AGRIBUSINESS: Crop Insurance Premiums Changing
USDA’s Risk Management Agency announced Wednesday it will continue updating crop insurance premiums; revised rates for corn and soybeans were offered in most counties in 2012, with other crops becoming available next year.
Just last year RMA announced it would update crop insurance premiums based on the findings of an independent, peer-reviewed study. That study recommended calculating rates by use of a moving average of the last 20 years, as opposed to the current practice of using an average of all years since 1975. In this way, RMA will place more weight on more recent years.
Periodically, RMA reviews its rates and methodology to ensure the federal crop insurance program doesn’t place an unnecessary burden on growers or taxpayers. The revised premium rates for 2012 and 2013 incorporate improvements, including integrating weather data into the rating process, refinement of premium loads for prevented planting and replant payments, and as mentioned above, placement of more weight on loss experience from recent years.
RMA will phase the new rates in over time to limit year-to-year premium changes, as well as potential increases due to losses in 2012 from the drought.