail
Crop-Hail
Premium and
and Loss
Loss Ratios
Ratios
Figure 16 All Crop,
Plans Combined
All
All Crop,
Crop, Perils,
Perils, Plans
Plans Combined
Combined

LR

Premium

(0.00-.50)

(0-1,000,000)

(.50-.75)
(.75-1.00)
(1.00-1.25)

(10,000,000-25,000,000)
(25,000,000-100,000,000)

(1.25-1.50)

(100,000,000-200,000,000)

(1.50-7.00)

(1,000,000-10,000,000)

Data
April
24,
2019
Data
asas
ofof
April
Data
as
of
April24,
24,2019
2019
Source: National Crop Insurance Services Insured Crop Summary and NCIS6b

Source:
Source:National
NationalCrop
CropInsurance
InsuranceServices
ServicesInsured
InsuredCrop
CropSummary
Summaryand
andNCIS6b
NCIS6b

sota, and North Dakota were also impacted. Two
days prior, June 28, saw total damages of almost
$24 million, over $8 million of which occurred in
Nebraska, $5 million in Illinois, $3 million each
in Iowa and North Dakota, and another $1.4
million in Minnesota. June 6 experienced $27
million of storm damage, nearly $16 million of
which occurred in Nebraska, $6 million in Iowa,
$2 million in North Dakota, and $1 million in
Minnesota. The fourth large storm occurred on
August 6, causing over $26 million of damage
with nearly $17.5 million in Nebraska, $3.3 million in Minnesota, $2.2 million in Missouri, and
$1.3 million in Iowa.
In total, the losses from the top ten storm
days amounted to $211 million, up from $198
million in 2017, but well below the $420 million
paid out in 2014. Five states took the brunt of
the major storm, with Nebraska absorbing $98
million of loss, Iowa with $27 million, Minnesota
with $15 million, Kansas with $13 million, and
North Dakota with $22 million. Texas came in
well behind with only $4 million in losses from
major storm events.
Crop-Hail loss ratios by state are shown in
Figure 16. Colors identify states with similar loss
ratios, while shading is used to identify states
with similar premium volume. Crop-Hail insurance was purchased in 41 states in 2018. Of these,
14 had loss ratios greater than 1.00; these are
shown in red and red-brown on the map. Georgia had the highest loss ratio by far at 6.49, but on
a low premium volume of just over $1.7 million.
22

SECONDQUARTER2019

The top five premium volume states, Nebraska,
Iowa, North Dakota, Minnesota, and Illinois had
loss ratios of 1.31, 0.91, 0.73, 0.74, and 0.72, respectively. Overall, 13 of the 41 states with premium had loss ratios of 0.50 or less, shown in light
green on the map. Six additional states, shown
in green, had loss ratios between 0.50 and 0.75,
while eight states had loss ratios falling between
0.75 and 1.00.
[Information sources for this section include:
NCIS' Insured Crop Summary and claim files.]

Canadian Crop-Hail
Experience

Crop-Hail business in Canada is primarily
written in the prairie provinces of Alberta, Manitoba, and Saskatchewan. Denoting Canadian dollars with C$, Table 8 presents the totals by year.
Overall premiums for Canada declined from
C$286 million in 2017 to C$270 million in 2018,
some of which may be attributed to the 3.4 percent decrease in the number of policies written for
the year. Loss experience returned to a more normal range after last year's excellent results. Losses
paid to farmers came in at C$171 million for 2018
compared to C$97 million in 2017. The number
of claims increased to a still below average 11,709
from 8,633 in the prior year, while the average
claim size increased to an above average C$14,630
from C$11,209 in 2017. Overall, the loss ratio for
the three Canadian provinces combined was 0.63,
in line with the long-run average of 0.60 for the
time period 2009-2017.

For the individual provinces, Manitoba saw
an increase in premium of nine percent, to C$55
million, while Saskatchewan and Alberta saws
reductions of six and 14 percent, respectively.
Policy counts were down in all three provinces, with reductions of six percent in Manitoba,
three percent in Saskatchewan, and five percent
in Alberta.
Total payouts for the year in Manitoba were
C$44 million, nearly double the C$23 million
paid in 2017. The loss ratio increased to 0.81
from 0.46 percent a year ago. Losses for Saskatchewan more than doubled to C$99 million in 2018
to C$48 million in 2017, resulting in an deterioration in the loss ratio from 0.30 to 0.66. Payouts
also increased in Alberta, but only marginally, up
from C$25 million in 2017 to C$27 million this
year, which caused the loss ratio to increase from
0.34 to 0.43.
[The information source for this section was the
Canadian Crop Hail Association.]

Conclusion
In 2018, Federal crop insurance provided a
much-needed risk management tool for American farmers and ranchers in a year highlighted by localized catastrophic weather events including wildfires, volcanoes, and hurricanes,
reminding us that farming and ranching are
risky businesses. Farmers paid more than $3.6
billion to buy 1.018 million crop insurance
policies. Insurance companies adjusted losses
and paid claims on more than 310,000 of these
policies. The low level of farm income continues and weighs heavily on all aspects of agriculture. While cases of severe or catastrophic
loss were limited this year, for areas struck
by disaster, Federal crop insurance quickly
provided much needed financial assistance
to those affected, helping with their journey
to recovery.
The crop insurance industry continues to
provide an effective and affordable risk management tool for U.S. agriculture, but will face
challenges in the coming year as policy makers
contemplate possibly renegotiating the Standard
Reinsurance Agreement. We look forward to
improving the mutually beneficial partnership
between the Federal government and private
insurance companies, which continues to be the
solid foundation for financial stability relied on
by farmers and ranchers across the diverse landscape that is U.S. agriculture.



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