GAO recommends lowering expected rate of return for crop insurance

From: Financial Regulation News

By Dave KovaleskiĀ 

The U.S. Government Accountability Office (GAO) is recommending that Congress consider legislation to reduce the expected rate of return for companies that sell federal crop insurance.

To implement the federal crop insurance program, the U.S. Department of Agriculture (USDA) partners with private insurance companies, which sell and service policies. In 2010, USDA negotiated a set rate of return with these companiesā€”that is, how much companies can profit from these insurance policies. However, GAO found that this expected rate of return was too high compared with market conditions. Reducing it could save the federal crop insurance program hundreds of millions of dollars a year.

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