Leveraging Verisk’s advanced agricultural risk modelling tools—including the Multiple Peril Crop Insurance (MPCI) and Crop Hail Model—Lockton Re aims to address the evolving challenges of climate change, meteorological factors, and their impact on crop production and insured losses. These models provide scientific, stochastic insights that transcend traditional reliance on historical loss data, which is increasingly insufficient for modern actuarial pricing.
Verisk’s Crop Hail Model, for instance, employs a 10,000-year stochastic event catalog to simulate hailstorms, offering granular risk assessments. The models incorporate critical variables such as crop genetics, yields, commodity prices, policy conditions, and weather patterns, delivering a realistic view of loss scenarios.
“We’re on a mission to revolutionise risk management options for the U.S. crop (re)insurance industry,” said Kristopher Lynn, Senior Broker and Agriculture Practice Leader at Lockton Re. “By integrating advanced climate data and analysing the global impact of phenomena like El Niño–Southern Oscillation (ENSO), we can offer reinsurers data-driven, innovative approaches to risk transfer that were previously unavailable.”
Oscar Vergara, Business Development Manager for Agricultural Modelling Solutions at Verisk, highlighted the importance of robust data for the industry. “Lockton Re brings a disruptive perspective to the U.S. crop market. By leveraging our models, they can offer reinsurers and insurers data-backed solutions for risks ranging from hail damage to extreme weather fueled by climate change. Our collaboration ensures stakeholders have the tools to navigate this volatile landscape.”
The partnership aims to advance the development of indexed insurance products, addressing growing climate-related risks in agriculture. Verisk’s crop models will enable Lockton Re to optimise portfolio management and expand into states with limited underwriting history, helping (re)insurers maximise profitability while staying within risk tolerance thresholds.
The U.S. crop insurance market has seen significant growth, with indexed products gaining prominence. According to the National Crop Insurance Services (NCIS), parametric insurance accounted for 12.4% of MPCI premiums in 2023, with even higher shares in key states.
“As climate change continues to disrupt global agriculture, our collaboration with Verisk will equip insurers and reinsurers with the insights needed to adapt,” concluded Lynn. “This partnership represents a new era in crop insurance, driven by innovation, data, and a commitment to advancing risk transfer solutions.”
By combining Lockton Re’s market expertise with Verisk’s state-of-the-art analytics, this collaboration promises to reshape the crop (re)insurance landscape, ensuring better preparedness for the challenges of a changing climate.
