The premium rate is the price of insurance. The premium rates for U.S. crop insurance programs are federally mandated to be actuarially fair, or that over time the premiums collected should be equal to the indemnities paid out. Additionally, in U.S. crop insurance, farmers will never pay the full premium. They will pay a portion of the premium, and the federal government will pay for the remaining portion in the form of a subsidy.
Below, I provide maps of the spatial variation in base premium rates across counties in the U.S. for which there is loss data (i.e. recorded indemnities) available to rate crop insurance with. These rates are called Base Premium Rates because they are the base rate from which adjustments will be made, up or down, based on coverage level, irrigation practice, unit structure, and individual yield measured by Actual Production History (APH). For example, the base coverage level for the Base Premium Rate is 65%, so an increase from 65% to 75% would mean the premium you see in a county will be higher than observed here. If Enterprise Units are selected, then a discount is made to the premium rate. Additionally, if a farm-level APH is greater than the county-average APH, a farmer will see a discount made their their premium rate.
Ultimately, all Base Premium Rates are based on loss history relative to the total amount of coverage (i.e. Liability) purchased. The ratio of indemnities to liabilities gives the Loss-Cost Ratio (LCR). The USDA Risk Management Agency (RMA) computes a premium rate by taking the average LCR across across a 20-year loss-history. Another way to think about the premium rate that it gives the proportion of indemnities a producer of a county will collect relative to the total liability purchased on the average. For example, a county-level base premium rate of 0.25 would indicate that a producer in this particular county would, on the average, incur $0.25 for every dollar of liability purchased.
2023 Base Premium Rates
Winter Wheat (U.S.)
2022 Base Premium Rates
2021 Base Premium Rates
NOTE: The premium subsidy rate is the portion of the premium paid by the U.S. government. The other portion is paid by the producer who chooses to purchase coverage and is equal to one minus the subsidy rate found in the table below (Link). Premium subsidy rates are the same across all states, counties, and crops. Subsidy rates do not impact the premium rate but are applied to the premium rate after the rate has been determined.
Note: The Sales Closing Date for all counties in Arkansas for all crops below is February 28th.