4
Recent Evolution of Crop Insurance in the United States
the FCIC. RMA oversees the delivery of
and indemnities have increased about
programs by private insurance companies,
seven times to liabilities of $113 billion
sets premium rates, pays for operation and
and indemnities of $7 billion in 2011.
management of the program including farm
Premium subsidies have also risen to
Congress authorized formation of the
premium subsidies, and reinsures private
about $7 billion in 2011 (Table 1).
Federal Crop Insurance Corporation (FCIC)
insurance companies against losses.
in 1938. Crop insurance remained a small
Since 2005, covered acreage has stayed
program until the Federal Crop Insurance
By any measure the federal crop insurance
relatively constant as insured acres of
Act of 1980 expanded both the crops and
program has grown immensely since the
the large-acreage crops of wheat, corn
regions it covered. However, the modern
early 1990s. The number of separately
and soybeans have stabilized. However,
crop insurance program can be dated to
insured crops has increased from about
liabilities have continued to grow. The
the Crop Insurance Reform Act of 1994
50 to more than 300 depending on how
reasons are higher crop prices, extending
and the formation of the Risk Management
crops are categorized. Insured acres have
insurance to crops with a higher value per
Agency (RMA) in 1995 to administer
increased by 50 percent while liabilities
acre, and farmer decisions to buy higher
Table 1 Profile of the U.S. Crop Insurance Program, Selected Years, 1990-2011
a
Year
Total policies solda (million)
Buy-up policies sold (million)
Net acres insured (million)
Total liability ($ billion)
Total premium ($ billion)
Total indemnity ($ billion)
1990
0.89
0.89
101.4
12.83
0.84
0.97
0.86
1995
2.03
0.86
220.5
23.73
1.54
1.57
1.02
2000
1.32
1.01
206.5
34.44
2.54
2.59
1.02
2005
1.19
1.05
245.9
44.26
3.95
2.37
0.60
2006
1.15
1.03
242.2
49.92
4.58
3.50
0.77
2007
1.14
1.02
271.6
67.34
6.56
3.55
0.54
2008
1.15
1.03
272.3
89.90
9.85
8.68
0.88
2009
1.17
1.08
264.8
79.57
8.95
5.23
0.58
2010
1.14
1.06
256.2
78.10
7.59
4.25
0.56
2011
1.15
1.07
265.3
114.07
11.95
10.71
0.90
Catastrophic (CAT) policies, introduced in 1995, make up the difference between buy-up and total policies.
Source: U.S. Department of Agriculture, Risk Management Agency (2012). Summary of Business Reports and Data. Accessed: http://www.rma.usda.gov/data/sob.html.
Economic and Environmental Effects of Agricultural Insurance Programs
Loss ratio