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 1998-04-29 monographic deposited born digital 81 p. GA 1.13:RCED-98-111 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-98-111 P0b002ee1803a17ec f:rc98111 DGPO 2010-08-12 2011-03-24 GAOREPORTS-RCED-98-111 machine generated eng fdlp REPORT GAOREPORTS-RCED-98-111 RCED-98-111 Agricultural programs Insurance premiums Insurance claims Grain and grain products Farm income stabilization programs Insurance cost control Agricultural production USDA Revenue Assurance Plan USDA Income Protection Plan USDA Crop Revenue Coverage Chapter Report RCED Pursuant to a congressional request, GAO reviewed various issues pertaining to the Department of Agriculture's new crop revenue insurance plans.<p/>GAO noted that: (1) the three government-subsidized revenue insurance plans differ in the revenue guarantees they provide to farmers and in their relative cost to the government; (2) two of the plans, Revenue Assurance and Income Protection, set the revenue level that is to be protected at the time that crops are being planted, while the third, Crop Revenue Coverage, determines the protected revenue at either planting or at harvest, depending on when crop prices are higher; (3) in terms of potential government costs, Crop Revenue Coverage is likely to cost the government significantly more than the other two plans because of its higher reimbursement for administrative expenses and because of potentially higher total underwriting losses; (4) furthermore, the plan's promise base the revenue guarantee on the price at planting or the price at harvest, whichever is higher, exposes the government to higher claims payments in the years when widespread crop losses are coupled with rapidly increasing prices; (5) in their first two years of availability to farmers, the crop revenue insurance plans, especially Crop Revenue Coverage, achieved a significant share of the crop insurance market, accounting for about one-third of the total crop insurance sales in the areas where they were offered; (6) in terms of the claims payments for 1997, all types of crop insurance experienced much lower than average levels of claims as a result of favorable growing conditions in most of the country; (7) morever, primarily because revenue insurance plans were often marketed in lower-risk areas, they experienced lower levels of claims payments than did multiple-peril crop insurance; (8) GAO identified shortcomings in each revenue insurance plan's approach to establishing premium rates; (9) Crop Revenue Coverage is especially problematic because its rate structure does not take into account the interrelationship between crop prices and yields--an essential component of actuarially sound rate settings; (10) while good weather and stable crop prices generated very favorable claims experience over the first 2 years of the plans' availability, GAO has doubts about whether the rates established for each plan are actuarially sound over the long term and are appropriate to the risk each farmer presents; and (11) furthermore, while the plans were initially approved on a limited basis only, the Federal Crop Insurance Corporation, acting within its authority, approved the substantial expansion of one of these plans--Crop Revenue Coverage--before initial results were available. https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-98-111/html/GAOREPORTS-RCED-98-111.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-98-111/pdf/GAOREPORTS-RCED-98-111.pdf GAO/RCED-98-111 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-98-111 Chapter Report GAO/RCED-98-111; Crop Revenue Insurance: Problems With New Plans Need to Be Addressed; Agricultural programs Insurance premiums Insurance claims Grain and grain products Farm income stabilization programs Insurance cost control Agricultural production USDA Revenue Assurance Plan USDA Income Protection Plan USDA Crop Revenue Coverage