It’s a good year to have Total Weather Insurance
Farmers who decided to invest this year in added protection against weather losses by taking out a Total Weather Insurance policy with The Climate Corp. will soon be getting some big checks.
“In Kansas, 78% of the wheat producers who had policies against heat and drought have already gotten payouts,” says Jeff Hamlin with Climate Corp. Across Illinois, Indiana, Missouri, Kansas and Nebraska, more than 85% of the corn farmers with Total Weather Insurance policies had received enough bad weather to qualify for a payout as of July 30. That number will rise even further if there is additional hot or dry weather through August, he adds.
Total Weather Insurance, or TWI, provides a level of protection beyond federal crop insurance, allowing farmers to insure against lost yield potential because of adverse weather at some point in the production cycle. Problems at planting, during the growing season, at pollination and at grain fill are covered.
Payments are based on the number of days of adverse weather in tightly drawn areas of as few as 2.5 square miles. They are triggered automatically when adverse weather occurs; checks arrive automatically. Farmers do not need to document prior yields, and no appraisal of damage is required.
• Payouts for Total Weather Insurance policies will be huge.
• In Kansas, 78% of wheat policy holders got payouts.
• At least 85% of corn policyholders will get payouts.
This year’s payouts will be huge, Hamlin says. But he offered assurance that the company, which has been in business for six years and has offered Total Weather Insurance for the past three, will not have financial troubles as a result.
“We are well covered and plan for all scenarios,” he says. “The payouts are what is supposed to happen when bad weather occurs, which it did this year.”
For the 2013 wheat crop, The Climate Corp. has added a fall protection drought policy, covering against continued drought.
“The policy covers the lack of rain during this critical period,” Hamlin says. “It pays if it doesn’t rain.” It does not require farmers to plant the crop if conditions are never conducive to planting.
A second wheat product will be available to cover spring weather risks, which will give farmers an option to cover only those acres where wheat is established in the fall.
Hamlin says he anticipates that more farmers will opt for Total Weather Insurance next year, given the major losses sustained this year across the Corn Belt.
“Losses of more than $200,000 automatically trigger an audit before the grower can get his federal crop insurance check, and farmers will be waiting on checks from the RMA [Risk Management Administration] instead of their local agency,” he says. “There is a shortage of auditors, and we are going to see some pretty long delays getting those audits done. People are going to be waiting for that crop insurance check.”
Conversely, most TWI clients will have their checks for drought and heat by mid-September, likely before they’ve even gotten into the field to harvest the crop.
Farmers who have Total Weather Insurance can log onto the The Climate Corp.’s website, enter their policy number and track the exact payment they will receive based on the number of days of excessive heat and shortage of rain, Hamlin says.
Currently the only crops covered by TWI are wheat, corn and soybeans. “We do have the ability for farmers to purchase a product we called ‘named peril’ insurance for other crops,” he says. “But we don’t have the agronomy built into those products to recommend specific coverages for them. Farmers of other crops have to tell us what they need.”
A cotton farmer in Kansas for example, may know that he plans to plant somewhere between April 6 and April 16. He knows about when his crop will bloom and when it will set bolls, the critical times at which adverse weather could have a major impact. He could insure against it being too cold or too wet or too dry to get his crop planted on time, and insure against adverse temperature or moisture conditions at bloom or boll set.
This article published in the September, 2012 edition of KANSAS FARMER.