The proposed A&O rates recognize that premiums, and thus, A&O reimbursements, increase dramatically at higher coverage levels. For example, the premium (and current A&O payment) for an 85% policy is 60% greater than that for a 75% policy, yet A&O expenses are only 25% higher given relative loss frequencies. For this reason, RMA focused on the 80% and 85% coverage levels for much of the A&O reduction.
In the tables below, A&O payments for the 2004 corn APH (category - All Other), CRC (category - Revenue, including GRIP with the Harvest Price Option), and GRP (category - Group Risk, including GRIP without the Harvest Price Option) plans of insurance in Black Hawk County, Iowa are illustrated. A&O payments for coverage levels of 75% and below are quite similar between the current and proposed A&O rate schedules. Further, A&O payments for the 80% and 85% (and higher) coverage levels are still much greater than for the 75% coverage level, despite the reduction in A&O rates for these higher coverages.
Expense Reimbursements: Comparison of Current and Proposed SRA Payment Terms for
APH and Revenue Plans of Insurance
|
|
|
|
|
|
|
Coverage
Level %
| APH
Expense Payment
| CRC
Expense Payment
|
|
Premium
| Current
| Proposed
| Current
| Proposed
|
$/policy |
| 50
| $52.50 |
$12.79 |
$12.63 |
$11.01 |
$10.86 |
| 55
| $56.60 |
$13.87 |
$13.70 |
$11.94 |
$11.77 |
| 60
| $63.60 |
$15.51 |
$15.32 |
$13.36 |
$13.17 |
| 65
| $72.20 |
$17.69 |
$17.47 |
$15.23 |
$15.02 |
| 70
| $83.10 |
$20.36 |
$20.11 |
$17.53 |
$17.28 |
| 75
| $100.00 |
$24.50 |
$24.20 |
$21.10 |
$20.80 |
| 80
| $121.00 |
$29.65 |
$26.26 |
$25.53 |
$22.63 |
| 85
| $145.60 |
$35.67 |
$30.58 |
$30.72 |
$26.35 |
Expense Reimbursements: Comparison of Current and Proposed SRA Payment Terms for
GRP Plan of Insurance
|
|
|
|
|
| Coverage Level %
| Premium
| Current Expense
Payment
| Proposed Expense
Payment
|
$/policy |
| 70
| $69.23 |
$15.72 |
$15.51 |
| 75
| $100.00 |
$22.70 |
$22.40 |
| 80
| $130.77 |
$29.68 |
$26.28 |
| 85
| $169.23 |
$38.42 |
$32.83 |
| 90
| $230.77 |
$52.38 |
$44.77 |
Related items: Standard Reinsurance Agreement Claims and Facts
| 
