Routine Actuarial Adjustments Cut Taxpayer Cost in Subsidized Agricultural Insurance

Francis Tsiboe

Applied Economic Perspectives and Policy, 2026, vol. 48, issue 3, 690-708

Abstract: Government‐subsidized agricultural insurance plays a vital role in farm risk management but exposes taxpayers to substantial fiscal risk, intensifying debates over program efficiency and fiscal restraint. Using more than 3 million observations across 32 U.S. commodities from 2001 to 2024, this study evaluates how routine adjustments to rating parameters affect taxpayer costs. The results show that updating all ratemaking parameters reduces taxpayer expenditure by roughly 10% annually, while updating reference yields alone can generate savings of up to 15%. Although most states benefit, gains are uneven, underscoring the challenges of achieving actuarially and fiscally sound pricing.

Date: 2026
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https://doi.org/10.1002/aepp.70052

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Persistent link: https://EconPapers.repec.org/RePEc:wly:apecpp:v:48:y:2026:i:3:p:690-708

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