Information on the Federal Crop Insurance Program

Pursuant to a congressional request, GAO examined certain aspects of the crop insurance program administered by the Federal Crop Insurance Corporation (FCIC).

GAO found that FCIC methodology for establishing farm yields results in yields that are generally accurate on a countywide basis. However, yields distributed by FCIC to individual farm units often guarantee producers insurance coverage which is either too high or too low. The new FCIC individual coverage plan can provide those farmers who have production records an opportunity to obtain insurance coverage that better reflects their actual production. Monthly interest charges on late premium payments were established to encourage prompt payment and improve FCIC cash flow. Farmers who had insured approximately 22 percent of the total acres insured in 1981 cancelled their policies in 1982, citing low coverage and high premiums as the major reason for cancellation. FCIC records showed that 57 percent of the indemnity claims submitted by farmers for crop year 1981, totaling more than $241 million, took over 30 days to process for payment. State governments are not providing financial assistance to help farmers pay their FCIC premiums.