Crop insurance loss performance in 2021 • farmdoc daily

The Risk Management Agency (RMA) recently obtained the county’s 2021 returns, which enabled payments into area insurance plans, including Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO). With those payments made, we assess the overall loss performance of federal farm insurance for 2021. Overall, loss payments relative to total premiums were low in the US. Loss payments were particularly low in Illinois and the Midwest because corn and soybeans had few payments.

Overall Crop Insurance Performance in the US and Illinois

Loss ratios are used to judge the performance of crop insurance. A loss ratio is equal to the crop insurance settlement payments divided by the total crop insurance premiums paid. Total premiums include those paid by farmers and risk support provided by the federal government. A loss ratio of 1.0 means that crop insurance payments are equal to the full premium. Loss ratios greater than 1.0 mean that payments exceed premiums and vice versa. When setting premiums, the Risk Management Agency (RMA) aims to maintain a loss ratio slightly below 1.0, thereby creating a loss reserve in the ratings. Currently, the Congressional Budget Office uses a loss ratio of 0.80 when projecting future crop insurance payouts.

For the US, the 2021 Crop Insurance Program Overall Loss Ratio was 0.68, below the break-even point of 1.0 (see Figure 1). In the last ten years, the loss ratio exceeded the 1.0 benchmark in only three years: 1.57 in 2012, 1.02 in 2013, and 1.05 in 2019. The 2021 loss ratio of 0 .68 was below the 2012-2021 ten-year average of .84 and the 2017-2021 five-year average of .77. RMA began reporting accident rates in its Business Summary in 1989. From 1989 to 2021, the loss rate averaged 0.93. In 2021 and in recent years, accident rates have been low.

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Illinois had an exceptionally low loss ratio in 2021 of 0.13 (see Figure 1). The 2021 loss ratio of .13 is the lowest since 2006, when Illinois had an average loss ratio of .10. For the past ten years, Illinois’ loss rate has averaged .84. The .84 average includes the 2012 drought year when Illinois’ loss rate averaged 4.55. Over the past five years, the loss rate has averaged 0.37. Few insurable losses have occurred in the past five years. The last five years include 2019, when a large number of avoided plantings occurred. The loss ratio in 2019 was 1.09, not particularly large given the significant issues with prevented planting. From 1989 to 2021, the loss rate in Illinois averaged 0.64, below the US average of 0.93.

Iowa and much of the eastern Corn Belt also have low loss rates for 2021 (see Figure 2). The areas that had loss ratios greater than 1.0, indicating that losses exceeded the premium, stretched from Montana through parts of North Dakota, South Dakota and Minnesota. The drought caused yield difficulties in the upper Grand Plans.

Crop insurance loss performance in 2021 • farmdoc daily fdd07052022 fig2

In Illinois, county loss ratios ranged from 0.01 to 0.69 (see Figure 3). The five counties with the highest loss rates were Cook (.69), DuPage (.53), Greene (.52), Hardin (.49), and Union (.48) counties. The five counties with the lowest ratios were Douglas (.01), Moultrie (.02), Piatt (.03), Champaign (.03) and Coles counties.

Crop insurance loss performance in 2021 • farmdoc daily fdd07052022 fig3

Corn and Soybean Performance

Low-loss yields from Illinois and the Midwest had much to do with low-loss corn and soybeans. Two reasons contribute to the low losses:

  1. Harvest prices were above projected prices. Most farmers purchase Revenue Protection (RP) to insure corn and soybeans (see Table 1 in daily farmdoc, January 25, 2022). RP is income insurance with increased guarantee. When crop prices are above projected prices, insurance payouts are primarily due to yield losses. In Midwestern states, the 2022 harvest price of corn was $5.37, well above the projected price of $4.58. Similarly, the soybean harvest price of $12.30 was well above the projected price of $11.87.
  2. Yields were at or above trend in much of the Midwest, resulting in few yield claims.
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As a result, loss rates were low for corn and soybeans, particularly in Illinois. The loss rate for corn was 0.37 for the US and 0.12 for Illinois (see Table 1). The 2021 loss ratio for US corn of 0.37 was well below the five-year average of 0.60 and the ten-year average of 0.88. Illinois’ corn loss rate was 0.12 in 2021, well below the five-year average of 0.36. and a ten-year average of 1.03.

Crop insurance loss performance in 2021 • farmdoc daily fdd07052022 tab1

The US loss ratio for soybeans in 2021 was 0.44, well below the five-year average of 0.57 and the ten-year average of 0.55. Illinois has had lower losses than the US Illinois had a loss ratio of .12 in 2021, below the five-year average of .38 and the ten-year average of .42.

For comparison, corn and soybean losses in 2021 were lower than those of wheat. In 2021, the loss ratio of 1.60 for wheat was above the benchmark of 1.0 and well above the loss ratios for corn and soybeans. Once again, drought in the northern Great Plains contributed to further losses.


Prices increased for both corn and soybeans in 2021. Additionally, yields were mostly above trend for corn and soybeans in much of the Midwest. As a result, federal crop insurance payments were relatively low in 2021. Crop payments were particularly low in Illinois and the Midwest.


Schnitkey, G., C. Zulauf, N. Paulson, and K. Swanson. “Crop Insurance Decisions in 2022”. daily farmdoc (12):10, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 25, 2022.

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