The Standard Reinsurance Agreement (SRA) is a document that governs the relationship between the Federal Crop Insurance Corporation (FCIC) and private insurance companies that participate in the federal crop insurance program. This agreement is updated and renegotiated every year, with the most recent update being the Standard Reinsurance Agreement 2020.
The SRA outlines the terms under which private insurance companies sell and service crop insurance policies on behalf of the FCIC. It sets the rates and terms for the reinsurance that the FCIC provides to the private companies to cover losses due to weather, pests, or other factors that can affect crop yields.
One of the key changes in the Standard Reinsurance Agreement 2020 is the shift from a traditional risk-sharing model to a performance-based model. Under the new agreement, private insurance companies are rewarded for doing a better job of managing risk and minimizing losses. This means that insurance companies will be incentivized to focus on risk management and loss prevention, which should lead to better outcomes for farmers.
Another significant change in the Standard Reinsurance Agreement 2020 is the introduction of a new program to support the development of new and innovative crop insurance products. The FCIC will provide funding to private companies to support the development and testing of new crop insurance products that can better meet the needs of farmers and provide more effective risk management.
Overall, the Standard Reinsurance Agreement 2020 represents an important step forward in the federal crop insurance program. By incentivizing private insurance companies to focus on risk management and loss prevention, and by supporting the development of new and innovative crop insurance products, the SRA will help ensure that farmers have access to the tools they need to manage risk and protect their livelihoods. It is an important document for anyone involved in the crop insurance industry, and one that will shape the future of this important program for years to come.