Crop insurance premiums should be raised “by as much as the full 20 percent annually that is allowed by law” in high-risk counties to improve the actuarial soundness of the federally subsidized program, said the Government Accountability Office. The watchdog agency said the USDA’s Risk Management Agency could collect tens of millions of additional premiums if it adjusted rates more frequently and more rapidly. The government pays an average 62 cents of each $1 in premiums.
In response, RMA said large increases in rates would undercut the goal of financial stability for agriculture. It also said the insurance program is actuarially sound at the national level. The agency said the GAO’s recommendation “is based on the assumption that faster movement to targets necessarily results in improved actuarial soundness — an assumption that is not completely accurate. RMA will continue to revise premium rates as appropriate, prudent and actuarially sound manner ….”