As a subsidy designed to lure insurers into a market they would not participate in without government aid, the crop insurance program is intended to enhance profit margins for insurers, but the numbers suggest the program has grown more generous than it was ever intended to be. Crop insurance subsidies guarantee companies a 14.5 percent rate of return, substantially above the 12 percent that is typical for financial business. Those figures paint the picture of a program meant to protect farmers that “has evolved into a system that in most years all but guarantees profits for insurers,” as Bloomberg writes. One agricultural policy expert at the University of Tennessee called the modern crop insurance system “a money-laundering operation.” The insurance companies that have access to that program and bank those tacitly guaranteed profits sport some notable connections. Former AIG head honcho Greenberg runs one of them, the Starr Indemnity & Liability Co., and another, the Great American Insurance Group of Cincinnatti, is part of the business empire of the Lindner family. The Lindners, including the late Carl Lindner Jr., have given many millions of dollars to Republican candidates and campaign organizations over the years.
Posted on: Thu, 12 Sep 2013 09:49:05 +0000
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