While crop insurers will likely face their worst underwriting results since 1988 due to 2012’s severe drought, ratings agency A.M. Best does not expect the net impact to materially affect any insurer’s capital position.
In a briefing, A.M. Best says of the drought’s impact on crop insurers, “With $20 billion to $30 billion in claims filed, A.M. Best estimates gross underwriting losses as of the third quarter of 2012 to be about $15.5 billion against estimated premium of $11 billion.”
A.M. Best further states that it projects crop insurers’ 2012 net combined ratio to hit 107, and for the sector’s gross loss ratio to top 135 percent. The ratings agency says the loss ratio may even eclipse the 139 percent loss ratio recorded in 2002, which “had been the worst year in recent memory.”
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