SWITCHING FRAUD IN THE FEDERAL CROP

Federal crop insurance is a core component of U.S. agricultural policy. From its inception, however, policy makers have struggled with two persistent problems: (1) higher than desired loss ratios and the resulting federal expenditures, and (2) lower than desired producer participation despite federal subsidies as high as 67 percent of some producer's premium costs (Goodwin and Smith). The persistence of higher than desired loss ratios and lower than desired producer participation have commonly been attributed to adverse selection and moral hazard (Chambers; Coble et. al.; Goodwin and Smith; Just, Calvin, and Quiggen; Makki and Somwaru; Skees and Reed; Quiggen, Karagiannis, and Stanton; Vercammen and van Kooten). Fraud has received less attention in the federal crop insurance literature although it is a common theme in the general insurance literatur