Lockton Re has formed a strategic collaboration with data analytics and technology provider Verisk to develop new insurance and reinsurance products tailored to the agricultural sector.
The partnership will leverage Verisk's risk modeling tools, including its Multiple Peril Crop Insurance (MPCI) and US Crop Hail Model, to evaluate the impacts of climate change and meteorological trends on crop production and insured losses.
According to Lockton Re, historical loss data is no longer sufficient for assessing current risks, given significant changes in premium and commodity rates. Verisk’s models offer stochastic and scientific insights into the US crop insurance market, helping insurers and reinsurers optimize pricing and profitability.
Verisk’s US Crop Hail Model simulates hailstorms using a 10,000-year stochastic event catalog. The models incorporate variables such as crop genetics, yields, prices, weather patterns, exposure, policy terms, and management practices to create realistic loss scenarios.
Lockton Re said that it will use these tools to gain a deeper understanding of risk and improve the design of insurance products.
Kris Lynn (pictured above, left), senior broker and agriculture practice leader at Lockton Re, stated that the collaboration aims to enhance risk management for the US crop insurance sector.
“By incorporating advanced climate data and understanding the global impact of El Niño–Southern Oscillation (ENSO) on crop production, we’re able to offer reinsurers a data-driven approach to risk transfer and product innovation that hasn't been available before. There has been slow adoption of the data and analytics necessary to keep up with changing risk landscapes. We aim to change that,” Lynn said.
Oscar Vergara (pictured above, right), business development manager for agricultural modeling solutions at Verisk, emphasized the role of partnership in providing reinsurers and insurers with up-to-date models.
“By using our crop models, Lockton Re will be able to provide more informed, data-backed solutions that account for everything from hail damage to the effects of extreme weather events fueled by climate change. Reinsurers and insurers need a robust, up-to-date risk assessment model to help maximize profit within risk tolerance level,” Vergara said.
Lockton Re said that it plans to use Verisk's crop models to develop indexed insurance products that address the growing risks posed by climate change.
Verisk's tools, such as the Fund Designation Service, allow portfolio risk managers to analyze the impact of expanding coverage into new regions with limited underwriting history, helping optimize risk selection and profitability.
The US crop insurance market has seen significant growth, with indexed insurance products gaining popularity. According to the National Crop Insurance Services (NCIS), parametric products accounted for 12.4% of MPCI premium in 2023, with higher adoption rates in key agricultural states.
As crop yields face increasing challenges from climate change, Lynn noted that the collaboration between Lockton Re and Verisk will provide insurers and reinsurers with tools to navigate this evolving risk landscape.
“This collaboration marks a new chapter in crop insurance, driven by data, analytics, and a commitment to improving risk transfer solutions,” Lynn said.
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