Crop Insurance- Standard Reinsurance Agreement (SRA)
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Crop insurance agents in the major Corn Belt states are going to take the biggest financial hits in a new contract between crop insurers and USDA. The agreement cuts expense reimbursements and underwriting gains to companies by $6 billion over the next 10 years.
“Fives states classified as the Corn Belt — Indiana, Illinois, Iowa, Minnesota and Nebraska — are the most profitable states for the crop insurance industry but will take the largest cuts under the new standard reinsurance agreement with about a 30 percent reduction in administrative and operating (A&O) compensation and underwriting gains.
“These cuts will be distributed to help boost insurance for companies in the states now considered underserved. That has been described as ‘rebalancing’ the program, said Keith Collins, a former USDA chief economist who is now a crop insurance industry consultant.”