$10 billion were shouldered by farmers who filed crop insurance claims in 2014 as deductible losses, according to the National Crop Insurance Services. That number, combined with the $3.9 billion spent to buy insurance, means farmers absorbed $14 billion, well in excess of the $9 billion in indemnity payments in rural America.
NCIS President Tom Zacharias explains how this is significant. “First, it shows that U.S. farmers are actively participating in the funding of their own safety net and minimizing taxpayer risk exposure,” he shares. “It also proves that crop insurance is working as designed by helping farmers recover – not profit – from disaster.”
This was even the case after the historic 2012 drought, when farmers shouldered $17 billion in deductible losses and premium payments and received $17 billion in insurance payments. Because farmers have substantial “skin in the game,” crop insurance helps reduce the cost of U.S. farm policy while discouraging risky behavior that may otherwise occur if taxpayers picked up 100 percent of the tab.
Zacharias said that growers favor the current system over past farm policies because crop insurance can be tailored to a farm’s unique characteristics and because efficient private companies administer crop insurance and speed relief when it is needed most.
The newly released deductible calculation completed the 2014 crop insurance picture. Other relevant statistics were detailed in the May edition of NCIS’s Crop Insurance TODAY magazine and included:
- 1.21 million policies were sold, protecting nearly $110 billion in crop value.
- More than 294 million acres were insured, with a record 83.5 percent of those acres being insured at high coverage levels.
- Private insurance companies successfully and efficiently processed claims on more than 441,000 policies.
The $10 billion dollar figure reflects only those crops on which a claim was filed. Smaller losses which were not filed by farmers are not included in the calculation.