United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Resources, Community, and Economic Development Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1997-04-17 monographic deposited born digital 156 p. GA 1.13:RCED-97-70 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-97-70 P0b002ee180389840 f:rc97070 DGPO 2010-08-12 2011-03-24 GAOREPORTS-RCED-97-70 machine generated eng fdlp REPORT GAOREPORTS-RCED-97-70 RCED-97-70 Grain and grain products Agricultural production Insurance companies Insurance losses Insurance premiums Administrative costs Insurance cost control Farm income stabilization programs Disaster relief aid FCIC Multiple Peril Crop Insurance Program Federal Crop Insurance Program Chapter Report RCED Pursuant to a legislative requirement, GAO reviewed the financial arrangements between the Federal Crop Insurance Corporation (FCIC) and participating insurance companies for delivering crop insurance to qualified producers, focusing on the: (1) adequacy of the current administrative reimbursement rate for expenses of participating crop insurance companies; (2) comparative cost to the government in 1995 of private companies' and the Department of Agriculture's (USDA) delivery of catastrophic insurance; and (3) advantages and disadvantages of different expense reimbursement alternatives.<p/>GAO noted that: (1) in 1994 and 1995, the government's administrative expense reimbursement to insurance companies was greater than the companies' expenses to sell and service federal crop insurance; (2) for the 2-year period, companies reported expenses that were less than the reimbursements paid to them by FCIC; (3) furthermore, GAO found that some of these reported expenses did not appear to be reasonably associated with the sale and service of federal crop insurance and accordingly should not be considered in determining an appropriate future reimbursement rate for administrative expenses; (4) in addition, even within the expense categories reasonably associated with the sale and service of crop insurance, GAO found expenses that appeared excessive for reimbursement under a taxpayer-supported program suggesting an opportunity to further reduce future reimbursement rates; (5) these expenses included agents' commissions that exceeded the industry average, unnecessary travel-related expenses, and questionable entertainment activities; (6) finally, higher premiums in the crop insurance program have had the effect of increasing the government's reimbursement to companies for the time period GAO examined; (7) at the same time, companies' expenses associated with crop insurance sales and service could decrease as FCIC reduces the administrative requirements with which the companies must comply; (8) combined, all these factors indicate that FCIC could lower the reimbursement rate and still amply cover companies' reasonable expenses for selling and servicing federal crop insurance policies; (9) in 1995, the government's costs to deliver catastrophic insurance were higher through private companies than through USDA; (10) although the basic costs associated with selling and servicing catastrophic crop insurance through USDA and private companies were comparable, delivery through USDA avoids paying an underwriting gain to companies in years when there is a low incidence of catastrophic loss claims; (11) in 1995, the underwriting gain to participating companies for catastrophic insurance totalled about $45 million; (12) in 1996, the underwriting gains were even higher; (13) GAO identified a number of different approaches to reimbursing companies for their administrative expenses that offer the opportunity for cost savings; (14) each has advantages and disadvantages compared with the existing r* https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-97-70/html/GAOREPORTS-RCED-97-70.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-97-70/pdf/GAOREPORTS-RCED-97-70.pdf GAO/RCED-97-70 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-97-70 Chapter Report GAO/RCED-97-70; Crop Insurance: Opportunities Exist to Reduce Government Costs for Private-Sector Delivery; Grain and grain products Agricultural production Insurance companies Insurance losses Insurance premiums Administrative costs Insurance cost control Farm income stabilization programs Disaster relief aid FCIC Multiple Peril Crop Insurance Program Federal Crop Insurance Program Public Law 103-354 Public Law 104-127