NCGA analysis shows crop insurance companies' returns within federal standards

The National Corn Growers Association (NCGA) recently released findings that show, despite some claims to the contrary, private crop insurance company returns have significantly dropped since the Standard Reinsurance Agreement (SRA) was renegotiated in 2010.

The SRA determines what compensation crop insurance companies receive from the federal government for administrative and operating reimbursements and underwriting gains. This compensation is in return for the companies taking on the risks associated with crop insurance. Before the SRA was renegotiated in 2010, crop insurance companies averaged a net return on retained premium of 14.1 percent, according to data covering 1998 to 2010. After the renegotiation, the rates averaged 1.5 percent from 2011 to 2015.

"The federal crop insurance program is the cornerstone of farm bill risk management programs, and it is more important than ever given the state of the farm economy," said NCGA Risk Management Action Team Chairman Steve Ebke, who is also a farmer in Daykin, Nebraska. "We commissioned an independent analysis of the crop insurance industry's performance to determine whether criticisms against the insurers' returns have merit. What we discovered is that the returns private crop insurance companies receive are much smaller than opponents claim, and they are well within the standards set by [the U.S. Department of Agriculture’s Risk Management Agency]."