December 9, 2011
USDA’s Risk Management Agency (RMA) and crop insurance companies are set to increase the threshold for high-dollar crop insurance indemnity reviews from $100,000 to $200,000.
The change would be made to an appendix of the Standard Reinsurance Agreement (SRA), which is the contract between the Agency and private crop insurance companies.
Both the Agency and all companies participating in the federal crop insurance program must unanimously approve the change. According to sources within RMA, the change has been approved internally, and will take effect for the 2013 reinsurance crop year, starting July 1, 2012.
NAWG has urged an increase in the indemnity review threshold and other changes to audit procedures to take into account the increased value of wheat crops on many farms. In recent years, wheat and other crops have been at historically high prices, raising the potential value of crops lost.
The lower automatic audit trigger has meant farmers with even relatively minor losses could have been subject to audits without any suggestion of impropriety — which is costly and burdensome for both the producer and the insurance company.
At the urging of NAWG and other agricultural organizations, RMA granted a temporary increase in the automatic audit trigger for producers in many states with high claims in 2011, including Texas, Oklahoma, North Dakota, South Dakota and Minnesota.
Texas and Oklahoma, in addition to parts of Kansas and Colorado, have faced historic droughts, which have devastated wheat and other crops there.
Conversely, North and South Dakota, Minnesota and some other areas in the northern states have been subject to flooding that caused huge prevented planting and crop losses.
NAWG appreciates RMA’s consideration of this common sense policy change and looks forward to working with the Agency and insurers as the new policy is finalized and implemented.
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