National Crop Insurance Services (NCIS) says indemnity payments in 2011 surpassed $9 billion for the first time in history—and Moody's Investors Service says this development could put smaller, geographically concentrated insurers at risk.
NCIS cites historic droughts in the Plains, flooding along the Mississippi River and deep freezes in the South for the $9.1 billion in payments and says that figure could grow to $10 billion as remaining claims are settled.
As noted in Moody's Weekly Credit Outlook, crop insurers are licensed by the Risk Management Agency of the U.S. Department of Agriculture and generally cede a large portion of crop losses to the federal government through the Federal Crop Insurance Corp.'s Standard Reinsurance Agreement.
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