Midwest Floods and Crop Insurers

While it’s too soon to know the extent of insured losses arising from the recent Midwest floods, investment analysts are suggesting that there could be significant losses for multi-peril crop insurers. According to a Lehman Brothers note, some experts are estimating insured losses in excess of $3 billion in Iowa alone. Analyst Jay Gelb warns that growth in the crop insurance market coupled with higher commodity prices could result in the worst crop insurance losses in 15 years. Industry wide gross written premiums for multi peril crop insurance more than doubled to $6.7 billion in 2007, up from $2.9 billion in 2002 (the last year with significant industry losses). Gelb explains that higher input costs associated with crops have caused farmers to purchase more insurance on their harvests through both crop-yield and crop revenue coverage. Check out further I.I.I. info on crop insurance.  

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