While U.S. #inflation is generally trending down, commercial property coverage is escalating for #grain and #farmsupply cooperatives and independent crop input retailers. My newly released research report (see link below) provides the conclusions of a "deep dive" into the critical variables at play (the "what" and "so what"), while also offering strategic options (the "now what") for co-ops to consider to help mitigate the financial hit from rising property insurance costs.
- 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.
Special thanks to
Marsh & McLennan Agency
,
Lockton Companies LLP
,
Aon
,
Triangle Insurance Company
Agrograph
and
Nationwide
, for their insights and perspectives.
