The crop insurance industry is calling a report by the Government Accountability Office “disheartening.” The GAO last week recommended to Congress that it considers directing the Department of Agriculture to adjust the expected rate of return for crop insurance.
In 2010, USDA negotiated with insurance companies to set a 14.5 percent target rate. According to GAO’s analysis, the reasonable rate of return declined, averaging 9.6 percent. However, the Crop Insurance Industry says the GAO “glossed over” key facts.
An industry news release says providers of crop insurance are not achieving the returns targeted, and says the GAO did not consider full business expenses by insurers for the report. The industry points out that a 2017 study by economists from the University of Illinois and Cornell University noted that net returns for crop insurance providers were just 1.5 percent from 2011-2015.