Coverage Levels Increase With New Crop Insurance Policy

Koch Agriculture Co. has introduced the RevMax 90/90 crop insurance policy, a product the company says will serve Midwestern farmers seeking innovative risk management tools to help them manage production and price risk.

The RevMax 90/90 policy gives farmers the opportunity to share risks and rewards and provides revenue protection starting at 90% of a farmer's actual production history yield and 90% of a selected price.

Additionally, Koch has named American Agrisurance, Inc. as a distributor of the RevMax 90/90 product. RevMax 90/90 is designed to provide more coverage than the standard Crop Revenue Coverage policy, a product developed by American Agrisurance and first introduced in 1996.

There has been a growing demand from farmers for ways to address the impact of the 1996 Freedom to Farm Act, the elimination of disaster payments, the decline in grain prices and reduced profit margins. If the farmer has revenues in excess of his historical average, he shares a portion of those excess revenues with the insurer as his premium. If the farmer has a loss of revenues, the insurer covers a portion of those losses, down to a point below which further losses are fully covered. In this loss situation, the farmer pays no risk/share premium to the insurer.

"RevMax 90/90 was designed to help producers enhance their profits by supporting more effective marketing plans and to help smooth their profits from year to year by effectively shifting all, or a substantial portion, of their crop insurance premiums from lower revenue years to higher revenue years," according to Bob McGrew, vice president of Koch Agriculture. RevMax 90/90 is a result of several years of research and development in the area of risk management, and the RevMax 90/90 product was among the Koch Agriculture Company capabilities highlighted in a recent Forbes magazine article on Koch Agriculture's parent company, Koch Industries, Inc.

The most unique aspect of this program is the cooperative relationship between growers and insurers. "For the first time, producers can join in relationships in which we all share the risks—and rewards—of crop production," McGrew said.

"We are pleased to enter into this agreement with Koch as a further demonstration of the leadership of Koch and American Agrisurance, in providing the types of insurance coverage American producers need to succeed during these times of agricultural independence," said Rick Gibson, chairman and CEO of American Agrisurance.

RevMax 90/90 will be marketed through crop insurance agencies affiliated with American Agrisurance, Inc., the nation's third-largest crop insurance company. For 1999, availability is limited to a total of one million acres for corn producers in the states of Illinois, Iowa and Nebraska. Training for agents marketing the policy will begin the week of Jan. 25 and will be held in Coralville, IA; Storm Lake, IA; Bloomington, IL; Lincoln, Neb.; and Kearney, NE.