What is Rainfall Index and how does it affect you?
Lack of precipitation can impact the growth of your forage. PRF Insurance is very simple, no record-keeping or claims required.
Rainfall Index is a statistical measurement of rainfall that uses a specific area called a grid. NOAA has grids for the entire country that are approximately 17 miles north to south and 14 miles east to west. We determine the location of your operation and find the appropriate grid to analyze your risk. Coverage is spread over a calendar year into two month time intervals. Rainfall amounts are determined within the grid by using the four closest official rainfall measuring stations to the center of your grid.
A producer can insure up to 150% of the county base value or as low as 60%. This range of coverage is called a productivity factor. Average rainfall triggers can be set as high as 90% of normal rainfall and as low as 70%. Therefore, a producer can have any combination of values and triggers between these two ranges of protection. Our most common coverage sold by AgRisk is a 85% rainfall trigger and a 150% productivity factor. (Acres x County Base Value x Productivity x Rainfall Trigger = Total Dollar Amount of Coverage)
Any perennial grass or forage is insurable under these policies. All native or improved grasses can be insured as grazing lands. Improved grasses, alfalfa, or other perennial legumes can be insured as hay. The Risk Management Agency has established a base value for grazing land and hay in every county in the lower 48 states.
In addition to providing solid advice, AgRisk agents have access to a proprietary Rainfall Index Lookup Tool that allows customers to receive estimated rainfall results well before the RMA releases its official results. The Rainfall Lookup Tool estimates interval results within four days after an interval ends. The RMA typically releases actual rainfall results 60 days after an interval ends. This huge different allows AgRisk agents to help you plan more effectively by informing you far ahead of time if you are likely to receive a loss payment or not. Does your agent have the tools to analyze all of the grids available to you? Can your agent prepare a complete study and recommendation of all your options? There’s no reason to gamble on the weather anymore. Let a AgRisk agent prepare a complete study and custom recommendations for you!
When you choose an AgRisk agent, you get recommendations not available with any other agent. We’ve built software, called RangeCalc, which combines interval information with NOAA rainfall data being used for the PRF program. These calculations will show how to best use the program based on the percent of payment and net returns. In other words, the software is taking those two-month intervals and finding where the volatility lies.