FEDERAL CROP INSURANCE

TUESDAY, MARCH 9, 1937

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON

AGRICULTURE AND FORESTRY,

Washington, D. C.

The subcommittee met, pursuant to adjournment, in the hearing room 324, Senate Office Building, at 10 a. m., Senator James P. Pope presiding.

Present also: Senators McGill and Frazier.

Senator POPE. The committee will come to order. We have this morning Mr. Rutledge, who can give us, I think, a good deal of information as to the experience of his company in the matter of hail insurance, and I think he has some information with reference to crop insurance generally.

You may proceed, Mr. Rutledge. State your name and the position you occupy, for the benefit of the record.

STATEMENT OF F. O. RUTLEDGE, ASSISTANT GENERAL MANAGER, FARMERS MUTUAL HAIL INSURANCE ASSOCIATION OF IOWA, DES MOINES, IOWA

Mr. RUTLEDGE. My name is F. O. Rutledge. Technically I am assistant general manager of the Farmers Mutual Hail Insurance Association of Iowa. I might further say that we have the record of being the largest mutual hail-insurance company in the United States. I am representing at this time as a witness that particular institution, and also all of the other mutual hail-insurance companies of the Middle West. I came here with the avowed intention of only attempting to furnish statistics on hail insurance and information and to answer questions, because the mutual hail-insurance industry has no desire to lobby in opposition or to oppose the Government's program on crop insurance.

Frankly, we feel that the Government would handle it in such a manner that if it is a competitor it would be healthy competition, and we of the mutual hail-insurance industry believe that healthy competition is good for all concerned.

I am not sure just where I should begin with giving information. I might offer first to the committee a chart which was prepared by the the Weather Bureau, the Highway Division of the Government's Weather Bureau at Des Moines. The particular chart I am presenting shows an average for 8 years, although the information is available for 14 years, showing the actual average hail loss in each county in the State of Iowa in dollars. That is taken from a record taken by the

assessor, by inquiring of each farmer each spring whether or not he has had any hail loss.

I would say that this report is conservative in the extreme, because in our experience in the hail-insurance business we find that men who might have a 10 percent loss by hail, if they are not insured by the following spring they will have forgotten and considered that they did not have a loss. Sometimes when they are insured they do feel that a 10 percent loss is at least 10 percent, possibly more. But that is human nature.

Anyway, this is conservative because of the fact that it is taken in the spring following the season in which the losses would have occurred, and naturally the smaller ones will have been forgotten. That is human nature also.

This report shows that in Iowa the loss on an average annually in each county ranges all the way from two or three thousand dollars as the very smallest one, up to an average of $235,000 in a single county annually. That is the mail loss alone.

Senator FRAZIER. What crops do you cover with your mutual insurance?

Mr. RUTLEDGE. All ordinary farm crops. There has been some effort to write special crops. Sugar beets and soy beans are written rather generally now, but sugar beets and some of the special crops and the vegetable crops where they are produced on a commercial basis, and also the horticultural crops. However, that experience has been somewhat bad, and the rate is rather high, even in Iowa, where you insure that kind of crop, because you are adding to your proposition a question of marketability of a crop as well as the actual loss from a normal feeding value standpoint. It is a little different proposition, but the ordinary crops I refer to are corn, small grain and hay for feeding purposes.

Senator POPE. Your insurance is limited to hail?

Mr. RUTLEDGE. Our insurance is limited strictly to hail only, nothing else, to growing crops.

SENATOR FRAZIER. Are your rates the same for the whole State? Mr. RUTLEDGE. No, we zone the State. Iowa is divided into three districts, three zones.

Senator FRAZIER. And the cost is based on the amount of loss you have had?

Mr. RUTLEDGE. It is determined by the amount of loss over a period of years, of course.

This

This little green sheet is our own piece of advertising, but it is taken from this general report made by the Weather Bureau. report is not an insurance-company report; it is a Government report taken from every farmer. It includes the entire hail loss in that particular State.

I have not been able to find anywhere any other State that I know of that makes such a similar report. I have not been able to find one. Probably the men from the Agricultural Department know better about that than I do, but I don't know any other State that actually makes such a complete record and compiles and makes a summary of it. This small sheet shows that the lowest loss, the average over the State of Iowa from hail, is one-half of 1 percent, or $5 on every $1,000, or of course, putting that into bushels, would be 5 percent of a bushel, five one-hundredths of a bushel. And the highest has been 2 percent, the highest loss ratio. The average is 1.15, according to this report.

That is rather conservative and does not quite comply with our own figures. Our own records show, if I recall correctly, 1.6 percent, or, in other words, the annual average hail loss in Iowa is equivalent to 1.6 percent of the crop, or based on the $1,000 would be equivalent to $16 on every $1,000 of insurance.

Senator POPE. Do you know, Mr. Green, whether your Department has the figures contained in these proposed exhibits?

Mr. Roy M. GREEN (Bureau of Agricultural Economics). Those Weather Bureau figures are, I believe, mostly estimates each year of the total loss from hail. I do not know that any other State has them as complete. They are prepared for Iowa through a cooperative arrangement with the State.

Senator POPE. I think it would be well then to have these figures included in the record.

Mr. RUTLEDGE. And this is in a little more condensed form.

Senator POPE. It might be well also to include the record of hail damage in Iowa as shown by this smaller exhibit here.

(The papers referred to follows:)