USDA’s Risk Management Agency is trying to reduce the costs of delivering crop insurance. They’re currently renegotiating what they refer to as Standard Reinsurance Agreements with private insurers. The agency’s administrator, Bill Murphy says the status quo will not do.
“From 2006, it cost about $1.8 billion to deliver the program; this year we‘re looking at about $3.8 billion,” Murphy told Brownfield in an interview this week. “That’s a doubling of the cost in just three years; certainly not sustainable.”
Bill Murphy, administrator, USDA Risk Management Agency
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Despite reports suggesting that the renegotiation may squeeze larger insurance providers, Murphy says proposed changes are intended to provide a reasonable rate of return to companies.
“We removed the potential for them to take severe losses. At the same time, we’ve lowered their ability to make high profits in the program,” said Murphy. “So be squeezing on both ends, actually it’s going to provide stability to them, so I think the impact would probably be just the opposite,”
The RMA expects to notify companies that the current agreement will be canceled by the end of this coming June.
Brownfield’s Ken Anderson contributed to this article.
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