The payment frequency on the Supplemental Coverage (SCO) and Enhanced Coverage Options (ECO) has been lower than expected from 2015 to 2022. Over all Illinois counties in that time frame, the frequency of payments for corn was 2% for SCO and 14% for ECO-95%. For soybeans, the payment frequency was 2% for SCO and 8% for ECO-95%. Based on a longer historical analysis, payments on SCO were expected at roughly 33% for corn and 20% for soybeans. ECO-95% payments were expected to trigger in 67% of years for corn and 53% for soybeans. Given these low payment frequencies, electing SCO and ECO in future crop years is questionable.
Subsidies for crop insurance are being debated as the farm bill begins to come into focus. In particular, subsides related to premium support for farmers are once again raising concerns. As currently designed, premium support provides higher per-acre subsidy amounts to higher-risk areas. Recent proposals have suggested an increase in premium support targeted at higher-risk farmland. That includes a 4% cap on farmer-paid premiums, which would further increase, in some cases dramatically, support for higher-risk areas. But is this good policy? The design of crop insurance already provides higher per-acre support to higher-risk areas and providing more support is highly questionable from a policy perspective.
This article explores the important role of the choice of crop insurance unit in the US crop insurance program. Farmers can choose from 4 insurance units: basic, optional, enterprise, and…
The farmdoc Crop Insurance section offers iFARM online tools including the Premium Calculator, Payment Evaluator and Price Distribution Tool. These tools are updated annually during the Spring crop insurance election period.