Crop

Hailstorms can be highly localized and last for just minutes, but as farmers are well aware, they can do a lot of damage in a short time.

In the weather community, few topics generate more buzz than weather modification. It has been the source of grand engineering ideas, among them tornado walls, armadas of mirror-laden ships, and hurricane-busting superbombs. And popular culture has glamorized the idea with futuristic devices that provide rain or shine at the touch of a button.

The 2014 United States Farm Bill created new crop insurance programs that were first employed in 2015. The status of these programs and their implementation in AIR's MPCI models were a highlight of this year's Crop Symposium, held during the AIR Envision 2015 client conference in our hometown of Boston.

Every year, farmers in developing countries alter the crop exposure landscape by choosing to plant particular crops. These choices are guided, for the most part, by individual households' annual consumption needs, the availability of on-farm and off-farm employment, and an expectation of the profit that can be had at harvest time from the portion of the crops that will be sold.

Last year the U.S. saw several crop-damaging hailstorms. Two of these—both in Nebraska—were particularly significant.

The U.S. agricultural sector is having a very interesting year from a meteorological and financial standpoint. Unfortunately there is no precipitation relief for drought-ridden California, but it's not all bad news for crops there. And Nebraska has had a couple of bad hail events so far, but overall the crops in that state are doing all right.

Few lines of business are as complex or as challenging from an underwriting perspective as crop insurance. The sheer number of variables at play—from the impact of the weather across different stages of growth, to the tolerance of different crops to environmental stress, to location-specific farming practices and technological change—make estimating potential crop losses a daunting task.