This article provides an overview of the crop insurance program in the US provided by the Federal Crop Insurance Corporation via a network of private firms. We review the evolution of the program during the past two decades and suggest an approach to model the loss to liability ratio. We show that the Weibull distribution provides a reasonable option to model the loss payments between 0% and 100% of the liability levels, a finding consistent with prior research on insurance claims modeling.

I. Introduction

Crop insurance in the United States is provided by the Federal Crop Insurance Corporation (FCIC) via a network of private firms. FCIC is managed by the Risk Management Agency (RMA) of the US Department of Agriculture [1]. This article provides an introduction to the crop insurance program in the US and provides an overview of policies, liability and claims during the period 2000–2020. We also look at the insurance losses and suggest an approach to model these losses.

While the examples and website references provided in this article are US-centric, the ideas presented herein are general and can be applied to all locations. In other regions and countries, the analyst will need to substitute the appropriate regional data sources for crop insurance claims data.

II. Data Sources

RMA provides excellent summary level data sets on their website [2]. The analysis presented in this article is primarily based on state/county/crop/coverage level data downloaded from this site by the author in October 2020. The data files are organized for each year and are in text file formats that can easily be processed by standard statistical software.

Note that the data from the RMA website is not dis-aggregate data. It is summarized at the level of state, county, crop and coverage level. So we are not able to undertake analysis at an individual policy or an individual claim level. We did request USDA for the policy level data through a Freedom of Information Act request but this request by denied because of prevailing laws and regulations that govern the data.

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