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Veteran Advisor

Re: Sorry

Crop insurance is a funny critter.
Those in the upper Midwest, where dry land
Corn is planted as far as the eye can see, many
Ask, why do we need it, we loose money carrying
It, and the only people that take it is the margin
People, who should plant it all back to pasture.
Several things here, first, some of the underwritting
Is loss history, and yeilds...so viewing it, your
Cost, if the case holds true, good crop each year,
Good yeilds, will be low, at a good price to offset
Risk
Also, most of those against insurance are those
Well established.

So, what do we do with those few who are starting...
And despite all the moaning and groaning comming
From the dryland corn belt...you still buy it !!!
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Veteran Advisor

Re: Sorry

If it is such a graft, crooked, on and on adnasuim,
Why do you buy ??
No one is forcing you (other than the banker).

Those that are trying to start or in the high plains,
Due to our risk profile, we pay more...so the Iowa
Corn people are not paying for ks/Okla people.

But what next ?? You can get insurance on
Forage..and pastures....is that wrong too ?
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Veteran Advisor

Re: Sorry

Regarding this statement, "Due to our risk profile, we pay more...so the Iowa
Corn people are not paying for ks/Okla people."  Not arguing with that, yet generally --

 

Loss ratios are reported for all multi-peril crop insurance in all states and crops.  Loss ratio is loss indemnities paid divided by premiums paid.  In those states where loss ratios exceed 100%, those losses are in effect covered (subsidized) by states where loss ratios were less than 100%.  Some examples of loss ratios from 2017 (all multi-peril crop policies) --

 

Nebraska 32.88%

Illinois 29.17%

Iowa 26.85%

Kansas 41.27%

 

New York 152.77%

Florida 218.41%

Montana 155.62%

Hawaii 134.21%

 

Source -- https://www.naic.org/prod_serv/MSR-PB-18.pdf

 

 

People obviously have a variety of reasons for buying (or not buying) crop insurance, and levels of crop insurance coverage, not unlike insurance on buildings, vehicles, lives, etc.

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Veteran Advisor

Re: Lower Crop Insurance Subsidy

ALSO, should  we  make  sure  when a  weather event in  the  summer  of  1988  hits  the  I  states ,  no  last  minute , after  the  fact  bail  outs -  May be - ?    

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Senior Contributor

Explain how wide spread participation in Welfare lowers cost?

I hear the spin about how you have to have the "big boys" participate in crop insurance or everyone pays more and I don't believe that. If for every big policy sold, the US Government (ie taxpayers) are paying 60 percent of the premium, how would having the big farmers drop out change the economics of subsidy adversely? Lets see the math on this one.

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Veteran Advisor

Re: Explain how wide spread participation in Welfare lowers cost?

rs  -  I  think  you  made  an  interesting  point  -   -    - 

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Highlighted
Veteran Advisor

Re: Explain how wide spread participation in Welfare lowers cost?

I think what the insurance people are saying is related to the overall insurance acre-pool -- the more acres that are covered, the more it spreads out the overall risk.  Those who are more prone to experience losses might be more likely to carry/continue the  insurance -- the more attractive the insurance purchase, the more likely those less risky acres are also insured.

 

Personally, as I've said in the past, I think there needs to be a tiered structure to the premium subsidies.  Currently, there are no limits to the total insurance subsidy one farmer might experience -- it has not been subject to USDA program payment limitations. I really don't think farmers should become ineligible to purchase crop insurance due to the size of their operation (not a limit on loss pay-outs); however, their premium subsidy should be limited.  Without limiting this subsidy, the USDA is assisting and sharing the risk of these ever-expanding operations.  If a farmer wants to farm 20,000 acres, that's okay by me, yet I don't agree with helping him pay the insurance premium to limit his risk to get there, stay there, and keep growing.  By tiered subsidy structure, I mean something like this, just for example --

 

1st $25,000 total base premium, 65% premium subsidy, farmer pays 35%

Next $25,000 total base premium, 50% premium subsidy, farmer pays 50%

Next $25,000 total base premium,  35% premium subsidy, farmer pays 65%

Next $25,000 total base premium,  20% premium subsidy, farmer pays 80%

All base premium over $100,000, -0- premium subsidy, farmer pays 100%

 

So, depending on program payment limitations and how that affects premium subsidies, everyone would still be experiencing some premium subsidies, though those higher up the scale would be also paying for a higher share of their own risk reduction.  It wouldn't surprise me if a structure such as this would impact less than half of all farmers, relative to our current premium subsidies.

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Honored Advisor

Re: Sorry

2 things 

 

rs   not sure I even understand the question but you bring up an interesting issue that is always goofy when thought out...

 

The attack in the plains is always based on "get the big guys out"  but the big accounts always subsidize the smaller accounts.

 

Look at those examples wcmo put in .........

 

That is a good example of insuring only the small guys..... the midwest large acre farm states compared to the east coast --- Kansas is obviously twice as much risk as Iowa, and Nebraska living on the best/most controlable water is somewhere in between...

 

But New york, Hawaii, and Florida     ----- Now who is subsidizing who,,,,,, and for what....??

 

Sounds like we are insuring uninsureable crop scenarios or scaming usda maybe. ??

 

Or is that what it looks like without the big guys in the midwest??  

 

And who backs federal crop insurance losses ??  

 

Do those losses become a greater liability to the taxpayers than the premium subsidy was ???

 

Are there details on the insurance losses in those east coast ag giants ??

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Honored Advisor

Re: Sorry

like every other federal program ----- the more complicated it is the more problems involved.......and the more skimming.

 

There are frauds guaranteed and it aint always your neighbor in iowa.  

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Veteran Advisor

Re: Sorry

Would be curious on the crop loses in NY and
Hawaii ??

We're they "standard" crops, or something
Special ?
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