MANHATTAN, Kan. – The early numbers are in and it appears the 2000 Crop Insurance Reform Law was a step in the right direction.

"The new crop insurance reform law clearly caused more growers to buy crop insurance and at higher coverage levels," said Kansas State University agricultural economist Art Barnaby. "Crop Revenue Coverage [CRC] participation increased by over 95,000 policies, or a 23 percent increase. Revenue Assurance [RA] increased by over 26,000 policies, or more than double 2000 sales."

The increase was expected because the law provided for higher subsidies on increased coverage levels, he said.

Currently, the number of policies sold is the only national statistic available that gives an indication of the change in crop insurance participation for 2001, said Barnaby, a risk management specialist with K-State Research and Extension. That’s only an "indicator," however, because some of those policies will not earn premiums unless growers plant the insured crop.

In addition to buying higher coverage levels, the data show that many growers switched from yield guarantees to the revenue insurance products.

CRC and RA policy purchases posted the most dramatic gains, the economist noted, while Multi-Peril Crop Insurance [MPCI] purchased at the 65 percent coverage level and greater, was nearly unchanged for 2001. MPCI purchases at less than 65 percent coverage dropped significantly, however.

"The decline may be a function of the data not being reported by the insurance industry, or it could be that growers responded strongly to the incentives provided by the crop insurance reform law to buy higher levels of coverage," Barnaby said.

Participation in the Catastrophic (CAT) policies have been falling for years, and this year is no exception, he said, noting that 63,000 fewer CAT policies were sold than a year ago.

"The reduction in CAT participation is undoubtedly coming from two sources – growers are paying for higher levels of insurance coverage or growers have simply dropped their insurance coverage totally."

Participation in other insurance products such as Income Protection, the Group Risk Plan, and the Group Revenue Insurance Policy accounted for less than 30,000 policies sold. However, all three showed an increase in participation.

"A successful crop insurance program not only requires participation but also a good loss experience in order to be a viable program," Barnaby said.

The higher coverage MPCI and revenue insurance products have met the Risk Management Agency [RMA] goal for actuarial soundness over the past years. This actuarial performance has reduced the taxpayer’s cost for covering underwriting losses in the crop insurance program, he said.

For more information, interested persons can visit http://www.agecon.ksu.edu/risk/.