Chairman Frank Lucas today released the following statement on Scott O'Malia's last day as Commissioner of the Commodity Futures Trading Commission (CFTC). Last month, O’Malia announced he would resign to pursue other opportunities.
Agriculture Subcommittee Holds Hearing to Review Financial Condition of Crop Insurance: Hearing Also Addresses Implementation of the Agriculture Risk Protection Act
AGRICULTURE SUBCOMMITTEE HOLDS HEARING TO REVIEW FINANCIAL CONDITION OF CROP INSURANCE
Hearing Also Addresses Implementation of the Agriculture Risk Protection Act
WASHINGTON, D.C. - Congressman Jerry Moran, Chairman of the House Agriculture Subcommittee on General Farm Commodities and Risk Management, today chaired a hearing on the crop insurance program and the implementation of the Agriculture Risk Protection Act. The witnesses also covered the financial condition of both crop insurance and the reinsurance companies.
“Crop insurance plays an increasingly important role for many farmers and ranchers,” Chairman Moran said. “This hearing has shed light on the financial status of the industry and on how the Risk Management Agency has implemented the changes mandated over the last three years.”
The subcommittee heard from four different witnesses who discussed the various aspects of crop insurance. Appearing were the Administrator of the U.S. Department of Agriculture (USDA) Risk Management Agency (RMA), Ross J. Davidson; the Chief Economist with USDA, Dr. Keith Collins; the Chairman of the American Association of Crop Insurers, Ronald Brichler; and the Vice Chairman of Collins Associates, Inc. in Minneapolis, Minnesota, Jim Brost.
“Crop insurance is a very successful program delivered by private industry” Brichler said in his testimony. “The industry is committed to delivering a viable risk management tool to producers that provides meaningful coverage and is actuarially sound. We want to work with Congress and RMA to make the program easier to administer, which in turn would reduce costs for all parties in this public-private partnership. It is a turbulent time for the industry and we need stability that includes no major changes in the program, which could jeopardize a vital successful program.”
The Agriculture Risk Protection Act of 2000 (PL 106-224) reauthorized crop insurance programs through FY 2005. The bill worked to reform and improve the program, while reducing the participation cost for producers.
In 2002, the Federal Crop Insurance Program had insurance products for over 100 commodities covering both crop and livestock production. More than 215 million acres were covered, with an insured value of over $37 billion.
The past few years have been difficult for the insurance industry as a whole. The events of September 11 are estimated to have cost nearly $70 billion. Prior to this event, the largest loss in the insurance industry was Hurricane Andrew at $20 billion. Specific to the crop insurance industry, over $4 billion of indemnities were paid to producers, nationwide, who suffered crop losses in 2002.