Risk Management Agency report shows outsize profits for Crop Insurance providers<
By Agri-Pulse Staff
© Copyright Agri-Pulse Communications, Inc.
Over the past 21 years, the crop insurance companies averaged a 17 percent return when the reasonable rate for that period was 12.7 percent.
RMA contracted with Milliman, Inc., to determine the long-term profitability of the crop insurance industry. The updated historical rate of return and reasonable rate of return represent 21 years of data, the longest historical data set of all current profitability studies.
The complete studies are available online at: www.rma.usda.gov/news/2010/03/marchhistorical-reasonable.pdf and www.rma.usda.gov/news/2009/12/sra.html
The Federal Crop Insurance Corporation reinsures the companies involved in the studies. To participate in the Federal crop insurance program, companies must sign and abide by the Standard Reinsurance Agreement (SRA). The Milliman study's results will become part of the discussion in this year's SRA renegotiation between RMA and participating insurance companies.
RMA is discussing the SRA's third draft with the companies now. RMA plans to complete discussions in April. RMA's goal is to have the new SRA signed by all parties by the end of June 2010, as provided by the 2008 Farm Bill.
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