The Federal Crop Insurance Program is a risk management tool that farmers and ranchers purchase to protect against loss due to natural disasters such as hail, drought, freezes, floods, fire, insects, disease and wildlife, or the loss of revenue due to a decline in price. Crop insurance is federally supported and regulated and is marketed by private-sector crop insurance companies and agents. In 2015, 1.2 million polices were purchased by farmers protecting more than 125 different crops covering 298 million acres, an area larger than Texas and California combined, with an insured value of $102 billion.

Congress created and provides funding for the modern-day crop insurance system through the Federal Crop Insurance Corporation (FCIC) to help manage the risks of natural disasters and market fluctuations. The activities of FCIC are carried out by the Risk Management Agency (RMA) of USDA. Lawmakers sought to establish a system that was more efficient and effective versus traditionally pursued ad hoc disaster legislation, thereby helping to shelter taxpayers from the full costs of agricultural disasters and avoiding the need to enact new disaster assistance following every major catastrophic event.

Crop insurance doesn’t pick winners and losers. It’s a risk management tool available to all farmers and ranchers regardless of size, location, or crop choice. Crop insurance policies are available on more than 125 crops, in all 50 states encompassing more than 62,000 county-crop programs – and premium support discounts are the same across commodities for each plan of insurance. As the crop insurance industry has matured, extensive efforts have been made to increase the crops and areas covered, by expanding new insurance plans.

Thanks to the effectiveness of crop insurance, there have not been any widespread calls for ad hoc crop disaster bills over the past several years, including 2011, 2012, and 2013, three of the worst weather years on record. Further, farmers help fund their own safety net, collectively spending nearly $50 billion out of their own pockets on insurance coverage since 2000.

For a timeline regarding the history of the crop insurance program, click here.

Today, crop insurance is a highly dynamic program which is closely tailored to the producer’s individual operation(s) and is most efficiently and effectively managed by the private sector. For example, 298,000,000 acres of farmland were protected through the Federal Crop Insurance Program in 2015. The private sector has proven that it can deliver assistance into the hands of farmers within days of the claim being filed. Because of policy customization and the responsive nature to individual farms and regional and commodityspecific issues, farmers and agricultural groups have made defending crop insurance, and private-sector delivery of this program, one of their top priorities. There are 16 private-sector approved insurance providers that currently sell and service policies through the federal crop insurance program. These companies employ more than 20,000 licensed agents, certified loss adjusters and other staff who market and service policies to farmers, collect premiums, determine the extent of losses in the aftermath of weather and market-related events, and pay claims. In 2015 these companies and their employees issued more than 1.2 million policies. The crop insurance companies also share in the underwriting gains and losses of the program. In good years, the government collects a portion of the underwriting gains and in bad years the private sector absorbs a share of the losses, thus reducing taxpayer exposure. Further, the unique public-private sector partnership has led to large private investment in technology, infrastructure efficiency, training programs and service improvements for farmers and ranchers.

The unique public-private partnership of the federal crop insurance program is working as intended and continues to both innovate and adapt to changing times and demands from taxpayers, consumers, and producers. This partnership should serve as an example for other areas in the federal government.