ADJUSTED GROSS REVENUE PILOT INSURANCE PROGRAM: RATING PROCEDURE (REPORT PREPARED FOR THE RISK MANAGEMENT AGENCY BOARD OF DIRECTORS)

The focus of this paper is on outlining the procedures used to estimate the premium rates for the Adjusted Gross Revenue (AGR) insurance plan. The AGR rating procedures draw substantially on rating procedures used in products currently reinsured and subsidized by Risk Management Agency/USDA (RMA); thus, the principal focus here is on those features that are a specific to AGR. The outline, briefly, the procedures used in rating existing products to set the stage for describing AGR rating procedures. The focus of AGR is on farms whose principal revenue streams are from NAP crops as contrasted to farms whose crops can be insured under a plan reinsured and subsidized by RMA; however, the procedures must recognize and take advantage of the fact that crops with APH plan insurance may also appear in the farm plans. Since the number of NAP crops is very large and since the information available differ substantially from crop to crop, the procedures draw on a wide range of information sources.