Crop Insurance

PIA supports the vital role of independent agents in the delivery of crop insurance.

The federal crop insurance program is a highly technical program that relies on the expertise of independent insurance agents. Crop insurance offers our nation’s farmers the ability to manage their risk while continuously providing Americans with a safe, strong, and dependable food supply. The federal crop insurance program requires private-sector insurance carriers to offer insurance to growers who are eligible for coverage and interested in purchasing it.

Unlike insurers in other lines of business, crop insurers do not set premiums. Instead, farmers’ rates are calculated by the United States Department of Agriculture (USDA), and, unlike prices for other insurance products, crop insurance prices are consistent across insurers.

Opposing crop insurance cuts

Despite the critical role crop insurance plays in protecting farmers from natural and economic disasters and in supporting rural economies, presidents of both parties have historically tried to cut crop insurance funding using the budget and appropriations process.

PIA routinely works with a coalition of organizations that represent every part of the crop supply chain to protect the funding of the federal crop insurance program. This advocacy is required due to past attempts to cut the program. For example, in 2015, Congress cut $3 billion from the program, but PIA and its allies successfully pushed for a statutory reversal to the cuts. In addition, billions of dollars in cuts to crop insurance have been included in presidential budget requests for most of the last decade.

Cuts to the program compromise the affordability and availability of crop insurance for farmers, seriously undermining the strength of the farm safety net. PIA will continue to work against any attempts to cut crop insurance throughout 2024.

Seeking inflation adjustments

In 2022, PIA successfully advocated for the inclusion of crop provisions in the year-end federal government appropriations package, known as an omnibus. The provisions included in the 2022 year-end omnibus acknowledge the need for the federal government to alleviate economic challenges that have faced crop insurance agents for years.

First, the 2011 Standard Reinsurance Agreement (SRA), which is the contract between the Federal Crop Insurance Corporation and crop insurers, established a broadly applicable cap on the administrative and operating (A&O) expense subsidy. To make matters worse, beginning in 2016, the U.S. Department of Agriculture’s Risk Management Agency (RMA) stopped making annual inflation adjustments to the total A&O subsidy cap, leaving its value fixed in 2015 dollars, where it remains today.

These actions resulted in effective cuts to agent commissions, during a historically challenging time for crop insurance agents.

The PIA-backed provisions included in the 2022 omnibus made explicit Congress’s view that the RMA has the legal authority to provide crop insurance agents with A&O inflation adjustment relief. Unfortunately, the RMA has made clear to PIA that, despite these provisions, they do not intend to bring the inflation adjustment back at this time.

PIA will continue to urge the RMA to restore the inflation adjustment and will continue to pressure Congress to address the inflation issue in the Farm Bill reauthorization process if the USDA does not independently reinstate the inflation adjustment.

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