Northeast Nebraska and Candelaria Philippines | The companies do retain some of the risk. My understanding is the companies get to choose between 3 different "levels" of risk. They can decide if they want to retain a larger part of the risk, or if they want to place the risk on the RMA. The more risk they take, the bigger share of the premium they get to keep. My understanding is they can choose these levels for different states they right in, or different counties, or different crops, and even down to individual policyholders.
These companies have all had massive losses in 2012. In 2013, most lost money, and a few made just a little. One company I know of, had less then a 2% underwriting gain.
So, the point is, even though it's heavily subsidized, and re-insured by the government, don't think these companies aren't sharing in the loses.
John Deere has been in the crop insurance business for the last 8 years, and they announced they are quiting. The last 5 years showed losses of 10-50 million each year.
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Crop Insurance Companies and Price Risk
