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Crop Insurance: Further Actions Could Strengthen Program's Financial Soundness

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Report Type Reports and Testimonies
Report Date April 21, 1999
Report No. T-RCED-99-161
Subject
Summary:

Federal crop insurance is one of the primary mechanisms used by farmers to protect against losses caused by droughts, floods, hurricanes, and other natural disasters. Since 1995, the federal government has spent an average of about $1.4 billion each year on the crop insurance program; the program will cost an estimated $1.6 billion in 1999. This testimony discusses whether the Department of Agriculture (1) has set adequate insurance rates to achieve the actuarial soundness mandated by law, (2) appropriately reimburses participating crop insurance companies for their administrative costs, (3) can deliver catastrophic crop insurance at less cost to the government than can private insurance companies, and (4) has established methodologies in the revenue insurance plans that set sound premium rates.

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