It Is Time for Ag Co-ops to Pay the Insurance Piper

June 7, 2023

Key Points

  • The increasing frequency and severity of global catastrophic events over the past decade have inflicted major financial losses on society, the insurance industry and agribusiness. U.S. losses to catastrophes totaled $170 billion in 2022, which is about triple the long-term average dating to 1980.
  • U.S. property and casualty (P&C) insurers have responded by raising prices. In fact, the magnitude of the three years of above-average losses has driven one underwriter, Austin Mutual, to exit the market.
  • U.S. grain and farm supply cooperatives paid 40% to 60% more (risk-adjusted) during the 2023 renewal season (both January and April). Rates for customers that experienced property losses during 2020 to 2022 increased up to 100%.
  • CoBank believes that commercial property insurance rates will remain elevated for the next 12 to 18 months as P&C companies attempt to make up for recent year losses and pursue rate adequacy in an environment of high costs for labor, building materials and financing.
  • While there is no one “silver bullet” solution that is applicable across the board, we conclude that cooperatives can reduce some of the bite of higher P&C costs by improving internal loss control and purchasing property insurance through a hybrid insurance program.

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Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.


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