Examples of premium changes are shown for Revenue Protection (RP) policies in Sangamon County. Table 1 shows 2012 and estimated 2013 premiums for a 200-acre enterprise unit, a 177-bu./acre Actual Production History (APH) and a 188-bu./acre Trend-adjusted APH. In 2012, an 85% coverage level RP policy had a $29.85/acre premium. If the projected price and volatility in 2013 stay at the same level as 2012 – $5.68 projected price and .22 volatility; the 2013 premium for an 85% coverage level would be $27.77, a reduction of 7% from 2012.
The 2013 crop insurance premiums could be higher if either the projected price or volatility is higher in 2013. For example, the 85% RP premium in Sangamon County would be $28.34 if the projected price is $6. This $29.34 premium would be almost the same as the 2012 premium of $29.86. If the 2013 volatility is .25 rather than .22 (holding the projected price at $5.68), the 2013 premium would be $31.83, higher than the $29.86 premium in 2012. Higher projected prices and volatilities are possible in 2013. The 2012 volatility was low compared to volatilities in other recent years.
Variations in Premium Changes
For an 85% RP policy at the enterprise level in Sangamon County, RP premiums in 2013 will be 7% less than in 2012, given the same projected price and volatility in 2013 as in 2012. Changes in premium will vary around Illinois, as Illustrated in Figure 1. The largest reductions tend to occur in the central-western portion of the state. The counties with the largest reductions are Mason County (-12%) and Calhoun County (-11%). Six counties have 10% reductions: Bond, Brown, Fulton, Green, Schuyler, and Scott Counties. Several counties in southern Illinois have increases. The counties with the largest increase are Wayne (13%), Gallatin (12%), and Hamilton (11%) counties.
Reductions also will vary across products. Yield Projection (YP) will have larger reductions compared to RP. For example, the YP policy comparable to the RP policy (described in Table 1) for Sangamon County (85% coverage level, 200 acre enterprise unit) has a projected 2013 premium that is 20 below the 2012 premium. This compares to a 7% reduction for the RP policy.
2013 Crop Insurance Decision Tool
Crop insurance premiums can be generated with the 2013 Crop Insurance Decision Tool, a Microsoft Excel spreadsheet available for download from the from the FAST section and Crop Insurance section of farmdoc. A screen shoot of the Premium Calculator tool is shown here. This spreadsheet will generate corn, soybean, wheat, and other crop premiums for most states in the eastern United States and in the Great Plains. The spreadsheet also has other tools, such as a what-if tool for evaluating crop insurance purchases.