Government subsidizing premium for crop insurance
The notes say that the government reimburses insurer expenses and subsidizes premium for crop insurance. What exactly does it mean to subsidize premium? Does this mean the government gives the insurer more premium as if the insurer is charging a higher rate?
Comments
It means part of the premium charged by the insurer is paid by the federal government.
Got it. The insurer likely wants to charge too high of a rate for it to be reasonable for an insured, but with the government paying part of the premium, the insured and insurer both stay happy. Right?
Yes, correct.