A study by the University of Illinois Extension Service shows this year's crop insurance premiums will be up 40% compared to last year's rates. The increase occurs because base prices are set by averaging daily settlement prices during February from the Chicago Board of Trade. Last year, the base price was $2.59 for corn and $6.18 for soybeans. During the university study, futures contracts were trading in the high $3.00 range for corn and mid to high $7.00 for soybeans. As a result, base prices for both grains may be $1.00 higher than those of last year.
“Higher base prices will result in higher guarantees for revenue products, a positive for farmers purchasing insurance,” reports Gary Schnitkey, university extension farm management specialist. “However, higher prices will result in higher insurance premiums, a negative for individuals purchasing insurance.”
The insurance policies affected by the higher base prices include Crop Revenue Coverage, Revenue Assurance and Group Risk Income Plan policies.