You’re probably aware that crop insurance is a key component in the success of our country’s agricultural economy. What you may not be aware of is the important role crop insurance plays in the success of Farm Bureau Mutual Insurance Company of Idaho. Here’s an overview of how it impacts all of us as Farm Bureau employees and agents.   

 

CROP INSURANCE AND THE ECONOMY

All of us rely upon agriculture for food and clothes. And in Idaho, where agriculture accounts for 18% of the state’s total economic output and around 12% of its employment, we rely on it for our livelihood. (See How Vital is Agriculture to Idaho?) That’s why it’s in everyone’s interest to have a safety net for farmers, and crop insurance is a critical part of this safety net. “I’ve been told by some clients that without crop insurance, they would have been done farming,” says Farm Bureau Insurance's Crop Specialist in Caldwell, Dustie Paynter. “At times, the coverage makes the difference between farming the next year or taking everything to auction.”

 

HOW CROP INSURANCE WORKS

Crop insurance works like most other insurance products in that it covers a large risk pool, participants must pay premiums and shoulder deductibles, and over time participants can expect to pay more than they collect. However, the parallels are not perfect because agriculture is a unique business that suffers unique kinds of losses.

 

Unlike other insurance lines, agricultural losses tend to be geographically targeted and severe. A single flood, storm, or drought can cause catastrophic loss for every farming operation in a given region. Because of this concentrated risk and the higher likelihood of wide-scale disaster, crop insurance would be cost prohibitive and very limited without some form of government support.

 

That’s why America has a crop insurance system based on a partnership between the U.S. Department of Agriculture and private insurance providers like Farm Bureau Mutual Insurance Company of Idaho. Under this arrangement, the federal government oversees the crop insurance products offered (which includes setting the premium rates), and private companies sell the products and service the clients.

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Farm Bureau Mutual Insurance Company of Idaho sells crop insurance through six Crop Specialist agents located across the state. They are:

• Arden Anderson in Idaho Falls

• Wade Andersen in Twin Falls

• Kim Borgen in Lewiston

• Tyler Hoopes in Pocatello

• Dustie Paynter in Caldwell

• Chip Quaade in Moscow

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Crop insurance is purchased by farmers and ranchers to protect against the loss of their crops due to natural disasters, or the loss of revenue due to declines in the prices of agricultural commodities. There are two major types of crop insurance: Multi-Peril Crop Insurance (MPCI) and crop-hail insurance. More than 90% of farmers who buy crop insurance opt for MPCI because a single policy can protect against all natural perils including adverse weather, fire, insects, disease, wildlife, earthquake, and failure of irrigation water due to unavoidable causes.

 

MPCI AND P&C CONNECTIONS

Besides serving as a safety net, a MPCI policy can also be leveraged by farmers to serve as collateral for loans. Tyler Hoopes, a Crop Specialist in Pocatello, explains how this can benefit property and casualty agents. “On two of my Whole Farm Revenue Protection policies, the clients were able to use that insurance to help them secure an operating line from the bank to keep them funded for another year. This, in turn, helped them keep their Farm and Ranch policies with their agents.”

 

There’s another way the crop insurance program can help property and casualty agents. P&C agents can work as a team with Crop Specialists to help keep clients financially intact. If a client’s money is tight and they’re cutting back, try calling a crop specialist. They can explore avenues to cut crop coverage costs so the client can keep their other lines of business with the company. Here’s a real-world example of how this can work.

 

A REAL-WORLD SUCCESS STORY

When one of Perry Shank’s clients told him that a competitor could beat his P&C quote by over $7,000, Perry didn’t give up. Instead, he called his local Farm Bureau Crop Specialist agent. Perry knew the client also carried crop insurance and he hoped a review of the client’s coverage with the crop specialist and himself might give him a fighting chance to keep the business.

 

When the Crop Specialist reviewed the client’s crop insurance coverage, he discovered the competing carrier’s agent had maximized his sugar beet coverage level at 85%. After Blake explained that the coverage would pay the same at different coverage levels, the client realized he only needed 50% coverage on his sugar beets. So instead of paying $50 an acre for 85% coverage, the client was instead able to pay $5.15 an acre for 50% coverage.

 

It was the same story on the client’s other crops – the competing carrier’s agent had maximized the coverage in order to maximize the premium. By the time the Crop Specialist finished reviewing all of the client’s crop coverage and adjusted the coverage levels to what the client actually needed, the Crop Specialists had saved the client over $70,000 a year.

 

At this point Perry asked the client if he would consider staying with Farm Bureau for their P&C coverage in addition to their crop insurance. The client’s answer, thanks to the fact that Perry and the Crop Specialist had taken the time to find out more about the client’s specific needs, was yes.

 

Crop insurance is an important business tool not only for farmers but also to us as Farm Bureau insurance professionals. It can help all of us grow our businesses and look forward to the seasons to come.

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