U.S. Crop Insurance Indemnities Edge Closer to $17.3 Billion

May 30, 2013 03:49 AM

Via a special arrangement with Informa Economics, Inc.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Net-insured acres for 2013 remain above year-ago levels.

U.S. crop insurance indemnities stand at $17.295 billion as of May 27, adding to the record level of payouts under the program, according to Risk Management Agency (RMA) data.

Payouts on corn, at $11.770 billion, are now nearly $1 billion above the prior record payout year for the entire program of $10.8 billion for 2011 crops.

 05 30 13 Indemnities

The loss ratio for 2012 crops is at 1.56 -- for each $1 in premiums paid in, $1.56 in indemnities has been paid out. However, this marked the first year that the loss ratio for the program has been above 1.0 since the 2002 crop year.

For 2013 crops, USDA reports that there are 89.616 million net insured acres so far compared to 88.790 million acres at this point last year. Eventually, net acres insured for 2012 crops stand at a record level of 282.462 million.

Comments: The continued strong usage of crop insurance by farmers as their primary risk management tool is one reason why the program has considerable support among farm-state lawmakers, but the focus on the premium subsidy that totals around 62 percent will keep the program in the cross hairs of anti-subsidy forces.

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