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<br />SIMPLIFIED EXPLANATION OF SETTING CROP HAIL INSURANCE RATES <br /> <br />A, Time Period <br /> <br />Kansas base rates for 1995 crop hail insurance by township were determined from an <br />analysis of =ulative crop-hail insurance statistics for the 1948-1993 time period. Western <br />Kansas Weather Modification Program was only in effect from 1975-1993 or 19 of the 46 <br />year rate setting period. <br /> <br />B, Basis of Determining Rates <br /> <br />Crop hail insurance rates are based on an analysis of loss cost ratios, which are ratios of <br />losses to liability. The loss cost, presented in dollars and cents, represents the average loss for each <br />$100 of insurance over the entire time period. In setting rates by township, the loss cost is increased <br />by a certain amount to cover the expenses of doing business and to allow for some profit. <br /> <br />C. Geographic Unit Consideration <br /> <br />Base loss costs for each township are computed by using percentages of the following four <br />separate loss cost categories: <br /> <br />1. Township Loss Cost from 1948-1993 <br />Reflects the experience of the base township <br /> <br />2. 9-Township Area Loss Cost from 1948-1993 <br />Reflects the experience of the base township and eight surrounding townships <br /> <br />3. 25-Township Area Loss Cost from 1948-1993 .- <br />Reflects the experience of the base township and 24 surrounding townships <br /> <br />4. Crop Reporting District Loss Cost from 1948-1993 <br />Reflects the experience of the crop reporting district within which the <br />individual township is located <br /> <br />12 <br />