Crop Insurance Today May 2016 - (Page 1)

TODAY PRESIDENT'SMESSAGE Laurie Langstraat, Editor Ashley Craft, Assistant Editor TODAY® IS PROVIDED AS A SERVICE OF NATIONAL CROP INSURANCE SERVICES® TO EDUCATE READERS ABOUT THE RISK MANAGEMENT TOOLS PRODUCERS USE TO PROTECT THEMSELVES FROM THE RISKS ASSOCIATED WITH PRODUCTION AGRICULTURE. TODAY is published quarterly-February, May, August, and November by National Crop Insurance Services 8900 Indian Creek Parkway, Suite 600 Overland Park, Kansas 66210 www.ag-risk.org If you move, or if your address is incorrect, please send old address label clipped from recent issue along with your new or corrected address to Donna Bryan, at the above address. NCIS® EXECUTIVE COMMITTEE Mike Day, Chairman Jim Korin, Vice Chairman Kendall Jones, Second Vice Chairman NCIS® MANAGEMENT Thomas P. Zacharias, President Charles Lee, General Counsel James M. Crist, CFO/COO Sherri Scharff, Executive Vice President and Chief of Staff Troy Brady, Senior Vice President Frank Schnapp, Senior Vice President Creative Layout and Design by Graphic Arts of Topeka, Inc., Kansas Printed on recycled paper. Waiting for Godot... In the weeks following the NCIS annual meeting, I was frequently asked - "How are things going?" "How are you doing?" "What's going on?" "How are things at NCIS?"-or some variation on that general theme. After responding to this a few times and in the course of preparing for the series of spring update meetings, it occurred to me that the crop insurance industry is in somewhat of a holding pattern, ergo our "tag-line" of "Waiting for Godot." Is there plenty to do? Yes, of course. Are there issues to be concerned about and prepare for, such as a potentially arduous and uncertain appropriations process? Absolutely. So then, why "Waiting for Godot?" Because until Tom Zacharias, NCIS President certain events play out - and not until that time - will we have an adequate base of information upon which to think strategically about the future of the crop insurance industry. Literary Context For those of us who were (or were not) able to stay awake during either high school or college literature, "Waiting for Godot" is a tragi-comedy in two acts that involves two main characters, Vladimir and Estragon awaiting the arrival of "Godot" who is never revealed and never arrives during the course of the play. Written by Samuel Beckett, who was awarded the Nobel Prize in literature in 1969, "Godot" stands out as perhaps his hallmark contribution. For our purposes here, we can think of the enigmatic Godot as the economic and political uncertainty that at times hovers like a dark existential cloud over our industry. (I use the term existential here in the acerbic sense that very few of us grew up as young children aspiring to rise in the ranks of the crop insurance industry. Moreover, I doubt that few, if any, of the professional critics of crop insurance and agricultural policy aspired to rise to their auspicious tower of punditry either.) With our literary foundation set, let us consider the nature of the uncertainty that lies before us, and the extent to which the timing of the resolution of that uncertainty will ultimately determine our future course of action. Industry Uncertainty Industry Economics: Fortunately for the 2015 crop year, results for both the state-regulated (crop-hail) and federally-regulated (MPCI) lines of crop insurance were pretty favorable overall. As this piece goes to press, current loss ratio (indemnity divided by premium) estimates for crop-hail and MPCI are .62 and .76, respectively. Definitive estimates of industry MPCI profitability for the 2015 crop year are not yet final and actual payments to insurers of federal crop insurance will not occur until October of this year. Printed with Environmentally friendly vegetable oil based inks. Continued on page 42 CROPINSURANCE TODAY® 1 http://www.ag-risk.org http://www.ag-risk.org

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Crop Insurance Today May 2016