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 The deal released Monday (Oct. 27) night would reduce the rate
of return for Approved Insurance Providers (AIPs) through the
Standard Reinsurance Agreement (SRA).
“Attacks on crop insurance are increasing in frequency,” said
Brauer. “As larger segments of the population are further and
further removed from agriculture, the value of this safety net
program is less and less understood” he said.
The public-private crop insurance framework allows farmers who
have been negatively impacted to receive indemnity payments in
less than thirty days, whereas previous ad hoc disaster
assistance often took a year or more to provide assistance to
farmers in need.
For many family operations the difference between thirty days
and a year, is the difference between continuing and shuttering
an operation. The efficient delivery of services has continued
to take place in spite of the 2008 Farm Bill and the 2011 SRA,
which cut $12 billion over 10 years in reimbursement rates.
“More and more crop insurance providers are exiting the sector
because these cuts have made it no longer profitable to be
engaged in this business,” said Brauer.
“Since 2013 we have witnessed the exit of five large crop
insurance providers with additional providers teetering on the
edge.
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ILFU remains concerned about concentration in the marketplace and
its impact on farmers and ranchers. These budget cuts would
accelerate the consolidation of the crop insurance sector.
The budget deal would cut reimbursement rates from 14 percent to 8.9
percent. Previous budget proposals were set at 12 percent.
However, since the SRA change was implemented, the average rate of
return has been less than 4%.
Since 2013, John Deere Insurance Company, John Deere Risk
Protection, Inc., OneBeacon Insurance Group Ltd., Monsanto Co.,
ProAg, and The Goldman Sachs Group, Inc. (Global Atlantic Financial
Group Ltd insurance unit) sold their crop insurance operations.
[Norbert Brauer, Illinois Farmers
Union]
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