How does the rainfall index work for PRF Insurance?
PRF insurance is designed to help ranchers mitigate the risk of low precipitation by providing indemnity payments when rainfall is low in their area. When first learning about the PRF insurance program, many wonder how exactly rainfall data is collected for their specific ranch. In order to standardize the process of measuring the rainfall for ranches located across the United States, the USDA’s Risk Management Agency (RMA) created the Rainfall Index.
The Rainfall Index divides the continental United States into grids that are 0.25 degrees latitude by 0.25 degrees longitude—approximately 17 by 17 miles at the equator. Depending on the size of a ranch, it will fall in one or more of these numbered grids. In creating a PRF policy, Redd Summit Advisor’s in-house GIS specialist will create a detailed map of a customer’s private, state, BLM, and Forrest Service allotments, allowing our agents to accurately determine which grids a ranch is located in. Making sure that a customer’s policy uses the correct grids is imperative to the program, as each rancher is insured based on their ranch’s specific location. Once a ranch’s location within the grid system has been determined, the RMA interpolates data from several of the nearest weather stations to determine the amount of rainfall each grid receives. This rainfall data is then compared to the historic rainfall data for the grid, and if the rainfall has been less than usual an indemnity payment will be triggered.
There is a lot of weather and geographic data that goes into measuring rainfall data for every ranch, but Redd Summit Advisors is uniquely positioned to maximize the potential of indemnity payouts through its advanced mapping team, software, and experience.