Insurance Loss Estimates from Florida Freeze Still Being Tallied

It will still be weeks, into March and April, before the full extent of crop damage and insurance payments from Florida’s recent extended freeze will be known.

While Florida’s citrus industry has been hard hit, the state’s nursery plants and shrubs industry could actually end up reporting higher losses. Growers of tomatoes and other vegetables in the southern counties are also reporting damage.

The state’s farmers battled freezing temperatures for nearly two straight weeks through January 14.

Florida Agriculture Commissioner Charles Bronson has said total crop losses could be in the range of hundreds of millions of dollars but a more exact number can’t be calculated until farmers are done harvesting.

The federal government agency agreed to designate 60 of Florida’s 67 counties as primary natural disaster areas as a result of the freezing conditions, which means farmers will be eligible for loans.

The government disaster aid is important because farmers have to absorb as much as one-third of their losses before insurance pays anything.

The U.S. government works with 15 private insurers to provide crop insurance under a program managed by the Risk Management Agency (RMA).

Mike Moore is a southeast district director for the RMA. An RMA veteran, he has witnessed other freezes. “We had some areas with freeze damage last year. I suspect that it’s worst than last year, but maybe not the worst we’ve seen,” Moore told Insurance Journal.

Statewide, there is about $3 billion in federal crop insurance in force and, out of that, about $416 million covers citrus. However, given that some (about $60 million) oranges were already harvested by the time the freeze hit, only about $350 million citrus exposure remains, according to RMA.

“We wouldn’t even begin to put a number on it at this point in time. In addition to the fruit, we also have the trees insured. We know that we had some tree damage, particularly in the northern areas of the state, but it’s very difficult to put a number on that at this point in time. The damage doesn’t show up for some time after,” Moore said.

While citrus is important, the bigger crop insurance liability in the state is actually nurseries. There is $831 million of nursery coverage in force in Florida, according to Moore.

Vegetables grown in the southern part of the state – Miami-Dade, Collier County, Hendry, Lee, Palm Beach County – were also affected by the freeze.

As with citrus damage, total nursery and vegetable losses are not going to be known for weeks, Moore said.

Representatives for private insurers like AgRisk Management Technologies, or ARMtech, the crop insurance subsidiary of Endurance Specialty Insurance Ltd., are in the fields reviewing individual claims. According to David Cash, chief underwriting officer for Endurance, determining insurance payments takes time.

“While we have some early indications that we will incur losses, we are not in position to quantify them at this point as we have not received all claims nor has our claims team been able to review the individual claims in the field to put initial loss estimates on the individual notices we have received from customers,” Cash said.

Cash said it will likely be the end of February before Endurance and other crop insurers have loss estimates. He anticipates the losses to be manageable.