Where Does a Crop Insurance Dollar Go?
The Risk Management Agency establishes crop insurance premiums on a crop-by-crop and county-by-county basis with the intent to reflect actuarial or break-even costs of insurance over the long run. To make participation attractive, RMA subsidizes farmer paid premiums, and pays administrative and overhead (A&O) subsidies to insurance companies to insure that all products are offered on an equal basis to all eligible producers. To understand where the dollars go, it is important to understand premium subsidies, loss ratios, and market shares of products sold. Click here to read the column…
