Crop Insurance Today - 30

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protection to the American farmer and rancher. As
most folks in this industry know, relationships
and trust are keys to a successful partnership.
Farmers and ranchers depend on industry
agents and adjusters to ensure that our policies
provide adequate coverage for the risk involved
and that losses will be paid accurately, fairly
and in a timely fashion. This is the "oath" our
industry has taken with American agriculture,
and it is a privilege and opportunity to deliver
the modern-day farm safety net alongside our
partners in the USDA.

Obstacles

Although not a major focus of his remarks,
Secretary Perdue briefly touched on the obstacles we face in accomplishing the tasks we
have before us. He did make mention of the
proposed reductions in the President's budget,
but drew on his prior experience as governor in
dealing with funding issues. There was a calm
and sense of quiet confidence about him-a
realization that obstacles can be overcome by
hard work and commitment to the task at hand.
The crop insurance industry has faced its
fair share of political and financial obstacles in
recent years, as well. And like Secretary Perdue
indicated, those obstacles required hard work
and dedication to overcome. Several examples
come to mind.
First, our industry responded admirably to
the large volume of claims following the Midwest flooding in 2011, Southwest drought of
2011, historic drought of 2012 and price decline of 2014. These back-to-back-to-back difficult years could have been catastrophic for
the industry, but its agents, claims adjusters
and support staff performed beautifully and we
emerged through these tough times with our
customers' appreciation and respect. Claims
even continued to flow during the U.S. government shutdown in October 2013-a difficult
period that solidified the value of private-sector
delivery with our customers.
Another excellent example of the industry's ability to rise to the challenge is illustrated by the decline in the improper payments
rate as measured by the Office of Management
and Budget (OMB). Reducing improper payments-a closely-watched standardized measure of waste and efficiency for all major federal spending programs-has been a long-term

30

MAY2017

goal for the industry and USDA. An improper
payment occurs when funds go to the wrong
recipient, when the correct recipient receives
too little or too much or when the recipient uses funds in an improper manner. Many
errors are simply rooted in data entry and
reporting mistakes.
By 2015, crop insurance's improper payment
rate had fallen from 5.58 percent to 2.2 percent.
And that measure was again lowered in 2016 to
2.02 percent-a massive improvement that puts
crop insurance well below a government-wide
average of 4.67 percent.
The 2014 Farm Bill brought with it wholesale
policy changes and crop insurance emerged as
the cornerstone of the modern-day safety net.
It also brought with it sleepless nights for NCIS
staff and other industry specialists, who worked
hand-in-hand with USDA officials to handle
technical minutia during implementation. This
expertise and these relationships are certain to
pay dividends as Congress begins work on the
2018 Farm Bill.
More recently, we faced an unexpected political attack during the last quarter of 2015,
which, if successful, would have added financial pressure to the industry at a tenuous time.
Thankfully, the industry was well organized
and well equipped to mount a defense and
reverse the political tide. Crop insurers came
together for a common cause and mobilized
not only Congressional champions, but also
coalition partners, to stop efforts to make cuts
to the program.

Although these are
early days in the new
Administration, we realize
that we have taken an
implicit Oath to serve those
working in agriculture. In
doing so, we also realize
we will face many Obstacles in our path, but with
Optimism and hard work,
we can persevere.

Optimism
Secretary Perdue acknowledged the rain and
cloudy skies in the Kansas City area that day,
and stated that above the clouds the sun was
shining. Granted, there is a pretty big bank of
clouds hanging over the farm economy these
days. Farm income has dropped precipitously
over the past several years. As a result of declining agricultural commodity prices, farmland
real estate values and cash rents have also declined. Farm equipment sales have suffered, as
well. Despite these conditions, Secretary Perdue
still demonstrated a sense of optimism.
Along with Secretary Perdue, we in the crop
insurance industry have much to be optimistic about. Industry returns for the past couple
of years have reversed themselves since 2012.
Crop insurance participation-as measured by
acres insured, coverage levels and diversity of
crop insurance policy offerings-remains historically high. We are optimistic that the farm
economy will turn itself around-hopefully
sooner rather than later for the hardworking
farmers and ranchers across our nation. In the
meantime, the role of the crop insurance industry is to be there as the backbone of the farm
safety net.
Although these are early days in the new
Administration, we realize that we have taken
an implicit Oath to serve those working in agriculture. In doing so, we also realize we will face
many Obstacles in our path, but with Optimism
and hard work, we can persevere. Thank you,
Secretary Perdue, for coming to Kansas City.
We look forward to working with you!
This is the second issue of Today magazine
for 2017 and we hope you enjoy reading it,
and like its new and cleaner design. This issue
contains one of our most important and bestread pieces, called Year in Review. This article
looks back at the weather, markets, crop insurance results, farm economy and other data
from 2016. While the weather cooperated for
the most part, and crop insurance losses were
lower than in previous years, the farm economy is still struggling as prices remain low and
commodity stocks remain high. Also included
in this issue is a recap of the 2017 Crop Insurance Industry Annual Convention and the
announcement of the industry award winners
who were honored at the convention. We hope
you have a wonderful spring!



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