Crop Insurance Cuts Climate Intensity

Nov 23, 2021

By Kurt Lawton  •  From Fall 2021 American Soybean magazine

Tom Zacharias, President of National Crop Insurance Services

Drought. Heavy rain events. Derecho. Record temperature extremes. Stronger and frequent hurricanes. Severe hail. As these weather extremes expand, farmers are reexamining crop insurance strategies to calm climate-induced risks that can devastate a farm business.

“A strong farm safety net helps farmers manage these challenges, and crop insurance stands as its cornerstone,” says Tom Zacharias, President of National Crop Insurance Services (NCIS), the trade association that represents all 13 companies writing crop insurance policies in the U.S.

Safe and affordable food

“These past few years continue to demonstrate the importance of maintaining a safe and affordable food supply that is resilient to disasters – whether that’s a weather event or an unprecedented global pandemic,” Zacharias adds. “During a time of hardship, America’s farmers and ranchers kept farming, and crop insurance never wavered in its mission to provide a trusted safety net.”

For example, more than 19 million acres were prevented from planting nationwide in 2019, and 25% of those acres were soybeans. After these planting challenges were droughts in some areas and early snow that reduced harvest in other areas. In 2020, the costliest thunderstorm derecho event in U.S. history destroyed crops, buildings and cities for 770 miles across the Midwest. The National Oceanic and Atmospheric Administration estimates the derecho caused over $11 billion in damage, including nearly $500 million in crop losses.

Mike Day, Head of RCIS for Zurich North America

“The agricultural industry has been faced with some very significant and unusual events that have impacted producers across the country,” says Mike Day, Head of RCIS for Zurich North America, and one of the 13 companies that insures crops. “Fortunately, our Federal Crop Insurance Program manages one of the most successful public-private partnerships that offers a variety of risk protection products across 160 different crops to help farmers and ranchers survive.”

Since making crop insurance the cornerstone of the farm safety net, Congress has strengthened the federal crop insurance program through various farm bills to expand coverage and improve program integrity. Both Congress and private-sector insurance companies have also invested in developing new policies tailored to meet each farmer’s individual needs and risks.

Climate-smart practice adjustments

One of the strengths of crop insurance is that it is self-adjusting and has the flexibility to respond to new challenges quickly. So, as America’s farmers are on the front lines of the fight against climate change, crop insurance is complementing efforts to incentivize the adoption of climate-smart farming practices that increase resiliency, improve conservation and support a healthy environment.

The first example is a cover crop program to help producers sustain a long-term soil investment by receiving a federal crop insurance premium discount. In addition, the USDA’s Risk Management Agency (RMA) recently announced a 2022 insurance option for corn farmers who split-apply nitrogen. The goal is to help farmers lower input costs and prevent runoff or leaching nutrients into waterways and groundwater.

“USDA and RMA have a key focus on sustainability, along with the Senate and House Ag committees,” Day says. “Coming into next year, we may see more products or endorsements that align with sustainable farming practices.

“The best thing to do on a localized basis is to talk to your crop insurance agent, run through your history, talk about your farming operation concerns, and examine different options that can add peace of mind and reduce risks,” he adds. “We certainly offer effective added private coverage to multi-peril: crop-hail, revenue, added price options and replant, to name a few. And when the need arises with our farmers and ranchers, we’re there to deliver on the cornerstone of agricultural risk management: affordable, viable and available crop insurance.”