Crop insurance policies must remain affordable for farmers and ranchers or the entire farm safety net will fail, crop insurance providers explain in a new educational video.
Farmers help fund current farm policy by spending approximately $4 billion a year out of their own pockets on crop insurance policies and by shouldering a portion of losses in the form of deductibles before receiving assistance.
The video explains that “… if insurance bills get too big, or deductible losses get too high, fewer farmers will sign up for policies, and the whole system will collapse. If that happens, not only will it be harder for farm families to bounce back after disaster, but costs that are currently being borne by farmers and private insurance providers will shift back to taxpayers.”
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Congress took steps in the 2014 Farm Bill to keep crop insurance affordable. Among the steps highlighted in the video:
- Farmers receive discounts on the premiums they pay for coverage, including discounts for new and beginning farmers looking to start a career in agriculture.
- Supplemental coverage is made available to help counterbalance a portion of deductible losses.
- Congress defeated attempts by some opponents of agriculture to cap crop insurance benefits and make policies more expensive for everyone.
This is the second in a series of educational videos meant to highlight three policy attributes that are essential to maintaining a strong crop insurance system. The first three-minute segment examined the importance of making crop insurance, widely available, and a future piece will look at maintaining the viability of private-sector delivery.
“Congress cemented crop insurance’s role as the centerpiece of the farm safety net during the 2014 Farm Bill,” explained Tom Zacharias, president of National Crop Insurance Services (NCIS), the trade group that sponsored the video series. “However, that safety net will breakdown if crop insurance policies aren’t widely available, aren’t affordable to producers, and aren’t economically viable to be administered by efficient private insurance providers.”