RMA announces changes to crop insurance
USDA's Risk Management Agency announced changes to 2013 commodity crop insurance contracts, part of a process of phasing in rate adjustments across the crop insurance program.
The premium changes will affect insured acres of spring wheat, corn, soybeans, grain sorghum, rice and cotton associated with 2013 crop insurance contracts. (Winter wheat contracts are on a different timeline.)
This update does not fundamentally change the agency's rating methodology. Rather, the key difference is in how the methodology treats historical loss data.
The update gives more weight to recent data and uses a 20-year moving period in the premium formula, while the past approach weighed loss history data from all years back to 1975 equally. Additionally, data prior to 1995 are now weighed less due to technological advancements in crop production, and the formula will use weather data to compare years with similar weather events.
The adjustments mean that over the entire country, premiums this year for rice and soybeans are expected to decrease by 8 percent and 6 percent, respectively. Rates for spring wheat are expected to increase by 4 percent. Changes to premium rates are more likely to decrease in core growing areas and increase in areas that have experienced loss in recent years.
RMA has said it will release more localized data soon to alert growers to changes prior to the spring planting season.
RMA began a phase-in of the updated methodology last year with adjusted rates for only corn and soybeans, reducing premium rates by 7 percent and 9 percent, respectively.
The Agency has committed to phasing in the new rates to limit year-to-year premium changes and to keep premiums as stable as possible. Crop insurance premium costs are shared by both farmers and taxpayers, and the products are delivered through regulated crop insurance providers to ensure coverage of crops grown throughout the country. RMA sets crop insurance premiums on an annual basis.
NAWG will continue to work with RMA as they make adjustments to wheat crop insurance premiums.
Additional information can be found at http://www.rma.usda.gov/news/2012/11/rateadjustment.html.