Each of the 16 private insurance companies who participated in the federal crop insurance program last year has signed their 2011 Standard Reinsurance Agreement with USDA. Agriculture Secretary Tom Vilsack says USDA's Risk Management Agency has received each signed agreement. The new SRA is projected to achieve $6 billion in savings over the next 10 years. Two-thirds of those savings will go toward paying down the federal deficit, while the remaining third will support high-priority risk management and conservation programs.
Secretary Vilsack says the new agreement will improve the farm safety net for producers by providing incentives for companies to sell policies in all areas so that farmers and ranchers across the country can access these critical risk management tools. The Secretary credited the efforts of the companies to negotiate a new agreement in good faith.
Each company will now submit its plan of operations, which is due no later than July 26. In the meantime, RMA is granting conditional approval to these companies to participate in the program, including the renewals and writing of new fall crop business. The new agreement generally maintains the current Administrative and Operating subsidy structure, but removes the possibility of windfall government payments based on high commodity price spikes by limiting the level of A&O payments that the industry can receive.