A small number of Nebraska farmers are finding out their crop production hail insurance has been canceled right in the middle of planting season.
Nebraska Department of Insurance Director Bruce Ramge said about 400 farmers were affected by the cancellation of the insurance policies by Crop Pro Insurance, which is a Des Moines-area startup company.
Crop production hail insurance is a supplemental product farmers buy to cover gaps in their federally subsidized multiperil crop insurance policies.
The crop production hail policies pay for actual crop losses caused by hail or wind damage that aren't covered by the multi-peril policies.
Seward County farmer James Duffek was one of the people affected.
Duffek said his cancellation notice mentioned that the company had sold too many insurance policies.
He said his insurance agent told him not to worry about it and that the situation would work itself out, but Duffek, who just finished planting, said it would be bad if a storm damaged his crops and he found out he had no coverage.
"I think it's pretty irresponsible," he said of the cancellations.
Ramge said it was his understanding that Crop Pro could not get reinsurance for all the policies it sold. Without reinsurance, which transfers some of the risk to another insurer, the company would be on the hook for 100 percent of any losses.
He said the Department of Insurance was reviewing the situation, and in the meantime, farmers affected by the cancellations should work with their insurance agents to find new coverage.
Crop Pro officials could not be reached for comment.
The company announced its launch last August with an $8 million venture capital investment.
At the time, co-founder Billy Rose said the company's goal was to serve the traditional crop insurance market while also helping the agriculture industry accelerate the adoption of emerging technologies.