As Waters Recede Worries Over Crop Insurance Rise
Industry worries over potential for record payouts after spring floods.
Compiled by staff
Published: Jun 18, 2008
With as much as 20% of Iowa farmland washed away, and more flooding in Wisconsin, Indiana and Illinois already, the crop insurance industry is worried about what may be floating its way. A Business Week report this week notes that the industry is looking back at the last great flood year of 1993 and bracing itself for what may be coming.
Back then, according to the report, the industry had a 2.19 payout - or $2.19 for every $1 of premium that year. This year premiums could total $8 billion and if the payout approaches that same level, the crop insurance costs could top $18 billion. Just over 20% of that liability is held by the government.
As cities and counties add up the costs of floods that have not yet receded, crop insurance providers will being their tallies too.
Ironically, for farmers in areas where crops are strong, the payouts from higher prices will be a boon. The Minneapolis Star Tribune reported on farmers in Minnesota this week who will benefit because flooding rains and rivers have missed their farms.
If you've been impacted by floods, start talking to all your insurance agents to get claims in order in a timely fashion.
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