Actuarial Review for Price Volatility Factor Methodology

RMA has posted the results of an external review regarding the determination and use of price volatility in premium calculations for revenue coverage. The report, Actuarial Review for Price Volatility Factor Methodology, is now available for public comment and can be found at: www.rma.usda.gov/pubs/. Questions and comments about the report can be sent to RMA by e-mail to actuarial@rma.usda.gov. All comments received on or before October 29, will be considered and evaluated. A summary of issues received will be posted at a later date.

Other Background

Over the past several years, RMA has contracted for external review of various aspects of premium rating for the federal crop insurance program. Through these efforts, RMA has received comments and inquiries regarding the methodology for calculating and incorporating price volatility in premium rate determinations. RMA contracted with Sumaria Systems to review the price volatility factor methodology and its use in determining premium rates. This review also included an evaluation of underlying price-yield correlations and the interacting effect price volatility and price-yield correlations have on revenue rates.