Why Does Crop Insurance Matter?
At AgriSompo North America, we sell crop insurance, perhaps one of the most essential and unique varieties of insurance in the world. Crop insurance simply put, is coverage for a farmer or rancher to protect the price and yield risk associated with farming. It is widely popular, essential to the safety and stability of the food produced in this country, and a successful component of the United States economy. In 2020, more than one million policies were issued and almost 400 million acres of cropland were insured, totaling 90% of all eligible acres in the nation.
Learn how CEO Bob Haney truly understood the importance of crop insurance.
Crop Insurance as a Safety Net
Why is crop insurance so important? For farmers, it acts as an irreplaceable safety net. Even a small farming operation requires an enormous financial expenditure and many long hours of labor. Each farm is heavily dependent on weather conditions and the price received for their crops, both of which are beyond the policyholder’s control, to deliver a return. A storm, a drought, or a flood can wipe out a farmer’s entire investment, sometimes in a single day.
No farm can shoulder such a risk alone over time; crop insurance makes it possible. Our policyholders rest easy knowing that an unexpected weather event will not destroy a year or lifetime’s worth of financial security. This peace of mind grants them the freedom to market their crops with confidence, to spend the money required for best farming practices, and to expand their businesses.
Farmers Manage Their Own Risk
Producers take an active role in their own risk management, working with independent agents to customize coverage to their individual needs and paying their portion of the premium to cover the risk. When the worst happens and a crop is lost before harvest, our adjusters verify the damage to ensure a payment is made which offsets the loss. The claim is then paid within a matter of days, quickly getting farmers back on their feet and preparing to plant their next crop.
Crop Insurance Secures Farmers' Ability to Feed the World
But it’s not just farmers that depend on crop insurance; it’s of vital importance to the rest of us, as well. The vast quantities of fresh food, fabrics and textiles, and many other essential products delivered around the world by American farmers would be all but impossible without the security and adaptability granted by the crop insurance program.
That’s why we are stewards of the United States Federal crop insurance program and we love what we do at AgriSompo North America. Farmers work hard to feed their families, and also much of the world. We in crop insurance have the privilege of ensuring that this hard work does not go to waste. It’s a demanding and ever-changing industry, but with time-tested processes, leading-edge software solutions, and a specialized team of experts, we are more than up to the challenge.
Crop Insurance is a Public-Private Partnership
We say we are a specialized team of experts, and believe us, crop insurance requires specialization. Crop insurance in the United States is governed by the complex Federal Crop Insurance Program. For more than four decades, the Federal program has been a successful public-private partnership wherein companies like AgriSompo sell and service the program through an agreement with the Federal government. This establishes a unique partnership with private companies providing flexibility, innovation, and efficiency, and the Federal government providing oversight and dependable financial support.
Only 14 private insurers are authorized to sell crop insurance in the United States, including AgriSompo North America (which is one of the largest). These companies sell, service and manage the risk associated with all of the crop insurance policies in the nation – over one million. Meanwhile, the Federal Risk Management Agency (RMA) regulates, provides rates and subsidizes premium for the program to ensure fairness and affordability.
What are Multiple Peril Crop Insurance (MPCI) and Private Products?
The many products provided through the Federal government program are known as Multiple Peril Crop Insurance (MPCI) products. The RMA dictates the prices at which these products may be sold, and the crops and counties which are eligible, in order to guarantee universally available coverage and to provide an even playing field throughout the industry.
Some products exist outside of the government partnership which drives MPCI policies. These private products are not regulated by the Federal Crop Insurance Program and are sold directly to producers by individual insurers. Private products are one way in which crop insurance providers can distinguish and differentiate themselves, and AgriSompo North America’s creative and varied offerings will set a new standard.
Over the coming years, AgriSompo North America, Sompo International, and each of our trusted partners will work together to shape the future of crop insurance in the United States, and to become the center of agricultural risk management around the world.