Would taxpayers save money if crop insurance was run by the Federal government?

No. With more than 20,000 private-sector individuals delivering crop insurance, it defies logic to think the government could run it cheaper or more efficiently than the private sector.

The government acted as the primary insurer prior to 1980 and farmer participation was very low because the government was not an effective marketer and service provider to farmers. There is no reason to think the story would be any different today, particularly with a more complex and widespread program and limited government resources. Congress replaced the inefficient crop insurance system of the past and put today’s public-private partnership in place in order to increase participation and reduce taxpayer risk exposure.

Crop insurance is not a “one-size-fits-all” program, which is typical of many Federal programs. Crop insurance policies are individually tailored to each farm’s crops, production methods and risk, and each farmer’s risk tolerance. Effective sales and servicing require much information and expertise to be exchanged between the agent and the customer.

One of the reasons why farmers strongly support crop insurance is that it is sold, administered, serviced and delivered by private-sector companies and knowledgeable, licensed agents who will work around the clock if needed. This public-private partnership combines the affordability and universality of the public sector with the speed, efficiency and flexibility of the private sector. As an example, in 2011, farmers in Texas received $2.6 billion in indemnities due mostly to drought. Of this, more than $1.3 billion was paid by mid-September of that year. Another example is during the 2013 government shutdown. Claims were paid, policyholders were taken care of, and the companies continued to operate “business as usual.”