State of the Insurance Market Report

2025 Initial Outlook and 2024 Wrap-Up

Agriculture Insurance

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Crop insurance is among the most important risk management decisions a farmer makes. Although natural disasters are often perceived as the biggest threat to U.S. agriculture, trade dynamics and international supply and demand significantly impact the farmers who produce beef, crops, and other food supply products.

Market Conditions

Profit margins continue to narrow for the second year in a row diminishing returns in agriculture production. Selecting suitable risk management strategies is imperative.

Looking ahead to 2025, insurance agents must be qualified and equipped to properly value all insurance and farm bill options to help farmers and ranchers navigate the tough choices in protecting their legacy for future generations.
  • Commodity market downturn reduces premium prices and profit margins: When profit margins get tight, farmers will naturally look for ways to improve the bottom line by making cuts wherever necessary. While insurance doesn’t help a farmer produce a higher yield, it greatly reduces the risk carried by unforeseen weather and pricing events throughout the growing season. Crop insurance is the only guarantee a farmer has heading into a new crop year.
  • The Government reduces premiums in top-level coverage options: A 21% increase in subsidies for enhanced coverage option (ECO) creates a substantial opportunity for farmers to reduce the effect of small losses in commodity pricing and yields, utilizing index plans and conventional crop insurance coverages. This product offers revenue protection in a coverage band from 95% to 86%. A deductible of only 5% can be critical to the farm’s financial performance.

Coverage Considerations

Crop insurance costs are expected to decrease 5% to 15% through late 2024 and into 2025. While lower commodity prices are the main driver for this reduction, farmers need to prepare to use the savings in subsidies and premium reduction to create the best protection possible for the upcoming season.

Historically, 80% revenue protection by optional unit was considered the best practice. A data driven analytical approach proves we can utilize government subsidies and multiple coverage options to provide farmers with much more efficient revenue guarantees.

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Recommendations

Selecting coverage based on a premium amount and dollars per acre is a method of the past. We are equipped to walk clients through an approach that starts with the cost to produce the crop, any forward contracted sales for that crop, and a clear understanding of the history/crop being grown on a specific unit. After this assessment, explore all available coverage options and dive into proper risk mitigation.

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Analyze county trend lines and determine if it coordinates with the grower history.
This will allow you to assess county versus grower yields.

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Evaluate past performance of an insurance product.
Historical patterns of effectiveness vary by county, but do not forecast the success of a product.

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Assess a profit matrix when selecting federal products and analyze the addition of private products to ensure profitability in the current season.

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Reflect on the financial performance of your farm.
Ask if it is being driven by input costs, market volatility, and production risk, and if so, are you making the right choices?

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Assess if insurance coverage of your pasture or hay ground under the pasture, rangeland, and forage program is merited.

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Consider products like livestock risk protection insurance and dairy revenue protection insurance if you have livestock.

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Evaluate your need for specialty crop insurance policies.
Apples, grapes, and many other vegetable crops continue to see new and innovative protections.

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Farm profits will continue to feel pressure into 2025 with the surplus of agricultural commodities on the U.S. and global balance sheet. Farmers must access both federal and private risk management products as part of an in-depth, analytical process. Simply quoting individual risk management products is not enough.

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Connect with our
Agriculture Practice

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The Risk Strategies Agriculture Practice incorporates the specialty expertise of Silveus Insurance Group, the largest independent crop insurance broker in the U.S.

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To protect your agricultural investments and ensure the sustainability of your farming operations, obtaining the right crop insurance is essential. We’re specialists who help you determine what works best for your operation.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.