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State of the Crop Insurance Industry
Thomas P. ZachariasNational Crop Insurance Services
Pensacola, FloridaMarch 31, 2017
SCC‐76AnnualMeeting
• NCISBackgrounder• WeareOurMembers• 2016Recap
– StateRegulated(Crop‐Hail)– FederallyRegulated(MPCI)
• OtherConsiderations– SomeFarmBillStuff– SelectedCoverageLevels– PremiumDecomposition– LossRatioPotpourri
• Summary
OrganizationofPresentation
2© 2017 NCIS
NCISFunctions• CropInsuranceProgramDevelopmentandAnalysis
– PolicyAnalysis,LossAdjustmentProcedures,LegalAnalysis,AgronomicResearch
• EconomicandActuarialAnalysis• EducationandTraining
– LossAdjusterSchools– 18(1,398attendees)– NationalConferences– 5(1,293attendees)– AnnualRegional/StateMeetings– 19(449attendees)
• Crop‐HailAdvisoryOrganizationandStatisticalAgent– LicensedbyIndividualStateInsuranceDepartments
• PublicRelationsandIndustryOutreach3© 2017 NCIS
WeAreOurMembers
AllUSDAApprovedInsuranceProvidersAre
NCISMembers
• StateDistribution• MarketConcentration
4© 2017 NCIS
CA
CO
IA
IL
KS
KY MNND
NEOHOK SD
TX
0
2
4
6
8
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12
14
16
18
0 200 400 600 800 1,000
Num
ber o
f AIPs
Total Premium Millions
Number of AIPs as a function of State Premium for 2016
Prepared 03/16/2017
© 2017 NCIS 5
Date Prepared 3/14/2017
© 2017 NCIS 6
2016Recap
7© 2017 NCIS
2015‐2016 Crop‐Hail Industrywide Totals (U.S. only)CROPYEAR PREMIUM LOSS LOSS RATIO
2016 980,575,140 881,282,181 0.902015 976,442,677 737,136,799 0.75
Crop‐HailPremiumTotalsStateRegulated
Top 5 Premium Written States for 2016
STATE PREMIUM LOSS LOSS RATIO
Nebraska 189,882,400 171,121,497 0.90
Iowa 115,941,228 56,407,329 0.49
Minnesota 99,923,170 106,703,576 1.07
North Dakota 93,234,193 137,567,852 1.48
Illinois 82,066,453 33,270,182 0.41
Date Prepared 3/14/2017
© 2017 NCIS 8
NCIS6b Premium Processing Report as of 03/14/2017NCIS Insured Crop Summary as of 03/14/2017
2016Crop‐HailLossRatio
Source: NCIS Internal Processing Reports, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 9
Source: Insured Crop Summary & NCIS6B Report, March 14, 2017 Prepared 03/16/2017
TheBestCrop‐HailGraphEver
© 2017 NCIS 10
FederallyRegulatedCropInsurance
© 2017 NCIS 11
Distribution by CropLiability ByMajor Crop, 2016
Total: $100 bil.
© 2017 NCIS12
NCIS Summary of Business as of 03/14/2017
Date Prepared 3/14/2017
Feed Grain 43%
Food Grain 10%
Oilseeds 22%
Nursery & Whole Farm 4%
Tree/Fruit/Nut, Vegetables & Others
18%
Cotton 4%
2015‐16 MPCI Industrywide TotalsCROPYEAR ACRES LIABILITY PREMIUM
2016 291,042,493 100,453,827,990 9,313,277,8222015 299,749,161 102,507,277,269 9,763,868,970
NationwideSummaryFederalReinsuredBusiness
Top 10 Premium States for 2016STATE ACRES PREMIUM LOSS RATIOTexas 38,624,542 889,032,244 0.52
North Dakota 23,328,950 853,119,417 0.33South Dakota 16,541,057 675,341,542 0.24
Illinois 19,260,658 626,139,560 0.14Kansas 19,191,893 602,902,922 0.13Iowa 21,904,829 596,736,763 0.09
Minnesota 17,576,960 558,342,611 0.21Nebraska 17,438,527 508,223,191 0.23California 6,261,962 480,881,517 0.55Missouri 9,398,261 365,637,456 0.21
Date Prepared 3/14/2017© 2017 NCIS 13
MPCI Summary of Business as of 03/14/2017
Specialty Crop Coverage Growing
© 2017 NCIS
14
02468
101214161820
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Billion
s
Whole Farm Vegetables Nursery Tree/Fruit/Nut
NCIS Summary of Business as of 03/14/2017 Date Prepared 3/14/2017
SomeFarmBillStuff
© 2017 NCIS 15
0
20
40
60
80
100
120
140
160
180
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
# Prod
ucts
Over160ProductIntroductionsSince2000
2013 – e.g., dry pea & bean revenue2012 – e.g., olives, pistachios, camelina
2015 – e.g., SCO/STAX, peanut revenue
2014 – e.g., cucumbers, tangors, other citrus
2016 – e.g., significant SCO expansion, margin protection
[NOTE: Includes livestock; does not include new options or expanded/specialty types/practices]
© 2017 NCIS
Source: RMA Summary of Business February 13, 2017
16
2016WholeFarmPremium
© 2017 NCIS 17
2015 WFRP 2016 WFRP ChangePolicies 1127 2237 98.5%Liability 1,148,105,268$ 2,339,750,132$ 103.8%Premium 53,294,578$ 119,462,469$ 124.2%
Producer Premium 15,204,225$ 35,250,490$ 131.8%Subsidy 38,090,353$ 84,211,979$ 121.1%States 34 43 26.5%Counties 215 511 137.7%Crops 400 400 0.0%
2016vs.2015WholeFarmRevenueProtection(WFRP)Comparison
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 18
2016vs.2015APHYieldExclusion(YE)
Crop 2016 2016 2016 2015Total Insured1 % Eligible2 % Elected3 % Elected
Barley 2,169,030 69.3% 5.3% 3.7%Canola 1,642,154 41.6% 1.5% 1.1%Corn 80,329,998 51.4% 20.0% 17.4%Cotton 9,410,759 78.8% 22.5% 23.3%Grain Sorghum 5,369,846 96.3% 21.5% 17.0%Peanuts 1,407,285 33.0% 1.6% 1.6%Popcorn 191,634 49.2% 7.1% 4.2%Rice 2,732,055 5.6% 0.1% 0.1%Soybeans 71,929,125 38.0% 5.9% 5.3%Sunflowers 1,436,046 96.4% 9.7% 8.8%Wheat 42,751,623 82.5% 16.0% 2.4%All Other 11,795,893 59.3% 3.1% ‐‐‐1 Acreage insured under plans eligible for YE.2 Percent of total insured acreage in counties / practices eligible to exclude at least 1 year.3 Percent of total insured acreage with YE.
© 2017 NCIS 19
Source: Risk Management Agency, March 2017
2016SCOWheatPremiumNumbers represents the $ changes in 1000s from 2015 to 2016
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 20
2016SCOGrainSorghumPremiumNumbers represents the $ changes in 1000s from 2015 to 2016
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 21
2016SCORicePremiumNumbers represents the $ changes in 1000s from 2015 to 2016
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 22
2016SCOBarleyPremiumNumbers represents the $ changes in 1000s from 2015 to 2016
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 23
2016STAXPremiumNumbers represents the $ changes in 1000s from 2015 to 2016
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 24
CoverageLevelsbyStatebyCrop
© 2017 NCIS 25
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
1.00
2.00
3.00
4.00
5.00
6.00
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 CORN Acres In Illinois ‐MPCI
2014 2015 2016
© 2017 NCIS 26
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 SOYBEANS Acres In Illinois ‐MPCI
2014 2015 2016
© 2017 NCIS 27
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 CORN Acres In Iowa ‐MPCI
2014 2015 2016
© 2017 NCIS 28
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.000.501.001.502.002.503.003.504.004.50
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 SOYBEANS Acres In Iowa ‐MPCI
2014 2015 2016
© 2017 NCIS 29
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 CORN Acres In Minnesota ‐MPCI
2014 2015 2016
© 2017 NCIS 30
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.50
1.00
1.50
2.00
2.50
3.00
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 SOYBEANS Acres In Minnesota ‐MPCI
2014 2015 2016
© 2017 NCIS 31
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 CORN Acres In Nebraska ‐MPCI
2014 2015 2016
© 2017 NCIS 32
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 WHEAT Acres In Kansas ‐MPCI
2014 2015 2016
© 2017 NCIS 33
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.50
1.00
1.50
2.00
2.50
3.00
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 WHEAT Acres In Montana ‐MPCI
2014 2015 2016
© 2017 NCIS 34
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.000.050.100.150.200.250.300.350.400.450.50
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2015 vs. 2016 Cotton Acres In Georgia ‐MPCI
2015 Combo 2016 Combo 2015 STAX 2016 STAX
© 2017 NCIS 35
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.50
1.00
1.50
2.00
2.50
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2015 vs. 2016 Cotton Acres In Texas ‐MPCI
2015 Combo 2016 Combo 2015 STAX 2016 STAX
© 2017 NCIS 36
NCIS Summary of Business as of 03/14/2017 Prepared 03/14/2017
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 RICE Acres In Arkansas ‐MPCI
2014 2015 2016
© 2017 NCIS 37
0.00
0.50
1.00
1.50
2.00
2.50
3.00
50 55 60 65 70 75 80 85 90
Millions
Coverage Level
2014 vs. 2015 vs. 2016 All Crops Acres In California ‐MPCI
2014 2015 2016 2015 STAX 2016 STAX
Pasture, Rangeland & Forage
Almonds & Grapes
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 38
Multiple Peril Crop2016 Premium $ 9.313 BillionRate Change ‐1.6%Price Change 3.8%
Volatility Impact 1.1%Overall 2017 Change 3.3%
2017 Premium (estimate) $ 9.621 Billion
2017PremiumDecomposition
Source: Insured Crop Summary & NCIS6B Report, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 39
2016MPCILossRatio
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 40
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 41
1997– 2016CumulativeLossRatio
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 42
2007– 2016CumulativeLossRatio
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 43
2012– 2016CumulativeLossRatio
Source: RMA Summary of Business, March 14, 2017 Prepared 03/16/2017
© 2017 NCIS 44
Summary
• Stillsortof“WaitingforGodot”• 2015and2016turnaround• 2018FarmBill
© 2017 NCIS 45
46© 2017 NCIS
Questions/Comments/Discussion
Websites SocialMedia
NCIS Twitterwww.ag‐risk.org @USCropInsurance
CropInsuranceinAmerica Facebook/Pinterest*JusttheFactsTab CropInsuranceInAmerica
www.cropinsuranceinamerica.org
NCISAmerica
SENSITIVE AND CONFIDENTIALDo not distribute without author’s permission
47© NCIS 2017