* Corn gets 63 pct of indemnities, soybeans 13 pct
* Persistent drought sparks fear for this year's crops
* Farm bill issue: crop insurance reforms
WASHINGTON, Jan 22 (Reuters) - Corn farmers are getting the lion's share of U.S. crop insurance payments on losses caused mainly to drought last year - 63 percent of the record $12.3 billion paid so far, the Agriculture Department said on Monday.
Some experts say indemnities could top $20 billion, nearly double the old record set in 2011. Record-high payments would drive up the program's cost to the federal government, which subsidizes the insurance policies and shares the burden of heavy losses.
At its peak, drought covered two-thirds of the continental United States, including prime crop territory in the Plains and Corn Belt. Persistent drought imperils this year's winter wheat crop and may mean a dry start for corn, soybeans and other spring-planted crops.
Crop insurance is the major federal farm support, ahead of traditional subsidies, due in part to sky-high commodity prices and the popularity of so-called revenue policies that shield growers from low prices and poor yields.
So far, corn farmers have collected $7.85 billion in indemnities, compared with $1.62 billion for soybean growers. The crops often are planted in side-by-side fields in the Farm Belt. Hot, dry weather withered the corn crop but late-arriving rains limited soybean losses.
Claims are expected to arrive for several more weeks.
Iowa and Illinois, the top corn and soybean states, led the nation in insurance payments. Illinois growers have received $1.8 billion and Iowans $1.5 billion.
Corn is the most widely grown field crop in the country. Growers bought $53 billion in policies on the crop out of $116 billion in total liability on nearly 282 million acres.
The rising cost of federally subsidized crop insurance is likely to make the program an issue in Congress this year.
That cost could top $10 billion on the 2012 crop. The government pays 62 cents of each $1 in premium, pays part of the cost of delivering insurance to growers and pays roughly three-fourths of indemnities that exceed the amount paid in premiums to insurers.
Senate Majority Leader Harry Reid of Nevada on Tuesday put a new farm bill on his list of priorities for this year. Last year, the Senate voted to scale back the premium subsidy by 15 points for the wealthiest farmers and to require policy holders to practice soil conservation.
Senate Agriculture Committee chairwoman Debbie Stabenow says she plans for the committee to draft an updated version of the bill early this year.
In its version of the farm bill last year, the House Agriculture Committee refused to make either of the reforms proposed by the Senate. Chairman Frank Lucas said there was no support for the ideas.
Crop insurers range from privately held companies to subsidiaries of large corporations, such as Wells Fargo, Ace Limited, Deere and QBE Insurance Group .
Leading states for payments to date:
--Illinois, $1.813 billion.
--Iowa, $1.493 billion.
--Kansas, $1.245 billion.
--Nebraska, $1.222 billion.
--Texas, $1.213 billion.
--South Dakota, $1.014 billion.
Leading crops for payments:
--Corn, $7.848 billion.
--Soybeans, $1.616 billion.
--Cotton, $917 million.
--Wheat, $722 million.
--Sorghum, $370 million.