Agribusiness are taking big hits with rising insurance costs

Insurance rates for grain elevator facilities have gone up substantially in the past year.

A bald man with a white shirt and blue blazer speaks with intensitity with a microphone.
Scott Aukes, president for the ag division for Assured Partners in West Des Moines, Iowa, spoke at the North Dakota Grain Dealers convention in Fargo on Jan. 16, 2023.
Mikkel Pates / Agweek
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FARGO, N.D. — Elevators and other companies who purchase facility insurance specific to commercial agriculture are “feeling a lot of pain” because of sudden, unexpected increases in insurance costs, insurance executives say.

Scott Aukes, president for the ag division for Assured Partners in West Des Moines, Iowa, a national insurance brokerage, spoke at the North Dakota Grain Dealers convention in Fargo on Jan. 16, 2023. He said companies are seeing radical shifts in terms and conditions — far higher insurance premiums and deductibles, as well as coverage terms for general policies covering buildings and equipment. Co-op leaders and other insurance executives at the meeting echoed his concerns.

A man in a suit listens as concerned grain elevator officials ask him questions about insurance rates, after his speech on the topic.
Scott Aukes, president for the ag division for Assured Partners in West Des Moines, Iowa, talks with elevator operators concerned about insurance rate hikes. He spoke at the North Dakota Grain Dealers convention in Fargo on Jan. 16, 2023.
Mikkel Pates / Agweek

100% increases?

“We’ve seen insurance premiums go up 20% to 100%,” Aukes said, “At the same time their deductibles go up from 50% to 200%.”

Higher insurance costs could significantly impact the “financial performance” of some companies, and “that’s a bad deal,” Aukes said, grimly.


“I think we’re in for this for another couple of years,” he said. He said co-ops that are large enough to take on a large enough ‘retention,’ (deductibles) will be at the top of the list for every insurance carrier still in the game.

Assured Partners works with 1,200 agricultural companies in the Midwest, with $200 million in premiums. They sell to customers in Iowa, Minnesota, and North Dakota, and some in South Dakota. They sell insurance from primary insurance carriers, and always in the top three brokers for a particular carrier.

Only a handful of major insurance carriers deal with agricultural businesses to begin with, and those are getting fewer, Aukes said. To compare, about 50 major companies might deal with electrical contractors, he said.

“If you’re an ag cooperative with big property values in rural America, there’s only about five willing to write your business,” Aukes said, acknowledging a major carrier recently pulled out of covering grain elevators.

Among the reasons are general distance from things like fire protection, and other factors. It’s been “next to impossible” for re-insurance companies to calculate premium rates that allowed them to continue to make money, in the context of major weather “patterns” and “nuclear verdicts” awarded by juries in the past five years, he said.

‘Re-insurance’ losses

The insurance carriers in turn sell off some of their risk to “re-insurers.” Those re-insurers — primarily based in London — have been unprofitable in recent years.

“Specifically, (re-insurers) have been really hit hard in recent years, so the re-insurance companies are changing their terms, their conditions, and even more specifically their costs to the retail insurance companies.”

Aukes said the increasing frequency of weather trends, including derechos or snow storms, can hit the re-insurers generally. Insurance carriers are limiting their coverage or pulling out of property coverage for things like sow units for hog production and dairy milking operations.


Besides accepting larger “retentions” or deductibles, Aukes said some ag co-ops are considering alliances to self-insure, to absorb losses as a group instead of traditional insurance.

He noted Minnesotans have created Parthenon Agency LLC, a “captive risk management agency,” for cooperatives to reduce risk.

He also said that elevators should at least deal with brokers that have access to the entire range of insurance carriers and should be willing to tell about the elevator’s real, verifiable safety and maintenance programs, so they can qualify for the best terms available.

“And be honest: If you have some 1980 grain bins that historically you were doing ‘replacement cost’ coverage on? Please don’t expect to get replacement cost coverage on these going forward, unless you’ve completely rebuilt them and they’re really ‘worth’ replacement costs,” Aukes said.

One elevator operator in the crowd asked how insurance rates will go for “wood-cribbed” facilities, some of which continue to be used even though companies mostly stopped building them in the 1960s.

“You still have them?” Aukes said, half-joking, and then got serious: Coverage on grain stock in the building may be possible, he said. But the building itself? “It’s going to be a tough one.”

Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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