PRF (RI) 

Pasture, Rangeland, Forage (Rainfall Index) Insurance

Overview & Key Points - 2025 Crop Year

• December 1st, 2024 sign-up deadline for the 2025 Crop Year (Jan 1. to Dec. 31)

• PRF is a federally subsidized option to insure established perennial pasture, rangeland or forage (alfalfa) used to feed livestock (hay or graze) for a single peril - lack of rain

  • PRF helps to offset additional expenses during dry times for things like:

    • Additional feed costs - buying hay or other feed

    • Additional irrigation costs (if irrigated forage)

    • Costs associated with destocking and depopulating

  • PRF has grown significantly in popularity over the last couple of years - it is now one of the largest commodity insured by a federal program & likely to grow with many more acres eligible

    • This seems to be driven primarily by the high subsidy rates of over 50% which results in the historical loss payouts being greater than the producers’ premium over time by a fairly wide margin.

    • PRF type ground covers approximately 55% of all U.S. land - nearly 650 million acres

    • 2023 PRF insurance national stats:

      • 61,000 policies, 1.35B premium

• Subsidized

  • 55% subsidy at the 85% coverage level

  • Subsidy rate based on coverage level

    • Coverage Level (Subsidy) = 70% (59%), 75% (59%), 80% (55%), 85% (55%), 90% (51%)

  • BFR additional subsidy benefit applies to Margin as well

• QUOTE EXAMPLES

  • Quote parameters:

    • 85% coverage level (55% subsidy), 150% productivity factor

    • ‘Even’ interval periods = FM, AM, JJ, AS, ON = Feb. through Nov.

  • Grazing - Saunders county (Grid ID 25334):

    • $70.13 /ac coverage

    • $4.77 /ac producer premium

  • Haying NI - Saunders county (Grid ID 25334):

    • $307.27 /ac coverage

    • $20.89 /ac producer premium

  • Based on history, this has a return (ROI) of 189% (almost a 2 to 1 payout)

    • PRF has such a high payout ratio primarily because of the significant government subsidy

• Very Simple

  • Loss payments are automatically calculated and paid out

    • No adjuster or claim submission necessary

  • No production reporting or production history required

• You can CUSTOMIZE your coverage by choosing:

  • Coverage Level: available from 70% to 90%

    • With the ability to insure at higher levels, like 85 and 90%, you have a smaller deductible than normal, but premiums are still more affordable due to the high federal subsidies.

  • Intervals: you select which intervals (2 month periods) you want to insure

    • You have to select at least two intervals (4 months total), but you can select to spread out your coverage over the whole year as well.

    • Similarly, you can select how much weighting (importance) you want to place on each interval - ex. 40% on May-June and 60% on July-Aug

    • Max weighting per interval is 60%

  • Productivity Factor: you select a productivity factor from 60% to 150% to scale up or down the dollar amount of insurance (& premium) to suit your needs / preference.

• Area plan - based on grids (one grid is approx. 17 miles N/S x 13 miles E/W in Nebraska)

  • Coverage is based on the experience of the entire grid 

    • It is not based on your own measurement or just your fields 

  • The grid index for precipitation is quantified by NOAA CPC 

  • Rainfall indexes are calculated and based on the normal and deviation from the normal for the years 1948 to the present

• Loss Payments 

  • Triggered when the final (actual) grid index < your trigger index

    • Trigger index = your coverage level X avg. index

  • Once a period is finished, it takes about 8-10 weeks for NOAA to review, correct & finalize the rainfall data for each grid throughout the nation. Once this process is complete, then FMH automatically files claims and issues loss payments where applicable.

  • Example: For the Apr-May period, the period finishes at midnight of May 31st and any loss payments due will come around August 1st - 15th.

  • Loss payments are first applied as credits to premium, and then any remainder and any future loss payments are issued as checks.

• Payment calculations 

  • Insured Value per Acre = County Base Value X Coverage Level X Productivity Factor X Insurable Share

  • Insurance per Interval = Insured Value X Interval % X Acres 

  • Payment Factor = 1 - Final Index / Trigger Index 

  • Interval Payment = Payment Factor X Insurance per Interval

• Other Key Points 

  • PRF is NOT drought insurance 

    • Drought classification does not trigger an indemnity 

    • Does not insure against abnormally high temperatures or windy conditions 

  • PRF can be used as a tool to protect against loss of precipitation in key months for forage production 

  • The coverage level selected dictates the amount of precipitation you will be insuring

    • Example: if the avg. precip. for April-May is 6”, and you select the 90% coverage level, you are effectively insuring 5.4” of precip for your grid.

  • Newly seeded alfalfa or pasture:

    • Has to be seeded by July 1st 2024 to be covered for 2025 CY

  • If ground is both hay and grazed, you can insure as one or the other type - your choice, just can’t insure the same acres twice

• Key Dates

  • Dec. 1st - sign-up deadline (prior to crop year)

  • Dec. 1st - acreage reporting deadline (prior to crop year)

  • Sep. 1st, 2025 - premium billing date (i.e. 10 months AFTER sign up deadline)

  • Jan 1. to Dec. 31 The crop year (coverage period) for PRF is the same as the calendar year

• Insurable Interest

  • Grazing - Must have an insurable interest in the livestock being grazed on the land

  • Haying - Must have an insurable interest in the hay being produced on the land

  • You can only insure your share of the insurable interest

Want to Discuss or have Questions?

• If you would like to discuss, get a quote or have questions, please contact us - call, text or email.

Last Updated: 9-3-2024