Crop Insurance Today September 2017 - 20

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"The fact that farmers are able to plant a crop
the year following a major crop failure is testament to the success of the crop insurance program." -Robert Rynning, president, U.S. Canola
Association
On one level, these statements are very gratifying and can and should be viewed with a sense
of accomplishment on the part of the industry.
On another level, these statements are humbling
and sobering.
Of late, the lyrics of Sting and the Police have
also captured my awareness. "...every step you
take, I'll be watching you..." The relevance of these
lyrics has been driven in no small part by the recent farm bill hearings and listening sessions
taking place across the country. Proponents and
opponents have their eyes on crop insurance and
the risk management role it plays in farm policy. The eyes on crop insurance include not only
our customers - U.S. farmers and ranchers -
but also state and federal regulators, members of
Congress and other regulatory authorities.
If I tried to put my finger on one thing in
terms of a challenge (or obstacle) and an opportunity, I would say it is the industry's ability to
continue to meet and exceed the expectations of
the farmer community, industry investors, shareholders and reinsurers, as well as the expectations
of agricultural policymakers and regulators.
First and foremost, the major commodity
groups and farm organizations leave little doubt
as to their number one priority in the upcoming
farm bill, as evidenced by their most recent testimony. Here's a sampling of what House Agriculture Committee members heard during their
listening sessions this summer:
"Farmers, ag leaders, equipment dealers - everyone involved in agriculture - agrees that crop
insurance should remain a viable and affordable
tool for managing risk." -Richard Gaona, president, Rolling Plains Cotton Growers
"How can I and my fellow farmers stay in business? Number 1 (priority) is crop insurance. ...
Crop insurance is indispensable." -Ben Scholz,
National Association of Wheat Growers
"Crop insurance is so vital to this state; so vital to every crop in (Texas). Whether it be corn,
wheat, or cotton - all of the crops come very much
into play when it comes to crop insurance." -Russell Boening, president, Texas Farm Bureau
"With more frequent and intense weather patterns, rising interest rates and production costs and
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lower commodity prices, our risk has gone up while
our balance sheets have gone down. We simply
have to have affordable crop insurance to manage
those risks." -Kyle Peterson, chairman, Southern
Minnesota Sugar Beet Cooperative
"When there's a crop loss, there's going to be a
loss of income on the farm but with a good crop
insurance program, and working capital, we may
help them farm another year." -Howard Olsen,
AgCountry Farm Credit Services
"Crop insurance is so important to me. We
have three families directly that drive income from
our farm and if we did not have crop insurance we
would not be able to survive." -Noah Hultgren,
Minnesota Corn Growers
In short, they want a crop insurance system
that is widely available, reasonably affordable,
and economically viable, as is the case with crop
insurance delivered by the private sector.
What are some of the factors that lead to this
level of support?
High levels of farmer participation are critical to the success of crop insurance and crop
insurance agents should be applauded for their
efforts. Approximately 85-90 percent of planted
acres are currently insured. On the national level,

First and foremost, the
major commodity groups
and farm organizations
leave little doubt as to their
number one priority in
the upcoming farm bill, as
evidenced by their most
recent testimony.

more than 80 percent of insured acres have coverage levels of 70 percent or higher. This breadth
and depth of participation prevents any calls for
ad hoc disaster assistance and, at the same time,
provides for an adequate risk pool in order for
crop insurance to perform in an actuarially
sound fashion. Looking back to 2011 and 2012,
there are examples of the remarkable job done
by industry adjusters. In 2011, farmers in Texas
received $2.6 billion in indemnities due mostly
to drought. Of this, more than $1.3 billion was
paid by mid-September of that year. In 2012, of
the $17 billion paid out in indemnities, approximately $10 billion was in the hands of farmers
and rural communities before the end of December. A clear demonstration of the effectiveness of
the private-sector delivery system.
Another example of the effectiveness of the
public-private partnership is evidenced by the
RMA's Improper Payment Rate. The Improper
Payment Rate measures the efficiency of operations of the crop insurance program and tracks:
1) payments going to the wrong recipient; 2) incorrect payments; and 3) insufficient documentation to justify a payment. For 2015 and 2016,
the government-wide improper payment rate
was 4.39 and 4.67, respectively. For crop insurance and the RMA, the 2015 and 2016 rates were
2.20 and 2.02, respectively.
These outcomes do not occur in a vacuum.
I would refer the reader to the NCIS Just the
Facts (JTF) section on the Crop Insurance Keeps
America Growing website. Specifically, "What
steps do crop insurers take to ensure that taxpayer dollars are efficiently used?" Quoting directly
from the document...
"The structure of crop insurance is such that
companies have dollars at risk on every policy and
are thus financially incentivized to reduce errors
and cases of waste. Thus, the industry has exten-

Table of Contents for the Digital Edition of Crop Insurance Today September 2017