Crop Insurance Today June 2018 - 22

Table 7 Crop-Hail Results, All Perils
	

CROP YEAR	

LIABILITY	

PREMIUM	

LOSSES	

	

	

Mil. $	

Mil. $	

Mil. $

	
	
	
	
	
	
	
	
	
	

2008	 27,540	669.4	
2009	 25,493	621.3	
2010	 27,170	682.2	
2011	 36,691	843.2	
2012	 39,407	955.8	
2013	 39,773	953.2	
2014	 39,652	991.7	
2015	 36,805	979.7	
2016	 36,178	983.3	
2017	 35,775	958.8	

LOSS RATIO

555.1	 0.83
565.9	 0.91
460.4	 0.67
974.5	 1.16
704.3	 0.74
646.2	 0.68
1,209.9	 1.22
740.3	 0.76
880.1	 0.90
882.0	 0.92

Data as of April 20, 2018
Source: Adjusted Verified Totals, U.S. only, for NCIS member companies combined with the data from non-members.

sured apple producers in the Pacific Northwest
additional time to harvest due to late development and maturity of the fruit resulting from
cool spring temperatures.
In addition to the activities related to dealing with weather disasters RMA continued
to work on multiple policy goals. Important
among those is the expansion of coverage in
terms of area covered and commodities included. For example, in January 2017 RMA expanded the area included in existing spring crops
coverage. Additional counties became eligible
for coverage of cabbage in New York; corn in
Louisiana and Texas; peanuts in Arkansas, Florida and Mississippi; soybeans in Florida, Louisiana, Nebraska and North Dakota; popcorn in
Illinois and Kentucky and processing beans in
New York. In July, expansion of area for existing
fall crops programs was announced. Additional
countries were included in coverage for alfalfa
seed in Idaho and Oregon; onions in California;
and wheat in Wisconsin. In September the coverage area for grapes was expanded to additional counties in California, Connecticut, Maryland, Massachusetts, New Jersey, Pennsylvania
and Virginia. Blueberry coverage was expanded
in Oregon and for pecans in California.
Work toward product coverage expansion
was reflected in the conversion of the clam pilot program to a permanent program. Intent to
begin research on new product coverage was
also announced for California citrus trees and
for hybrid canola seed. Research to evaluate the
actual revenue history pilot programs for sweet
and tart cherries was also announced. In some
cases, research conducted resulted in a new
product pilot not being continued or coverage
22

JUNE2018

offered to a new commodity, such as the case in
2017 with proposed garlic coverage.
Risk management education also continues to be an important focus for RMA. In May,
RMA announced it would award up to $4.85
million to deliver crop insurance education to
producers in 17 states where there is a low level of Federal crop insurance participation and
availability. In addition, the agency announced
it would award up to $4 million to provide
farmers nationwide general training and informational opportunities on crop insurance
and other risk management tools. The RMA
received 140 applications for program funding,
up from last year's 129. In September the agency entered into 76 risk management education
cooperative agreements totaling $9.8 million.
Federal crop insurance policy is dynamic
and will continue to evolve. For example, late in
the year RMA announced that it would change
the prevented planting coverage option. In
coming years farmers would no longer be able
to purchase a 10 percent additional prevented
planting coverage option; however, they would
still be allowed the option to continue to purchase 5 percent additional coverage. Changes
in programs, policy and coverage options will
remain both an opportunity and challenge for
the partnership between farmers, RMA, and the
industry going forward.

U.S. Crop-Hail Experience

Crop-Hail insurance are policies which insure direct damage from hail as the primary
cause of loss. In addition to hail damage, many
policy forms carry endorsements for additional perils such wind, fire, vandalism, and theft.

This article reports the results for all losses on
hail policies, including the experience of NCIS
non-member companies not included in NCIS'
Annual Statistical Summary reports.
Crop-Hail premium has risen substantially
over the past ten years. Premium for 2017 was
$958.8 million, a reduction of $25 million, or
2.5 percent, from $983.3 million in 2016. CropHail provided $35.8 billion in private insurance
protection to U.S. farmers in 2017, while losses
paid out were $882 million (Table 7), a small increase over 2016.
The program loss ratio, defined as paid losses divided by premium written, increased to
0.92, up from 0.90 in 2016 and 0.76 in 2015.
While the 2017 loss ratio was much better than
the record loss ratio of 1.22 in 2014, five out of
the past ten years have had loss ratios of 0.90
or more.
Large storms were not as severe in 2017 as in
2016, with only two days exceeding $25 million
in losses, down from five in the prior year. Eight
of the top ten storm dates occurred between
June 9 through July 11. The single worst day
was June 11, when a storm caused damages of
more than $27 million, primarily in Minnesota,
but also caused heavy losses in South Dakota
and Wisconsin. Two days later, July 13, saw total damages of almost $26 million, $14 million
of which occurred in Nebraska and another $6
million in South Dakota. The only other day
with more than $20 million in damages was July
4, with losses of $7 million in North Dakota and
Texas, $4 million in Minnesota, and more than
$2 million in Nebraska. In total, the losses from
the top ten storm days amounted to $198 million, down from $240 million in 2016, and well
below the $420 million paid out in 2014. Five
states took the brunt of the major storms, with
North Dakota absorbing $45 million of loss,
Minnesota with $38 million, Nebraska with $29
million, followed by Iowa and South Dakota
with $22 million each. Texas came in well behind with only $10 million in loss from major
storm events.
Crop-Hail loss ratios by state are shown in
Figure 18. Colors identify states with similar
loss ratios, and shading is used to identify states
with similar premium volume. Crop-Hail insurance was purchased in 42 states in 2017. Of
these, 14 had a loss ratio greater than 1.00; these
are shown in purple and red on the map. Louisiana again had the highest loss ratio of 2.07, but
on a premium volume of less than $3 million.



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