Venture-backed crop insurance startup Crop Pro Insurance has canceled nearly 200 crop hail insurance policies just a few weeks into the company’s first planting season in operation. Hail insurance is additional insurance that farmers purchase to cover damage due to hail and/or fire.
Crop Pro president Joe Young confirmed to AgFunderNews that cancellations affected 182 Nebraska farmers.
According to Young, the company had not acquired enough reinsurance to back the policies it wrote for the 2018 growing season.
“The market demand and interest in Crop Pro crop hail policies was more than we anticipated, and the policies of 182 farmers and seven agencies had to be canceled due to a lack of reinsurance. The timing was due to a late change by reinsurance underwriters given the state premium load balance,” said Young.
The agencies he references are independent actors that represent multiple crop insurance companies. Young said that affected agents were notified within 48 hours of Crop Pro’s knowledge that reinsurance would be an issue and letters were sent to policyholders within three days, in accordance with state codes.
“Crop Pro appointed agents are actively moving these policyholders to other insurance carriers that they represent. Crop Pro has encouraged those affected to work with their agents to find similar coverage, and appointed agents are actively assisting their customers with like alternatives,” said Young.
Bruce Ramge, director of the Nebraska Department of Insurance told AgFunderNews that his department is reviewing the situation and could not comment on any forthcoming consequences since the inquiry is ongoing. He recommends that any affected farms work closely with their insurance agent.
“This type of occurrence does not happen frequently,” said Ramge. “The Department of Insurance considers these cancellations to be a very serious matter and has an open review of the situation. ”
One affected Nebraska farmer, James Duffek told the Lincoln Journal Star, “I think it’s pretty irresponsible.” (The report in the Lincoln Star Journal put the number of farmers affected at 400, which Ramge confirmed to AgFunderNews was the number Crop Pro gave him late last week. Crop Pro confirmed the number of affected farmers to be 182 to AgFunderNews yesterday.)
As well as offering typical crop insurance coverage for weather, pests, flooding, and price fluctuations, Crop Pro, which claims to be the first VC-backed insurer to be approved to offer federally-backed policies, aims to promote agtech adoption through unique private, agtech insurance products. So, if a farmer decides to try a new biological yield enhancement product, for example, and purchases a policy on it from Crop Pro, the farmer can make a claim and recoup some of the investment if the product doesn’t work as the manufacturer forecasts.
“As we continue to grow our reach on farms throughout the United States, we are going to continue helping farmers get income assurance they can rely on, as well as improving their profits and maximizing their returns by taking the risk out of using new agtech innovations. To make sure this does not happen again, we have rebalanced our state-level reinsurance premium protocols,” said Young.
Crop Pro Insurance raised an $8 million Series A round in August led by ag-focused venture firms Finistere Ventures and S2G Ventures. Crop Pro Insurance, which is based in Des Moines, Iowa, received approval from the USDA to sell crop insurance on June 30, making it the newest player in a very small club of only 16 approved providers. Established insurance provider GuideOne Insurance also joined the round.