Posted by GeneMO on November 21, 2014 at 19:26:06 from (71.51.203.52):
In Reply to: Farm economy posted by WellWorn on November 21, 2014 at 10:40:01:
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With all due respect, you are wrong about the insurance companies. The SRA (Standard Reinsurance Agreement) that the ins. companies have with the Feds (RMA-USDA) can allow them to make money even in bad loss years. IF, they have done their fund placements right.
The rules of normal insurance do not apply to MPCI. It resembles "real" insurance in name only.
The companies you refer to do not set the premiums, they do not make any of the loss adjusting rules, they do not make any of the underwriting rules, and they do not make any policy language or anything. The USDA does all that. Then the USDA offers the crop ins. companies a "take it or leave it" SRA. The companies do have some input through NCIS, their trade group, but not a huge amount.
If there is anything at all you do not like about crop insurance, do not blame it on insurance companies. Oh, and in most all instances, what you think are insurance companies are not. Rain and Hail, NAU, RCIS, etc. They are all "Managing General Agents" Not real insurance companies. They have to get a Front company to back their required reinsurance, companies like Wells Fargo, etc.
The Farm Bureau groups are for the most part the only ones that actually own their own Reinsurance company. May be one or two more, not sure.
There are only 12-14 MGA's that have SRA's with the govt.
I heard that the John Deere folks were bailing out of crop ins. they had lost money the last 5 years. They needed to stick to making tractors.
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