US senators want an index-based insurance policy for farmers

The bill is expected to cover multiple natural calamities

US senators want an index-based insurance policy for farmers

Catastrophe & Flood

By Josh Recamara

A group of US senators is urging the Federal Crop Insurance Corp. to develop an index-based insurance policy, also known as parametric insurance, to address risks farmers face from extreme weather, according to a report from AM Best.

The Withstanding Extreme Agricultural Threats by Harvesting Economic Resilience (WEATHER) Act proposes a multi-peril index insurance product that would link agricultural income losses to data from the National Oceanic and Atmospheric Administration, satellites, climate models and other sources, according to a statement from Sen. Chris Van Hollen, a Democrat from Maryland.

A fact sheet from the office of Sen. Peter Welch, a Vermont Democrat, states that the bill directs the US Department of Agriculture to use its research and development authority to explore parametric insurance options.

The proposed policy would base insurance coverage on a farm’s income rather than crop prices, which Welch said would better reflect losses associated with crop damage. Parametric policies would also streamline claims processes by automatically triggering payments when a weather event meets predefined criteria.

Under the bill, program payouts would be issued within 30 days after an event exceeds a county-level threshold, Van Hollen said. The covered perils include high winds, excessive moisture, flooding, extreme heat, abnormal freezes, hail, wildfire, drought, and other risks identified by the US Secretary of Agriculture.

David Howard, policy development director for the National Young Farmers Coalition, said in a statement that the legislation comes as farmers nationwide experience increasingly severe storms.

“As farmers struggle to rebuild from and manage ongoing and future impacts, it is clear that we need more tools in our agricultural climate risk policy toolbox,” Howard said. “Young Farmers endorses the WEATHER Act of 2025, recognizing how this proposal can complement existing resources and strengthen support for young farmers in persevering through these impacts.”

Requests for comment from national crop insurance trade groups were unsuccessful, the report said.

A July 2024 Best’s Market Segment report found that the US crop insurance sector continues to experience pressure from commodity price fluctuations and droughts. The federal crop insurance program accounted for more than $19 billion of the $20.8 billion in crop insurance premiums collected in 2023, with total premiums declining by 3% from the previous year.

The five largest providers of multiperil crop insurance in 2023, based on direct written premiums across public and private markets, were: QBE North America Insurance Group (20.47%), Chubb INA Group (19.16%), Zurich Insurance US PC Group (15.65%), Sompo Holdings US Group (13.49%), and Great American P&C Insurance Group (8.84%), according to BestLink.

Among private crop insurance providers, the top five carriers in 2023, based on direct written premiums, were: Zurich Insurance US PC Group (21.68%), QBE North America Insurance Group (18.24%), Chubb INA Group (12.56%), Sompo Holdings US Group (11.25%), and FMH Insurance Group (11.07%), BestLink also said.

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