The Department of Agriculture's Federal Crop Insurance Corporation

GAO presented information concerning its ongoing review of the Federal Crop Insurance Corporation (FCIC) and the implementation of the Federal Crop Insurance Act of 1980 which expanded the crop insurance program and transferred the sales program to private insurance companies. GAO found that, while FCIC made substantial progress in implementing the act, the program was expanded without necessary evaluations. Until actuarial problems are resolved, sales and insured acreage participation rates may not increase sufficiently to permit crop insurance to become the predominant income protection mechanism. GAO stated that producers must be offered a policy that combines yield guarantees with reasonable unit price elections at a premium rate commensurate with the underwriting risks. GAO noted that other factors, such as depressed agricultural business conditions and the Government's increased emphasis on reducing planted acreage, will continue to affect producers' decisions to buy crop insurance or to insure themselves. In summary, GAO suggested that the FCIC manager take actions to improve actuarial soundness, compensation rates, the reinsurance program, and quality control.