The United States Department of Agriculture’s Risk Management Agency (RMA) offers protection to crop insurers in the form of the Standard Reinsurance Agreement (SRA), allowing them to transfer risk to the government by sharing specified levels of underwriting gains and losses. The 2008 Farm Bill enacted by Congress allowed the RMA to renegotiate the SRA for the 2011 crop year and beyond, replacing the previous version from 2005.
This year, the AIR model will reflect the changes to the Standard Reinsurance Agreement—changes that will have a substantial impact on MPCI profitability and risk. In this white paper, AIR examines the motivation behind the change and its impact on MPCI industry gain and loss potential.