The insurance industry faces its biggest ever loss in agriculture as the worst drought to hit the US in more than half a century devastates the country’s multibillion-dollar corn and soyabean crops .

Companies providing so-called crop protection will recoup part of their loss as the US federal government reinsures some of their risk, on top of subsidising the premiums that farmers pay to private companies.

Agricultural economists at the University of Illinois estimate the drought will trigger this year gross liabilities of roughly $30bn, with an underwriting loss of $18bn. Of that, the US government would shoulder about $14bn, while -private sector insurers are likely to face a loss of $4bn, the economists said. Standard & Poor’s, the rating agency, put the losses of the private sector a notch higher at $5bn.