Crop Insurance Today May 2015 - (Page 28)

Continued from page 1 coverage levels at or above 70 percent per acre, enabling farmers to cover the lion's share of their production costs. With the combined efforts of the RMA and the private-sector delivery system, crop insurance is now available for more than 62,000 different county/crop plans. This represents almost a three-fold increase from 1997 when there were approximately 22,000 such county/crop programs. So, as you can see, lots of interlocking pieces and playing well. How Long has Crop Insurance been Playing Well? Legos can trace its roots to wooden toys dating back to the early 1930s. Crop-hail insurance can trace its introduction from Europe into the United States to the late 1800s. In fact, Farmers Mutual Hail Insurance Company of Iowa (FMH), a family owned and operated business, was established in 1893 and is still in existence today, operating out of West Des Moines Iowa. Compared to wooden toys, FMH agents and adjusters would ride horses and later ride bicycles to service their policy holders. Another well-known crop insurance company, the Crop Division of Great American Insurance Group, "...has been helping generations of farmers take control of their risks since 1925." NCIS can trace its roots back to 1915 with the formation of the Western Hail and Adjustment Association; an organization created by crop insurance companies to devise a system to adjust losses and to compile an adequate statistical base to permit actuarial analysis. Although crop insurance has risen to recent stature in the 2014 Farm Bill, the crop industry itself has been in the game of agricultural risk management and playing it well for some time as evidenced by the longevity and commitment of companies invested in the business. Why is it Important to Play Well? The importance of agriculture in society: First and foremost, the crop insurance industry is involved in agriculture. And how fundamental is that? A financially stable agriculture is fundamental to a stable society. The 28 MAY2015 agricultural resource base of the United States is beyond compare. As a nation we are truly fortunate to have the climate, soils, and water resources available that provide the best quality and highest yield-producing crops in the world. As a society, we are also fortunate that our forefathers made a series of long-term public investments in our agricultural infrastructure. Investments in soil conservation, investments in research and development, and investments in technology, just to name a few, have all contributed to our nation's success in agriculture and our ability to feed our domestic population, and historically serve as a leading exporter of agricultural products. The importance of risk management in agriculture: As fundamental as agriculture is to a stable economy and society, risk is as intrinsically inherent in agriculture. Quoting scripture "...time and chance happen to them all" (Ecclesiastes 9:11). Farmers are in the business of managing risk in every aspect of their respective operations. This publication has repeatedly provided information on how farmers can protect themselves in the five major areas of risk: production, marketing, financial, legal and human resources. Since 2008, the TODAY® magazine, including this issue, has featured a "Year in Review" article. "Year in Review" provides a comprehensive summary of the performance of the crop insurance industry. The article - which contains information on the previous year's significant weather events, Crop-Hail and MPCI experience, indemnity payments, and market and planting conditions - covers the gamut of agricultural risks farmers and insurance companies face in this industry. Crop insurance is risk management. Farmers meet with a state-licensed crop insurance agent to determine his or her risk exposure or liability and then select the individual risk management solution for that particular farm. With crop insurance, farmers only receive an indemnity payment in the event of an insurable loss as verified by an accredited crop insurance adjuster. As Senator Stabenow is often quoted,"...with crop insurance, farmers receive a bill, not a check." Industry is a steward of taxpayer dollars: Lastly, in terms of playing well, it is important to recognize that the crop insurance industry is responsible for taxpayer dollars. Crop insurance is both a business and in a partnership with the USDA, and as such, the private-sector delivery system has a fiduciary responsibly to its shareholders and the taxpayer at large. That said, RMA and the delivery system takes their responsibility seriously and program integrity is a prime consideration. In crop insurance, companies have dollars at risk on each and every policy. There is a direct financial incentive to reduce fraudulent behavior and not overpay claims. The industry participates in extensive training and education efforts. This includes a certified loss adjuster proficiency program which all adjusters must complete and retain certification. Program integrity is essential for continued public support. Currently, there are numerous monitoring, review, audit and other oversight requirements found in the Standard Reinsurance Agreement (SRA). The industry and RMA have sought to minimize fraud, waste and abuse and have implemented effective measures to improve program integrity. RMA and the crop insurance industry have been early adopters in the use of data mining, performing thousands of reviews of industry insurance data to help ensure program integrity. Quoting from RMA's previous Administrator William Murphy's 2011 Congressional testimony, "RMA continues to make significant progress in preempting fraud, waste and abuse through the expanded use of data mining. ARPA (Agriculture Risk and Protection Act) directed RMA to employ data mining technologies to program compliance and integrity efforts, and provided the funding necessary to support these activities. "ARPA also provided a role for FSA to assist RMA in further program compliance and integrity. RMA subsequently entered into a contract with the Center for Agribusiness Excellence (CAE) at Tarleton State University to develop and maintain appropriate data warehousing and data mining capabilities. Annually, CAE produces a spot-check list of producers engaging in questionable behaviors which is provided to FSA for further investigation. With the assistance of FSA offices, RMA and the insurance companies conduct growing season spot checks to ensure that claims for losses are legitimate." RMA's current administrator, Brandon Willis has also said, "...the Federal Crop Continued on page 40

Crop Insurance Today May 2015

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