Federal Crop Insurance Program in North Carolina and Iowa

Gao ID: RCED-84-120 March 16, 1984

Pursuant to a congressional request, GAO reviewed the Department of Agriculture's Federal Crop Insurance Program, which is administered by the Federal Crop Insurance Corporation (FCIC). Specifically, GAO was asked to obtain information about how the program was working in North Carolina and Iowa.

GAO found that, in North Carolina, the number of acres insured under the program dropped from 17 percent of the total planted acres in 1982 to 12 percent in 1983; in Iowa, the acres insured dropped from 16 percent in 1982 to 11 percent in 1983. Producers cited various reasons for not buying Federal crop insurance, including the high cost of premiums, covering their own losses, and low yield coverage. Although FCIC spent almost $12 million to advertise the crop insurance program, a study showed that producer awareness of the program was about the same before and after the advertising campaign. FCIC must maintain a loss ratio of 1.0 or lower for indemnities paid to premiums received to remain actuarially sound. In North Carolina and Iowa the loss ratios were below that figure for 1982. However, loss ratios varied substantially within crops.

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