The US drought is spreading to more states as analysts continue to revise insurance cost forecasts upward.

The US Department of Agriculture has designated 38 states as natural disaster areas.

In its latest report on the drought, the department says 63% of the nation’s hay acreage is experiencing drought, while 86% of corn crops and 88% of soybean production are affected.

Agricultural economists from the University of Illinois estimate the drought will trigger losses of about $US30 billion ($29 billion) with insurers picking up $US18 billion ($17.4 billion) of the cost.

Risk modeller AIR Worldwide estimates insurance claims will exceed $US13 billion ($12.6 billion) based on premiums of $US11 billion ($10.6 billion).

“Our current estimate for this year’s crop insurance losses points to a gross loss ratio for the whole industry of 120-180%, which translates to payouts of between $US13 billion to $US20 billion ($12.6 billion to $19.4 billion),” AIR Worldwide Senior Principal Scientist Gerhard Zuba said.

In a new report on US crop insurers, ratings agency Moody’s says QBE has $US1.8 billion ($1.7 billion) of direct written premiums with $US840 million ($816 million) of business in the top 12 drought-affected states.

Moody’s says the premiums in these states account for 46% of QBE’s total crop premiums.

Allianz’s Fireman’s Fund has $US961 million ($933 million) of premiums with only $US192 million ($186 million) in the top 12 affected states. This equates to 20% of total crop premiums written by the insurer.

Munich Re America has $US251 million ($243 million) of crop premiums with $165 million ($160 million) in the drought states. Its exposure to the drought is put at 66% of total premiums by the ratings agency.

Ace has the highest total crop premiums among the insurers with $US2.3 billion ($2.23 billion). It has $US96 million ($967 million) of premiums in the worst affected states giving it an exposure of 43% of Ace’s crop book.

“The leading crop insurers, including US subsidiaries of Ace, QBE and Allianz average almost half of their national crop direct premiums, and about one fourth of their total US-based premiums, in the 12 most severely drought-affected states,” the Moody’s report says.

“Several (crop) insurers indicated in their second-quarter earnings calls that the second-half results will be adversely affected.”