Friday, February 10, 2012

NASCOE Versus Crop Insurance

NASCOE has asked Congress to de-privatize crop insurance according to DTN's Jerry Hagstrom.  DTN editorial opposes.

Some random comments:

I didn't see this position on the NASCOE site until I doublechecked and found this consultants report.  Don't understand why the report was dated in September but, unless I have been missing it consistently, which is possible, not posted until recently. The report seems impressive enough (that's what consultants do--impress) that it should be up front in NASCOE's pitch. The DTN editorial rightly says this is FSA trying to preserve jobs, but without mention of the data in the report.  If NASCOE is serious they should be highlighting the dollar savings in short talking points.

Having gone through the process of parallel sales and servicing of CAT policies in 1994-6, I've some wisdom thoughts to offer. I think we ended up doing a pretty good job with CAT and I think GAO was reasonably positive about our work, though that may be an old man's rosy memories.  But the point is it was a real battle of sweat and tears to get to where we ended up.  There was a very big learning curve.  It's easy to assume crop insurance is simple, just another program to administer.  But it's not, particularly because the differences are subtle.  I've posted before about the different acreage reporting dates of ASCS/FSA and RMA--there's good reasons for many of them, reasons which someone raised in the crop insurance world understands automatically (as regards crop insurance) and someone raised in the FSA world understands automatically (as regards farm programs). 

I've posted before about the 80/20 rules: it's those subtle differences and the odd-ball (to an FSA person) crops which would cause 80 percent of the work.  

So I'd fault the consultants for not recognizing transition costs and learning curves, which would be major.   If Congress really wanted to explore saving a billion or so (which I doubt they will--just look at the map of crop insurance agents in the report and remember those people have influence) I'd suggest they haul some branch chiefs and division directors from FSA and RMA up before their committees to thrash out the proposal.

I was struck by the statement in the report that most crop insurance acreage reports are rekeyings from FSA acreage reports.  By now I would have hoped that offices could have been working directly from GIS-based reports, but I guess not.

1 comment:

Micheale Dewey said...

Here are the reasons that FSA should be selling Crop Insurance instead of Private Company’s:
Administrative and Operating Expense Reimbursements Paid to Insurance Companies by the Crop Insurance Program in the United States: From 1995 to 2010 was $13,824,279,099
Indemnities: $51,616,090,842
Other Federal Expenses: $2,618,503,799
Total of what the Government pays out to Crop Insurance Agency’s is: $68,058,873,739
Farmers pay for their part $28,366,946,447

Total of our Government taxes going to Insurance Agents are: $39,691,927,292, Your seeing right, it over 39 billion.

This is not money that goes to the farmers this is the money that goes directly to the crop insurance agents.

I guess if this is ok with you as a tax payer thats your decision, but as for me (a tax payer) I don’t find it acceptable at all. With all the savings that could be realized from this, if FSA administered the crop insurance program, they could hire people just to take care of the program and they could get licensed and take any classes to keep up that license. Most states you just have to take a test you don’t even have to have any classes, so its not rocket science for sure. Just about anyone can get an insurance license. Then take continuing education classes like 8 or so hours every other year, I think it is here in Kansas.

This is just another case of outsourcing at its worst. This is a program that could be handled by FSA. I work for FSA, the can do agency and believe me, we could make it happen. But the Politicians are being lobbied by the insurance people with our own money no doubt. This is one of the reasons that Insurance Companies are some of the richest companies in the world.