Routine Pricing Adjustments Help Keep Crop Insurance Costs in Check

Francis Tsiboe and Evelyn Osei

No 393785, ARPC Brief from North Dakota State University

Abstract: Government-subsidized agricultural insurance plays a central role in managing farm risk in the United States but also represents a substantial and growing cost to taxpayers. This study examines how routine actuarial updates to insurance pricing affect taxpayer outlays in the U.S. Federal Crop Insurance Program. Using a counterfactual simulation framework and national actuarial and summary-of-business data from 2002 to 2024, the analysis compares observed outcomes with scenarios in which insurance rates were not updated from one year to the next. The results show that routine actuarial adjustments are associated with significant reductions in taxpayer costs, averaging about 10 percent per year under the full Risk Management Agency update pattern. Targeted updates to specific pricing components, particularly reference yields, generate even larger cost reductions. These savings arise from improved alignment between premiums and realized loss risk and occur without reductions in premium subsidies or coverage levels. The findings highlight the importance of pricing accuracy for the fiscal performance and long-run sustainability of the crop insurance program.

Keywords: Agricultural and Food Policy; Agricultural Finance; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2026-02-06
New Economics Papers: this item is included in nep-agr
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/393785/files/ARPC%20Brief%202026-06.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:arpcbr:393785

DOI: 10.22004/ag.econ.393785

Access Statistics for this paper

More papers in ARPC Brief from North Dakota State University
Bibliographic data for series maintained by AgEcon Search ().