Farm supply cooperatives and grain elevators in the Midwest are in a difficult situation regarding insurance, according to an Associated Press report, as those operations face skyrocketing premiums even if they are able to find coverage.
Only one of the 10 insurance companies that formerly wrote policies for grain elevators in Kansas are still operating state, according to a spokesperson for the Kansas Grain and Feed Association, the industry group representing the state’s elevators.
Kansas assistant insurance commissioner, Matt All agreed that farmers are not alone in the struggle to find property and casualty insurance. He said because companies that write farm and farm-related policies in the Midwest are finding it difficult to make a profit and are tightening their underwriting standards, raising rates or exiting the market altogether. Lack of underwriting gains, losses on investments and difficulties with reinsurance are part of the problem, according to All.
Grain and feed supply operations are reportedly facing premium increases of 40 to 200 percent.
An official of the Kansas Farmers Service Association, which writes most of the policies for the state’s grain elevators, said poor profits at insurance companies are nothing new, adding that weather-related losses have compelled many companies to pull out.
Curiously, increased instances of illegal methamphetamine production in rural areas of Kansas-a national leader in meth busts according to the AP-has been cited as a problem for insurers partly because of liability issues surrounding the theft of anhydrous ammonia from grain elevators. The farm chemical is used to make the illegal drug.
However, a bill granting elevators and other suppliers immunity from injuries relating to thefts of the chemical was recently signed by the governor of Kansas.
Another negative factor appears to be fears that products commonly supplied by rural farm cooperatives, like propane, gasoline and some agricultural chemicals, could be used in terrorist weapons.
Kansas and 45 other states allow terrorism exemptions in insurance coverage.
Topics Agribusiness Kansas
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