Multiple Peril Crop Insurance (MPCI)
Some Short Facts
Multiple Peril Crop Insurance (MPCI) policies must be purchased before you plant. They cover loss of crop yields from all types of natural causes including drought, excessive moisture, freeze, and disease. Newer coverage options combine yield protection and price protection to guard farmers against potential loss in revenue. That way is doesn’t matter whether it is due to low yields or changes in market price.
Under the Federal Crop Insurance Program’s unique public-private partnership, there are currently 19 private companies authorized by the United States Department of Agriculture Risk Management Agency (USDA RMA) to write MPCI policies. The service delivery side of the program, such as:
- writing and re-insuring the policies
- marketing
- adjusting and processing claims
- training
- record-keeping, etc.
is handled by each private company.
The Risk Management Agency (RMA) oversees and regulates the program. The RMA sets the rates that can be charged and determines which crops can be insured in different parts of the country. The private companies are obligated to sell insurance to every eligible farmer who requests it The private companies also retain a large portion of the risk on over 80 percent of the policies written.
The federal government also subsidizes the farmer-paid premiums to reduce the cost that is paid by farmers. In addition, it reimburses the private insurance companies to offset operating and administrative costs that would otherwise be paid by farmers as part of their premium. Through this federal support, crop insurance remains affordable to a majority of America’s farmers and ranchers.
By combining the regulatory authority and financial support of the federal government with the efficiencies of the private sector, the crop insurance program has succeeded in meeting and even surpassing the goals set forth by Congress for broad participation, diversity and inclusion. By using the private sector, risk is shared among the private companies as well as the government.