Des Moines Register 05-03-07 Congress targets crop insurer profits By PHILIP BRASHER REGISTER WASHINGTON BUREAU Washington, D.C. — The growing profits that crop insurance companies are making from selling their federally subsidized policies is catching the eye of Congress. Profits from crop insurance are three times as high as the rate of turn that insurance companies normally get from property and casualty insurance, government investigators told the House Oversight and Government Reform Committee. Forty cents of every dollar the government pays for the program goes to insurance companies, not farmers, said Lisa Shames, an official with the Government Accountability Office, the investigative arm of Congress. The chairman of the House committee, Rep. Henry Waxman, D-Calif., called the program a “textbook example of waste, fraud and abuse in federal spending.” The U.S. Agriculture Department reimburses crop insurance companies for administrative expenses as well as paying them underwriting gains when premiums exceed indemnities. USDA paid the insurance companies $2.8 billion in underwriting gains from 2002 and 2006, an annual rate of return of 17.8 percent, Shames said. The rate of return for companies selling property and casualty insurance during that period was 6.4 percent, she said. Representatives of the crop insurance industry told a House Agriculture subcommittee earlier this week that it’s unfair to consider underwriting gains as profit, because companies need to save some of those earnings for years when indemnities exceed the premiums. Bruce Babcock, an agricultural economist at Iowa State University, told the oversight committee that the government could save money and make much of the insurance unnecessary by overhauling the way crop subsidies are paid. Sixteen companies are authorized to sell the federally subsidized policies, five of which are based in Iowa.