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Industry Opposes Proposed Cuts to Crop Insurance

A proposal to cut government payments to the private insurers that administer the U.S. crop insurance program could cause some insurers to drop out, said...
May 12, 2009

A proposal to cut government payments to the private insurers that administer the U.S. crop insurance program could cause some insurers to drop out, said Bob Parkerson, president of National Crop Insurance Services (NCIS), a trade group that represents the 16 private insurers that participate. Crop insurance is backed by the Department of Agriculture (USDA). Insurers "are being punished for doing a good job," Parkerson said. He attributed some of the negative sentiment toward insurers to the financial services bailout, despite the fact that property/casualty insurers have for the most part rejected government bailouts.

The proposal to reduce crop insurance payments was contained in the Obama Administration's  2010 budget proposal unveiled last week, which calls for $17 billion in budget cuts from 121 government programs.

Specifically, the budget document's 'Terminations, Reductions and Savings' section says the proposal would reduce the federal crop insurance subsidy to both farmers and the insurance companies in three ways: reduce premium subsidies by five percentage points on all coverage levels; increase the government's share on underwriting gains to 20 percent from five percent; and reduce the premium on Catastrophic Crop Insurance by 25 percent and charge a sliding scale fee for CAT coverage from $300 up to $5,000 depending on the crop value.

Obama Plan Still Calling for Cuts in Direct Payments (Wisconsin Farm Bureau 5/11/09) 

"Terminations, Reductions, and Savings" (PDF file, President's Budget, page 74)

President's Proposed Budget Cuts (PDF file, President's Budget, full list)

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