- Federal Crop Insurance Program (FCIP) participation of selected major U.S. Crops
- Federal Crop Insurance Program insured acreage
- Federal Crop Insurance Program liability by commodity type
- Federal Crop Insurance Program liability by policy type
- Federal Crop Insurance Program indemnities by cause of loss
- Federal Crop Insurance Program loss ratio
- Federal Crop Insurance Program costs
Federal Crop Insurance Program (FCIP) participation of selected major U.S. crops
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Since its inception in the 1930s, the Federal Crop Insurance Program (FCIP) has evolved into a key Federal support program for agriculture in the United States. Producer participation in the program has grown since 1990. In 2024, roughly 89 percent of acreage of eight major U.S. field crops (barley, corn, cotton, oats, rice, sorghum, soybeans, and wheat) were enrolled in FCIP—a 52 percentage point increase from 1990. The USDA, Risk Management Agency (RMA) oversees FCIP and offers agricultural producers financial protection against losses due to adverse events including drought, excess moisture, damaging freezes, hail, wind, disease, and price fluctuations. For crop year 2024, RMA offered insurance coverage for more than 120 unique agricultural commodities, representing the vast majority of the value of U.S. crop production. Increased FCIP participation over the last three decades was partly the result of legislative changes—including premium subsidies, as well as the introduction of new insurance products.
Federal Crop Insurance Program insured acreage
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FCIP insured acreage rose from 206 million acres in 2000 to 296 million acres by 2013. Starting in 2016, insured acres began to rise rapidly—reaching 543 million acres for the 2024 crop year. Much of this recent rise was due to the introduction of policies for Pasture, Rangeland, and Forage (PRF) coverage. Forage crops represented 19 percent of insured acreage in 2016, but this share had risen to 56 percent by 2024.
Federal Crop Insurance Program liability by commodity type
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Increases in insured acreage have been met with corresponding increases in total liability—which, as of 2024, was more than 192 billion dollars. The majority of FCIP liabilities are attributable to row crops which represent 65 percent of insured liability in 2024. Behind row crops, livestock/animal products contribute the next most to total liability (almost 18 percent for 2024). Forage crops, despite representing a large share of total insured acreage, have relatively low monetary values and represented only 4 percent of total liability in 2024.
Federal Crop Insurance Program liability by policy type
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A wide variety of crop insurance products exist, but most can broadly be classified into individual-based policies or area- and index-based policies. Further, individual policies can be further classified into yield or revenue protection. Individual policies trigger indemnity payments in response to the individual producer’s loss experience, while area or index plans are conditional on a high-level outcome or index (example: reduced yields at the county level) that may not directly correlate with a single insured producer’s experience. Yield-based policies protect against a drop in the quantity of production (i.e., low yields), whereas revenue-based policies guarantee a certain level of production revenue and thus protect against low output prices and/or a drop in the quantity of production. Historically, individual yield-based policies made up most of the insured liability in FCIP. However, starting in the mid-1990s, individual revenue-based policies gained popularity and represented most of the insured liability for the last decade. Participation in area and index plans have been growing, overtaking individual yield policies in 2021 as the second largest type of policy in terms of covered liability. Area and index plans represent 24 percent of total liability as of 2024.
Federal Crop Insurance Program indemnities by cause of loss
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Many factors can influence the magnitude of FCIP indemnified losses—including changes in producers’ demand for crop insurance, prevalence of extreme weather events, and changes in crop values over time. Since 2000, annual indemnity payments increased on average by 17 percent per year. Although a year-to-year variation exists due to prevailing weather conditions, drought and high temperature were a leading cause of indemnified losses in 14 of the 25 years since 2000, averaging 41 percent of total indemnity payments over the same period. Excess moisture is also frequently responsible for large indemnities, representing 27 percent of total indemnity payments since 2000.
Federal Crop Insurance Program loss ratio
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Although indemnities have trended upward since the early 2000s, the overall actuarial performance of the program has improved. Prior to the mid-1990s, loss ratios (which measure the ratio of total indemnities to total premiums) were often greater than 1.0—indicating that total indemnities were higher than the sum of collected premiums. Following the passage of the Federal Crop Insurance Reform and Department of Agriculture Reauthorization Act of 1994 (Public Law 103–354), the purchase of crop insurance became a mandatory condition for maintaining eligibility for various benefit programs (including price support programs), but this mandatory participation requirement was repealed in 1996. Additionally, significant underwriting/rating changes were made to the Federal Crop Insurance Program in 1995 (RMA was not established until 1996). The mean-loss ratio since 1997 is in line with the congressional mandate (covering projected losses plus reasonable reserve). These legislative changes, along with increases in premium subsidies, helped increase crop insurance participation (and in turn, create a more diversified risk pool). Since 1997, FCIP’s annual loss ratios has averaged 0.85, indicating that average annual indemnities total about 85 percent of total premiums.
Federal Crop Insurance Program cost
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The total cost of maintaining FCIP has also increased with program participation. Premium subsidies, which have historically been the primary policy tool to increase program participation, represent the largest share of total program cost. Premium subsidies totaled $10.4 billion for 2024. In addition, FCIP incurs other costs due to its public-private partnership structure, which is defined via the Standard Reinsurance Agreement (SRA). SRA defines a financial agreement between private insurance companies (formally known as Approved Insurance Providers (AIPs)) and the Federal Government. Under SRA, AIPs sell and service the insurance policies while the Federal Government subsidizes both producers’ purchases and AIPs’ administrative and operating expenses. In 2024, the cost of the program delivery (administrative costs) was $2.34 billion and $2.31 billion was paid as underwriting gains to AIPs. Total FCIP outlays (the sum of premium subsidies, program delivery costs, and underwriting gains) for 2015–24 averaged $11.7 billion, which is a notable increase compared to the 2006–2014 average ($8.04 billion).