Insurers face big agriculture losses

Drought damage to U.S. corn, soybean crops causing bulk of claims.

Javier Blas and Alistair Gray, The Financial Times | Aug. 26, 2012

The insurance industry faces its biggest ever loss in agriculture as the worst drought to hit the US in more than half a century devastates the country’s multibillion-dollar corn and soybean crops, triggering large claims.

Insurance companies providing so-called crop protection will recoup part of their loss, nonetheless, as the US federal government reinsures some of their risk, on top of subsidising the premiums that farmers pay to private companies.

Agricultural economists at the University of Illinois estimate the drought will trigger this year gross indemnities of roughly $30bn, with an underwriting loss of $18bn.