Is PRF Right for You and Your Operation?

A storm over a pasture
13 Sep 2023

We don’t know what the weather has in store for us. We have, however, witnessed drought conditions across our three-state territory over the past few years leading to difficult pasture conditions and higher feed bills. Those raising livestock have an opportunity for protection with a Pasture, Rangeland, Forage (PRF) policy. 

What is PRF?
PRF is a Rainfall Index plan of insurance that covers below-average rainfall in a two-month period. It is an area-based plan that operates on 17-mile by 17-mile grids that are formed in line with the equator. 

Anybody with grass or forage acres that is used for haying and grazing may benefit from a PRF policy. While the product does insure rainfall it really insures feed costs. If something were to happen where you wouldn’t get your normal grass/hay in the field this product could help supplement either on the feed cost, selling the livestock lighter than normal, or additional rent going towards a different pasture.

How does PRF work?
When you sign up you select specific months you need rain, what forage area you want to insure, and the coverage level you want to insure at. With this product, you choose the months in two-month intervals that you need the rainfall and the acres you want to insure. PRF works in a calendar year, so the two-month intervals you must choose from are:

  • Jan-Feb
  • Feb-March
  • March-April
  • April-May
  • May-June
  • June-July
  • July-Aug
  • Aug-Sept
  • Sept-Oct
  • Oct-Nov
  • Nov-Dec

Something to note is you must choose at least two intervals and no two months can overlap. For example, if you needed your pasture or forage in August then rainfall would be important from April through July. In this scenario, you might choose intervals April-May and June-July, but you could not choose May-June and June-July because June would overlap. 

You can pick up to six intervals but must have a minimum of two selected. You then allocate 100% to your selected intervals. So, in the example above you could do 50% allocated to April-May and 50% allocated to June-July, or you could do a different combination to equal 100% such as 40% April-May and 60% June-July.

Coverage levels run from 70% to 90% in 5% increments with productivity factors running from 60% to 150% in 1% increments. The coverage level is what triggers the claim, and the productivity factor is what gets multiplied by the claim amount.

Continuing with our example, you can see the rain gauges below of the intervals we selected. The blue is the average rainfall, and the green is the percent of the average rainfall that was received. Let’s say the County Based Value of your Grid ID is $40.00 (this is published in the county actuarial by crop type and varies by crop and county). The coverage level we elected was 90% with a productivity factor of 125%.

$40.00*90%*125%=$45 of protection per acre chosen to insure. 

This amount is applied towards all acres chosen to insure by crop type for your county. 

A payment is made when the final rainfall amount for the Grid ID is less than the average rainfall for the two-month interval chosen. You can see below that June-July received 100% of the average amount of rainfall, so there would be no payment. April-May is only at 45% of the average and, therefore, would have a payment. 

The trigger chosen was 90%, so the payment calculation would be (90-45)/90=.5. The payment per insured acre would then be $45*.5=$22.50 per acre.

Rain gauges

Unlike multi-peril, PRF allows you to pick and choose how many and which acres you want insured. This is an area-based plan of insurance; it is possible to suffer an individual loss and not receive an indemnity, but it is also possible to receive an indemnity and not suffer a loss.

Availability and Important Dates
PRF is available in all 48 contiguous states. Premium payments are due each September.

The sales closing date to get signed up for PRF is December 1st. This is also the acreage reporting date, so your insurance agent would need to know your coverage levels and the acres you want to insure at the same time. This would also be when you would discuss the monthly intervals you would like to choose. 

Indemnities are paid out after each chosen interval is finished. In our earlier example, you could possibly receive a claim at the end of May and then again at the end of July.
PRF is an easy policy for insureds to manage rainfall risk. Once signed up, the insureds do not need to keep track of anything else and the insurance companies do the rest by gathering the information from the weather stations within the grids.
How do I sign up?

Contact your local AgCountry insurance specialist. They will be happy to assist you and answer any questions you may have.

Amanda Pilgrim
Written By: Amanda Pilgrim
VP Insurance