You Paid For It: Crop Insurance

Published 08/20 2012 09:56PM

Updated 08/21 2012 10:31AM

SPRINGFIELD -- Experts estimate record numbers of farmers will file claims on crop insurance policies this year because of the drought. But many people don't realize crop insurance isn't exactly like auto or home insurance policies. It is subsidized by the federal government.

Farmers pay premiums for their policies and a private, for-profit company manages the policies and writes claims. But, the Environmental Working Group of Washington, D.C., says more than 60% of premiums for farmers are paid by government subsidies, and therefore the taxpayer.

The group also says the government pays part of the insurance companies' administrative and overhead costs. When the insurance agencies have to pay out claims, the government helps again.

EWG legislative policy analyst David DeGennero said his watchdog group isn't saying crop insurance is a bad idea. The group just says the amount of government support needs to be reexamined.

But, Jim Birge, with the Sangamon County Farm Bureau, says farmers need this assistance to pay for this insurance. Birge says farming is one of the riskiest jobs in the country with farmers unable to control weather conditions and therefore their livelihoods.

He says because of the risk, insurance companies are forced to charge higher premiums that would put farmers out of business. That's where the government comes in.

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