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Patterns of Collusion in the U.S. Crop Insurance Program: An Empirical Analysis

Published online by Cambridge University Press:  28 April 2015

Roderick M. Rejesus ,
Bertis B. Little ,
Ashley C. Lovell ,
Mike Cross  and
Michael Shucking
Roderick M. Rejesus
Affiliation:
Department of Agricultural and Applied Economics, Texas Tech University, Lubbock, TX
Bertis B. Little
Affiliation:
Center for Agribusiness Excellence, Tarleton State University, Stephenville, TX
Ashley C. Lovell
Affiliation:
Center for Agribusiness Excellence, Tarleton State University, Stephenville, TX
Mike Cross
Affiliation:
Planning Systems Inc., Stephenville, TX
Michael Shucking
Affiliation:
Planning Systems Inc., Stephenville, TX
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Abstract

This article analyzes anomalous patterns of agent, adjuster, and producer claim outcomes and determines the most likely pattern of collusion that is suggestive of fraud, waste, and abuse in the federal crop insurance program. Log–linear analysis of Poisson-distributed counts of anomalous entities is used to examine potential patterns of collusion. The most likely pattern of collusion present in the crop insurance program is where agents, adjusters, and producers nonrecursively interact with each other to coordinate their behavior. However, if a priori an intermediary is known to initiate and coordinate the collusion, a pattern where the producer acts as the intermediary is the most likely pattern of collusion evidenced in the data. These results have important implications for insurance program design and compliance.

Keywords

abusecollusioncrop insuranceempirical analysisfraudwasteG22Q12Q18Q19
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 36 , Issue 2 , August 2004 , pp. 449 - 465
Copyright
Copyright © Southern Agricultural Economics Association 2004

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