How the 2014 Blair Hailstorm Continues to Shape Hail Insurance Today

Just as the Nixon and Carter trade embargos of the 1970s are still shaping the farm economy in 2020, the hailstorm that hit Blair in early June of 2014 is shaping the risk management of Nebraska farmers in 2020.

In 2006 when I was just getting into crop insurance, John Deere Risk Protection started a hail insurance price war with their “110 Protection Plan”. I was quite excited about this hail plan because my 2004 experience in Wheeler County was still fresh in my mind. In 2004, I experienced a hailstorm that caused a 20% to 30% damage on the crops that I had in Wheeler County. That combined with a large price drop that we experienced that year caused me a lot of financial pain.

After John Deere introduced their “110 Production Plan” other companies responded by introducing their own plans. Pretty soon we had 115, 120, 130 and even 140 plans. These plans were great for farmers as they paid very well for storms that caused little damage. However, just as they were great for farmers, they were not so great for the insurance companies that had to pay the claims.

 Everything went well until the 2014 storm that caused severe damage in Blair, but it also caused low-level damage to about 1/3 of Nebraska. The many acres of crops that were damaged combined with production plans that paid very well at low levels of damage, caused the crop insurance companies to start to reevaluate the “production plan’ policies.

Just as the Carter Embargo reinforced the effects of the Nixon Embargo, events in 2018 reinforced the effects of the 2014 hailstorm. Crop insurance companies have long considered Nebraska to be the wild west of crop insurance. That was because the Nebraska Department of Insurance unlike departments of insurance in other states, did not enforce minimum hail rates. That changed in the summer of 2018. A company called Crop Pro was unable to demonstrate that it had the financial ability to cover potential losses. The days of the wild west were over.

Contrary to previous practices where insurance companies played a game of chicken to file hail rates, the Nebraska Department of Insurance now mandates that hail rates must be filed by January 15th and mandated a minimum price. 

How to Compare and Evaluate Hail Insurance Policies

For the past 3 weeks, I have been looking at those rates and preparing a spreadsheet that allows my clients and myself to evaluate and compare policies. One thing has become obvious, these companies do not like production plan policies. They are available, but they are expensive. 

There are potential alternatives that provide similar protection to the production plan at a much lower cost. I have spent a considerable amount of time organizing these policies, their costs and how they cover the damage from storms in a way that allows a valid comparison. I would like to share that comparison with you. 

See My Policy Comparisons

Call us at 402-843-5342 or 402-843-8142 to set up a time to visit about these hail policy comparisons and which might be right for you.

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