Pubdate: Fri, 21 Jun 2002
Source: Kansas City Star (MO)
Copyright: 2002 The Kansas City Star
Contact:  http://www.kcstar.com/
Details: http://www.mapinc.org/media/221
Author: Roxana Hegeman, Associated Press
Bookmark: http://www.mapinc.org/meth.htm (Methamphetamine)

MIDWEST GRAIN OPERATIONS SCRAMBLE TO FIND INSURANCE

WICHITA, Kan. - Insurance is getting harder to come by for farm supply 
cooperatives and grain elevators in the Midwest, which face skyrocketing 
premiums if they're lucky enough to find coverage.

All but one of the 10 insurance companies that wrote policies for grain 
elevators in Kansas last year have left the state, said Tom Tunnell, 
president of the Kansas Grain and Feed Association, the industry group 
representing the state's elevators.

"It is a terrible crisis," Tunnell said.

Matt All, assistant insurance commissioner in Kansas, said it's not just 
farmers in his state who are struggling to find property and casualty 
insurance.

"All across the Midwest region, companies that write those policies are 
having a hard time making a profit," All said. "Some are pulling out of the 
market, some are using strict underwriting standards, and some are raising 
rates."

Several factors -- including meager underwriting gains, investment losses 
and availability of reinsurance -- have created what All calls "the perfect 
storm," wreaking havoc on companies that write commercial policies.

"Our industry is being forced to pay premiums for property and casualty 
that have increased 40 to 200 percent," Tunnell said, "and at the same time 
coverage has been reduced."

Some in the insurance industry blame the Sept. 11 terrorist attacks, which 
cost insurance underwriters billions. But an official of the Kansas Farmers 
Service Association, which has written the majority of policies for the 
state's grain elevators, said there's nothing new about poor profits at 
insurance companies.

"This started long before the Sept. 11 deal," said Mike Schaffter, the 
association's vice president of operations. "A lot of companies started 
exiting this market, primarily because of weather-related losses."

Others blamed a rise in methamphetamine production in rural areas. Kansas 
- -- a national leader in meth busts -- became a high-risk state for insurers 
in part because of liability issues surrounding the theft of anhydrous 
ammonia from grain elevators, Tunnell said. The farm chemical is used to 
make meth.

The governor recently signed a bill granting elevators and other suppliers 
immunity from injuries relating to thefts of the chemical, a move that 
Tunnell hopes will reassure insurance companies.

But it may be more difficult to deal with rising fears that products 
commonly supplied by rural farm cooperatives -- such as propane, gasoline 
and various agricultural chemicals -- could be used as terrorist weapons.

Kansas Insurance Commissioner Kathleen Sebelius said Kansas and 45 other 
states have terrorism exemptions in their insurance coverage, and she said 
she has been working to get the word out that insurance companies cannot 
use the fear of a potential attack to raise rates.

"It is a bogus response -- and we would like to know about it," Sebelius said.

Among those forced to deal with the insurance crisis early was the Farmers 
Co-Op Equity elevator in Isabel, whose policy was canceled in December.

Elevator manager Charles Swayze said his insurance company, Farmland 
Insurance, dropped him even though he hadn't had anything other than 
weather-related claims in the past five years.

Schaffter, the elevator's insurance agent at the time, said the insurer 
tightened its restrictions and the elevator was not "compliant with the 
things they wanted done."

Swayze said some companies he contacted told him they would not insure him 
unless he sold his propane business. One agent told him terrorists could 
hijack his propane or fuel truck and smash it into a populated area.

"It seems nothing was really a problem until Sept. 11 and then everybody 
blames everything on Sept. 11," Swayze said.

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On the Net:

Kansas Grain and Feed Association: http://www.kansasag.org

Kansas Farmers Service Association: http://www.kfsa.com
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