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SE IL | Total $ for insurance on an acre of corn is $60 (in this example) for 80%. Gov pays over half, let’s call it $40. That 40$ is the direct subsidy we see. The indirect subsidy is the gov control of the program essentially being the reinsurance or backstop. In other words the program is not designed to make money; money equals money out to farmer + insurance companies for admin. $60/ an acre would come close to buying the total policy if it was left to the private sector, but the Gov is taking the risk.
Yes it can be fairly lucrative for insurance as well as they have no risk. Their cut is predetermined though, somewhere between 10-15% of total I believe. | |
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Do farmers get subsidized crop insurance?