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It is not uncommon for the media to talk about what a handout crop insurance is. The reality is that the goal is that the federal crop insurance program will take in a dollar of premium for every dollar they pay in claims. In 2014 they only paid 90 cents in claims for every dollar they took in, however they don’t make mention of what the taxpayer is paying for the other component which is the expense ratio (marketing, administrative fees, paying the agents and adjusters, etc). For this program to not be a drag on the taxpayer they need to take in a dollar for every dollar that is spent for both losses and expenses combined. This is known as the “combined ratio” in insurance vernacular.  I find it interesting that corn and soybeans (which is most of what is insured in the Midwest) is paying out 85 cents in loses for every dollar they take in. That is probably pretty close to a combined ratio of 1.

http://will.illinois.edu/agriculture/note/crop-insurance-loss-performance-in-2014
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