Kansas State University ag economist Art Barnaby says earlier estimates of up to 40 billion dollars in crop insurance underwriting losses were wildly off the mark.
Barnaby continues to stick by his earlier estimate of less than 15 billion dollars. But he says that number is dropping every day and could end up closer to ten billion dollars due to better than expected crop yields, a drop in prices and other factors.
“I’ve seen numbers—estimates—much, much lower than that. I’m not sure I’m ready to buy into those,” Barnaby says. “I think they may be as much of an outlier as the 40-billion numbers that were thrown out early. But I certainly think under ten billion is in the ballpark.”
Some politicians and others have expressed concern over the large crop insurance indemnities that will be paid out to some farmers because of this year’s drought. But Barnaby points out that many of those farmers have been paying premiums for the past ten years without ever filing a claim.
“On the farmer’s side, why are you upset now that I collect? You really shouldn’t be—but nonetheless that’s what’s going on,” he says.
Barnaby says that, over the past decade, the crop insurance program has actually had an underwriting gain.
Barnaby made those comments in an interview with Brownfield at a crop insurance workshop in Grand Island, Nebraska.