Grain and farm supply cooperatives are grappling with skyrocketing property insurance premiums caused by the escalating frequency and severity of weather-related disasters. U.S. insurers have responded to the surge in natural catastrophe claims by raising prices, tightening coverage terms, and increasing deductibles. This has resulted in insurance expenses outpacing total operating expenses for agribusinesses since 2021.
According to a recent report from CoBank's Knowledge Exchange, commercial property insurance rates will remain high for the next 12-18 months as insurers strive to recover recent losses and achieve rate adequacy amidst mounting costs. The report highlights various strategies that grain, and farm supply cooperatives can consider mitigating the burden of insuring their facilities, such as grain elevators and storage buildings.
Cooperatives can explore the implementation of advanced analytic software programs to enhance internal risk management and improve loss control. These programs enable cooperatives to demonstrate improved risk management practices and negotiate coverage that aligns closely with their specific exposure.
Another option available to cooperatives is participating in hybrid insurance programs managed by specialty carriers or brokers. These programs blend traditional and non-traditional insurance elements, allowing cooperatives to have more control over their risk management practices and self-insure a portion of the risk. The traditional component of these programs provides the stability of established insurance companies with consistent reinsurance support.
While no one solution fits all, cooperatives can work with their accounting, legal, and risk management advisors to evaluate these options and manage their insurance premiums effectively. By implementing these strategies, cooperatives can navigate the challenging landscape of rising insurance costs while safeguarding their operations.
Photo Credit: istock-Rustic
Categories: Kentucky, Crops