Second draft of Standard Reinsurance Agreement
Farm and Ranch March 1, 2010 USDA's Risk Management Agency, which administers the Federal crop insurance program, recently released a second draft of a proposed new Standard Reinsurance Agreement for SRA. That agreement establishes the terms, roles, and responsibilities for both the USDA and insurance companies that participate in the Federal crop insurance program. The new draft includes a series of significant changes, including many discussed during negotiations between the RMA and the participating crop insurance companies. RMA Administrator Bill Murphy says the agency’s goal with a new agreement is reduce the administrative and operating costs and underwriting gains. Murphy: “In 2006 we provided the companies 1.8 billion dollars between those two funds to deliver the program. In 2009 that is just less than four billion dollars. In just three years we are doubling the cost of delivering the program and that just is not sustainable.” Murphy says producers who participate in federal crop insurance won’t see increased costs because of a new Standard Reinsurance Agreement. Murphy: “The producer subsidy in the program, the subsidized premium, is set in statute. We cannot change that with the SRA. The rats that they pay for their individual insurance policy are purely based on potential risk. It has nothing to do with what we are doing here.” Murphy says a final proposal should be available by April for insurance companies to consider and sign with the process hopefully concluded by June. I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on the Northwest Ag Information Network. ? ?
