One of the main performance measures used to evaluate the Federal Crop Insurance program is the loss ratio. Loss ratio is a performance metric that is calculated by dividing total losses by total premium paid. The graph below shows loss ratios over the last seven year. Currently, 2016 is at a record low with a loss ratio of 0.38. This means that for every $1.00 in premium paid, the program paid out $0.38 in indemnity payments. As you can see, we have been on a steady decline since 2012, where we saw large losses due to widespread drought. The loss ratio is also a key component in calculating premium rates. Currently, the 20-year average is 0.87 and premiums are calculated using a loss ratio of 0.88.