Businesses involved in agriculture, forestry and fishing provide $15.76 billion in commercial lines premium in the United States or 12.3% of total commercial premiums written, according to data obtained from IMR Corporation's (Insurance Market Research) database of insurance marketing information. The loss ratio is 66.5%. This is a relatively stagnant market, with subgroups showing little or even negative real growth (an increase in employment) and small premium growth. However, it remains an extremely important market due to its tremendous size.
There are four subgroups in this niche market that provide more than $1 billion in commercial lines premium--the largest subgroup being hogs with $2.43 billion in premium and a loss ratio of 68.8%, followed by beef cattle, except feedlots ($2.31 billion, 76.8%); corn ($1.32 billion, 56.5%); and vegetables and melons ($1.02 billion, 68.0%).
"Agriculture remains an extremely important part of the United States economy, making these businesses important to many agents, especially those located in certain areas of the country," Lindsay Smith, president of IMR Corp., one of the PLP Companies, points out. "Although there are growing numbers of large and jumbo agricultural enterprises, the small and medium-sized businesses continue to account for the majority of the premium, making these businesses prime targets for independent agents."
There are 387,398 businesses engaged in agriculture, forestry and fishing in the United States, employing nearly 11.5 million people; 278,197 are small (employing fewer than 20 people) and account for $3.50 billion in premium for an average premium of $12,590 per account. There are 82,092 medium-sized accounts (20-99 employees) providing $5.19 billion in premium for an average of $63,195. The 27,035 large businesses (100-499 employees) account for $7.03 billion in premium and an average of $259,960 per account. The 74 jumbo accounts provide $37.8 million for an average of $510,160.
There are 45 subgroups in this category, ranging from those niches providing in excess of $1 billion in premium down to the smallest niche--soil preparation services--which offers $3.13 million in premium. Loss ratios range from a low of 45.4% for businesses involved in aquaculture to a high of 93.7% for tobacco farms.
Businesses involved in agriculture, forestry and fishing provide $3.82 billion in premium in the Rough Notes West region. The loss ratio is 65.8%. Beef cattle, except feedlots, represent the largest subgroup, providing $457.4 million in premium and a loss ratio of 71.8%. Tree nuts are next, with $322.8 million and a loss ratio of 63.3%. They are followed by vegetable and melon farms ($319.3 million, 67.2%); citrus fruits ($278.6 million, 70.9%); and grapes ($266.5 million, 71.7%). There are 80,321 of these businesses in the West, employing 3.15 million people. The 50,537 small businesses (those employing fewer than 20 people) account for $652.2 million in premium for an average of $12,905 per account. The 20,993 medium-sized accounts (20-99 employees) provide $1.30 billion in premium for an average of $61,740 per account. The 8,768 large organizations (100-499) account for $1.86 billion for an average of $212,590, and the 23 jumbo accounts provide $10.68 million for an average of $464,475.
Information on this niche market is available from IMR at 39 E. Hanover Ave., Morris Plains, NJ 07950, or call (888) 237-7066. *
©COPYRIGHT: The Rough Notes Magazine, 1998