Crop Insurance: Covering Companies' Costs
There are 18 insurers approved by the U.S. Department of Agriculture to provide crop coverage. The government reimburses insurers for their costs based on a percentage of total premiums. Between 2004 and 2008, soaring commodity prices inflated premiums, causing subsidies to more than double to $2 billion. In 2010, the standard reinsurance agreement was renegotiated, capping reimbursement at $1.3 billion plus inflation. Even with the new limits, the insurers’ administrative subsidy last year was 42 percent higher than in 2006, though the number of policies was almost unchanged.
Published Sept. 10, 2013
Source: Sources: U.S. Department of Agriculture, Risk Management Agency; National Crop Insurance Services (NCIS), Bloomberg reporting
GRAPHIC: ALAN BJERGA & DAVID J. LYNCH/ BLOOMBERG NEWS, DAVID INGOLD / BLOOMBERG VISUAL DATA