Purpose and Structure of National Crop Insurance Services (NCIS)

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1 Purpose and Structure of National Crop Insurance Services (NCIS) Thomas P. Zacharias, President National Crop Insurance Services

2 32 nd AIAG Congress Purpose and Structure of National Crop Insurance Services (NCIS) and U.S. Profile Vienna, Austria Thomas P. Zacharias, President National Crop Insurance Services October 1, NCIS NCIS - 2

3 PURPOSE Service Organization for Crop Insurance Industry STRUCTURE NCIS Members are Crop Insurance Companies and Reinsurers 2013 NCIS NCIS - 3

4 Membership Involvement/Participation NCIS Governed by Board of Directors Industry Participates in Technical Committees 2013 NCIS NCIS - 4

5 Industry Committees Loss Adjustment and Policy Actuarial and Data Reporting Industry Training Industry Communications Monthly Conference Calls/Formal Meetings with United States Department of Agriculture/Risk Management Agency (USDA/RMA) 2013 NCIS NCIS - 5

6 Regional/State Committees Northwest Montana North Dakota Minnesota California Nevada Colorado Wyoming South Dakota Nebraska Kansas Oklahoma Iowa Illinois Wisconsin Missouri Indiana Ohio Michigan Kentucky Tennessee East Southwest Gulf States Arkansas Southeast 2013 NCIS NCIS - 6

7 NCIS Services and Functions 2013 NCIS NCIS - 7

8 2013 NCIS Crop Research Potatoes Winter Wheat Canola Alfalfa Lentils Field Peas Chick Peas Corn Corn Potatoes Corn Soybeans Corn Alfalfa Corn Cotton Cotton Canola Soybeans Cotton 2013 NCIS NCIS - 8

9 Economic and Actuarial Research Individual Coverage Versus Area Schemes American Journal of Agricultural Economics Ex Ante Crop Insurance Versus Ex Post Disaster American Agricultural Economics Association Meetings Industry Rate of Return NCIS Today Magazine Review of RMA s Methodology Change RMA Website Program Costs of United States Crop Insurance NCIS Today Magazine 2013 NCIS NCIS - 9

10 Schools and Education 2013 NCIS NCIS - 10

11 2013 NCIS Major Conferences and Adjuster Schools Spokane, WA Moccasin, MT Fargo, ND Lamberton, Beresford, MN Arlington, WI SD Scottsbluff, Champaign, NE Lincoln, NE Salina, KS Overland Park, KS IL Ft. Wayne, IN Columbia, MO Stillwater, OK Kissimmee, FL Major Conferences Train the Trainer Conference Claims Manager s Conference 2013 NCIS NCIS - 11

12 Communications and Industry Promotion 2013 NCIS NCIS - 12

13 Communications and Industry Promotion 2013 NCIS NCIS - 13

14 U.S. Profile 2013 NCIS NCIS - 14

15 Liability as a Share of Production Value avg. Production Value (bil $) Insured Liability (bil $) Liability as a % of Prod. Value Grains % Oil crops % Fruits & nuts % Vegetables & melons % All other % Total crops % 2013 NCIS NCIS - 15

16 Major Plans of Crop Insurance Sold, 2012 Individual Yield (% of total liability) Yield Protection (8.3%) APH (9.9%) Individual Revenue Revenue Protection (70.2%) Revenue Protection Harv. Price Excl. (2.6%) Area Yield & Revenue Other Group Risk Plan (>1%) Group Risk Income Protection (>0.5%) Group Risk Income Prot. Harv. Rev. Opt. (2.2%) AGR, PRF, Aqua, Api, etc. (6%) 2013 NCIS NCIS - 16

17 Revenue Policies Rationale Farmers Face Income Risk Harvest Price Option (Replacement Value Contract) Protects Farmer with Forward Contracts Protects Farmer with Livestock 2013 NCIS NCIS - 17

18 $17.4 Billion U.S. Indemnity (Approximately 80% Drought-Related) $4.1 Billion U.S. Farmer Premium $12.7 Billion U.S. Uninsured Losses (Approximately) 2012 Drought 2013 NCIS NCIS - 18

19 Actuarial Performance of Crop Insurance Loss Ratio = indemnities/premiums 3,0 2, ,0 1, ,0 0,5 0, NCIS NCIS - 19

20 Policy & Program Issues Interaction of Crop Insurance and Farm Programs Interaction & Implementation issues: ARC, RLC, SCO, STAX Private Delivery Concern over delivery cost (different regulatory model, less costly products, alternative approach?) Premium Subsidies Level and structure Distribution of A&O across states Underwriting Gains Degree of public/private risk sharing and returns Level of Market Competition and Privatization Rate making, universal coverage, level of oversight 2013 NCIS NCIS - 20

21 Questions / Discussion Thank You for Inviting Me to Participate! 2013 NCIS NCIS - 21

22 NCIS Website Crop Insurance in America Website Support Crop Insurance Website Facebook CropInsuranceInAmerica Questions/Comments/ Membership Info 2013 NCIS NCIS - 22

23 Purpose and Structure of National Crop Insurance Services (NCIS) Thomas P. Zacharias, President National Crop Insurance Services

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