Record drought leads to…lower crop insurance premiums?
I am not an economist or an actuary and I don’t play one on TV, but there’s something about that math that strikes me as a bit odd given the circumstances. In a year of record drought and a potential doubling of insurance payouts to $28 billion, it seems incongruous to have premiums dropping. If there’s a “silver lining” of sorts (and perhaps the best explanation of this oddity), it’s that taxpayers will now be on the hook for slightly less in crop insurance premium subsidies. Taxpayers pick up roughly 60 percent of the tab for producers’ insurance premiums and as much as 24 percent of administrative costs for private crop insurance companies.