Cost-Sharing, Public-Private Partnership Set Crop Insurance Apart02/28/2017
The cost-sharing structure and the unique partnership between the U.S. Department of Agriculture (USDA) and the private sector are key to the success of crop insurance, according to National Crop Insurance Services President Tom Zacharias.
Zacharias, who spoke today at the 2017 USDA Agricultural Outlook Forum, said crop insurance has become popular on Capitol Hill and in rural America because “it serves as a hand-up, not a handout, when farmers need help rebuilding after a disaster.”
“Farmers help fund their own safety net by paying premiums and by shouldering part of losses through deductibles,” he explained. “And private companies pay part of the indemnities when disaster strikes, helping shield taxpayers from risk.”
All told, farmers have collectively paid nearly $50 billion from their own pockets into the crop insurance system since 2000. Today, about 90 percent of U.S. farmland is insured, providing $100 billion in protection to more than 125 different kinds of crops in all 50 states.
Crop insurance is now the cornerstone of U.S. farm policy, Zacharias said, which was made possible by a close working relationship between the government and the private sector. Insurance providers and agents sell and service insurance policies, while the USDA oversees the program, making it affordable and widely available to all growers.
“As a result, farmers usually get assistance within days or weeks of a verified claim, not months or years as was the case with old ad hoc disaster bills,” he told the group.
This public-private partnership is also important to stamping out waste and protecting taxpayer investments in the farm safety net. The USDA sets guidelines and closely monitors all activities, and insurers spend millions every year on new research and technologies, as well as training and education programs.
Earlier this month, the USDA released crop insurance’s improper payment rate for 2016. This measure of efficiency and accuracy is required of all major federal programs, and crop insurance’s marks were twice as impressive as other government programs – 2 percent compared to the 4.67 percent government-wide average.
Zacharias believes these successes will serve crop insurance well as Congress begins debate of the next Farm Bill.
Source: National Crop Insurance Services