New insurance helps with weather woes

There’s a new way of thinking and a new kind of crop insurance that’s raising a few eyebrows and interest in the countryside.

With weather being the culprit for about 90% of crop losses, a relatively new product is designed to provide a safety net beyond federal crop insurance. And it’s all about the weather — planting rain (causing delays), daytime and nighttime heat stress, drought, excess rain, low heat units, and freeze.

Total Weather Insurance, or TWI, provided by The Climate Corp. (formerly WeatherBill), offers full-season weather insurance that looks at a particular crop, location and soil type, and then based on recorded weather events, pays the farmer for the associated yield loss he or she is likely to see at the end of the year — not on end-of-year documented yield loss.

It’s actually not brand new, it was introduced in 2010, but TWI is now much more precise and more widely offered. Weather data has been honed in from a regional and county level — traditionally a 12-by-14-mile block — to a 2.5-square-mile rainfall grid and temperature station specific to the field location, according to Jeff Hamlin, Climate’s director of agronomic research.

Key Points

• Full-season weather insurance looks at a particular crop, location and soil type.

• The Climate Corp. relies on a data using weather from 2.5 million locations.

• The Insurance offers protection beyond federal crop insurance.


The Climate Corp. relies on a sophisticated technology platform that uses weather measurements from 2.5 million locations. It forecasts daily from major climate models and processes the data along with 150 billion soil observations. TWI bases premiums on historical measurements and forecasts.

The Farm-Level Optimizer, Hamlin says, determines the weather conditions that can make or break an individual grower’s yields and then pays growers accordingly at the time of the occurrence.

One new TWI element is Soil Moisture Tracker. For each Precision Rainfall Grid, the tracker estimates the amount of water entering the soil each day through rainfall and the amount of water leaving the soil through plant water use and evaporation. Soil Moisture Tracker supplies a more accurate understanding of the timing of drought and ponding stress that a given crop in a given location may experience during a growing season.

In addition, TWI now includes coverage for nighttime heat stress, “which is in direct response to ongoing university research that has increasingly identified nighttime heat stress as a major driver of corn yield shortfalls,” Hamlin says.

According to Mike Schmidt from Deerfield, “TWI is a good product in addition to multi-peril insurance.” Schmidt farms 2,500 acres of corn, soybeans and wheat with his father, Alan. “I use it on about half my corn and beans.”

Schmidt also sells crop insurance for Fishers Agricultural Insurance of Adrian. “About two-thirds of my clients utilized it in some way last year, and I expect that number to grow this year. This last year we had some claims for early planting rain, heat stress and some areas that didn’t get enough rain. We also had some where it didn’t pay out at all. It’s all about how much protection you want, which is something we all have to weigh in on considering weather extremes. This is up and above federal crop insurance. It’s not based on yield and price; it’s strictly to do with weather.”

When bad weather happens, checks are sent out to the policyholder automatically within 10 days of the end of the coverage period. There’s no claims process, no paperwork, and no waiting for payment. And if a grower gets good weather all season and a premium is due, it’s not collected until the end of the 2012 crop year.

In the digital age, Schmidt says it’s the perfect fit. “You can look up your policy and track real-time payout data online.”

Designed for grower needs

The insurance is highly customizable, according to Hamlin. “Our system will recommend a set of weather protection policies for the grower based on his location, yield target, current crop insurance coverage level and what weather events have historically caused yield loss for that crop in that area,” he says. “This is their TWI program.”

Growers can make changes to the recommended policy and choose to remove certain coverages or change recommended dates of coverage. “The grower has the option to choose every parameter associated with his coverage, from the definition of what ‘bad’ weather is, to the dates he will be covered, to the weather events that he wants to cover in his policy.”

Schmidt says there is a point where it’s not cost-effective. “You have to determine on your farm where that extreme line is and make sound business decisions.”

Because it’s based on weather, it’s possible for a producer to receive checks because of bad weather during the season and still end up with good yields. It could also go the other way when weather events did not trigger a payment, but yet yields were down.

Because the insurance is customizable, it also can be used to insure any specialty crop. “For a specialty crop policy, the grower defines the weather event or events that will cause a problem, and we pay if those events occur. It does not matter what the crop is,” Hamlin says.

Determining need

The process starts by answering six questions online or with the help of a crop insurance agent. A weather risk report is generated for the grower’s crop and region. “The agent will then supply a quote,” Hamlin says. “Once the quote is generated, the grower can make changes to coverage parameters if needed, save them and immediately see how the premium changes.”

One of the major benefits of TWI is it helps protect top-end yields that are not covered by federal crop insurance and that oftentimes represent the greatest share of a grower’s profit margin. “Federal crop insurance is based on a grower’s actual production history [APH], which is an average of the yields produced over the last 10 to 20 years,” Hamlin says. “Those uninsured bushels between where federal insurance starts and the yield the grower is spending for is what can make or break a grower’s financial outcome in any given year.”

For example, if a corn grower has a 160-bushel APH, but is spending on inputs to achieve 180 bushels, his federal crop insurance will at most cover 85% of APH, or 136 bushels. Without TWI, the grower can lose 44 bushels per acre without his federal crop insurance paying him anything. “TWI insures against the weather events that are most likely to cause growers to lose top-end yields,” Hamlin says.

TWI can be bought until March 15. Find an authorized agent at www.climate.com.

What are growers asked about when considering TWI coverage?

These questions are asked online; then a customized program is generated, to be discussed with a local crop insurance agent.

• What federal crop insurance level are you using this year?

• What’s your APH?

• What’s your expected average sell price for the commodity being grown?

• What’s your target yield given the inputs you’ve bought?

• What are your input costs?

• What is your crop insurance premium?


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This article published in the January, 2012 edition of MICHIGAN FARMER.

All rights reserved. Copyright Farm Progress Cos. 2012.