Drought-related crop-insurance losses could reach as high as $20billion, according to the latest estimates.

“Although the 2012 growing season began on a very promisingnote, it became clear by the end of June that the crop-insuranceindustry was facing one of the worst agricultural droughts,” sayscatastrophe modeler AIR Worldwide, which issued a loss estimate ofbetween $13 billion and $20 billion resulting from farmerclaims.

AIR says it expects a gross loss ratio of the industry ofbetween 120 percent and 180 percent.

“After government recoveries, which are available through thestandard reinsurance agreement between crop insurers and thegovernment, the total responsibility for the insurance companiesand their private reinsurers, net after accounting for premiumscollected, will be about $1 billion to $3 billion…,” says GerhardZuba, senior principal scientist at AIR.

AIR says con and soybean yields could be 40 percent below normalin some areas because of the drought. Low yields have alreadyincreased prices, AIR notes, with corn prices climbing by 142percent and soybeans by 138 percent since planting this spring.

Farmers will not suffer a loss, says AIR, because they carryrevenue-protection policies.