CROP INSURANCE RE-RATE POSITIVE, FALLS SHORT OF THE MARK
OR IMMEDIATE RELEASE Contact: Tricia Braid
(309) 557-3257, (309) 830-3393
BLOOMINGTON, Ill. -- A decision today in Washington, DC, means the crop insurance investment made by Midwestern corn farmers more closely represents their risk, although still misses the mark on making sure that farmer and government investments stay out of corporate pockets.
U.S. Department of Agriculture (USDA) Risk Management Agency (RMA) Administrator William J. Murphy announced what RMA framed as a “logical decision,” finalizing a premium re-rating that was nearly a decade in the making. The re-rating decision followed exhaustive research and consideration by the agency's professionals.
Illinois Corn Growers Association (ICGA) President Jeff Scates commended Administrator Murphy’s decision, one that however appropriate did not come without its share of difficulties and falls short of what was earlier proposed.
"Illinois corn farmers, in partnership with the National Corn Growers Association, have been working on this re-rating process for nearly 10 years and across multiple administrations," Scates said. "It took persistence, but that investment of time and energy will pay dividends as corn farmers in Illinois have made progress toward a more equitable premium system that has historically benefited crop insurance companies with premium overpayments.”
“House Ag Committee Chairman Frank Lucas really complicated this process,” Scates said. “His arbitrary objection to RMA’s established actuarial system, followed by obstructionary tactics aimed at politicizing an action that should have been an ordinary course of RMA business, meant that the re-rate did not correct farmer overpayment as much as it could have. Lucas’ actions really demonstrate he isn’t interested in regional equity and what’s best for family farmers.”
The federally supported crop insurance system was designed to have a loss ratio of 1.0. In theory, farmer paid premiums paired with USDA paid premiums, should result in an equal number of dollars paid out in claims over time. For corn farmers, that has certainly not been the case, as their premium overpayments have accrued to crop insurance companies as profit.
"Our members do their due diligence to minimize claims. Obviously the goal each crop year is to farm the farm, not farm insurance programs," Scates added. “Crop insurance companies, however, have farmed the premiums, knowing full well it will grow their profits rather than equal out to a zero-sum game as was intended.”