Crop Insurance Today June 2018 - 20

where the difference exceeded 0.20 points were
Arizona, Idaho, Massachusetts, New York, and
Utah, which jointly contributed only $70 million
in premium to the program. In comparison, the
yield plan loss ratio exceeded the revenue plan
loss ratio in 32 states, 13 of which had a difference of 20 points or more. On a countrywide
basis, both plans had underwriting gains, with a
loss ratio of 0.45 for the revenue plans and 0.92
for the yield plan. The primary states for yield
protection business include Texas, Montana,
Georgia, North Dakota, and Arkansas. Other
plans of insurance also had good results in 2017,
with the highest loss ratio being 0.94 for the
Rainfall Index program.
Figure 17 shows the major causes of crop losses for 2017. Drought was responsible for 31 percent of all losses, while excess precipitation was
responsible for another 27 percent, followed by
"other" perils with 12 and hail at 9 percent. Price
changes were responsible for only 3 percent of all
losses due to the stability of crop prices throughout the year. Area plans, along with SCO, STAX,
and Margin Protection contributed 8 percent of
all losses, while heat was responsible for only
4 percent.
[The information sources for this section were
RMA Summary of Business, Cause of Loss, and
Reinsurance Runs and NASS Quick Stats.]

Program and Policy
Developments

Much of the RMA 2017 work program involved response to the widespread and severe
weather events that took place during the year.
Beginning in March the agency responded to an
outbreak of fires in Colorado, Southwest Kansas, Oklahoma, and Texas to allow additional
time for policyholders to report their acreage
for short rate eligibility. Later in the month the
agency urged swift action by farmers and their
AIPs in appraisal of damage in response to severe freeze events in the Southeast, especially
blueberry and peach growers in Georgia and
South Carolina.
By mid-April attention was directed to wet
weather conditions in Southwest Oklahoma
and Northern Texas that prevented farmers
from terminating crops used for winter grazing.
Farmers were allowed additional time to terminate those crops thus preventing possible loss of
insurance on spring planted crops due to depletion of moisture that occurs if the crop reaches
the headed or budded stage.
20

JUNE2018

Figure 17 2017 Causes of Loss

Data ss of April 17, 2018
Source: RMA Cause of Loss

Later in the year attention turned to problems
stemming from severe drought conditions in
Montana, North Dakota, and South Dakota. Lack
of adequate food or forage by mid-July resulted
in ranchers bringing their livestock to market
sooner than usual. Such early sales may result in
violation of the ownership in last 30 days of the
insurance period provision of the Livestock Risk
Protection coverage. In response, RMA allowed
for AIPs to use their discretion to grant a waiver of the 30-day ownership provision subject to
proof of ownership.
As drought damaged livestock operations
in Montana and the Dakotas, RMA acted in
a proactive fashion in anticipation of damage
from an impending hurricane in the Texas Gulf
coast area. Tropical Storm Harvey was expected
to make landfall in late August and cotton producers were in the process of harvesting a record
cotton crop that exceeded gins ability to accommodate modules for storage. As a result, some
farmers needed to relocate modules in danger
of flood damage to higher ground, which may
have resulted in removal from the field. Removing cotton modules from the field would end
insurance coverage at a time when farmers were
trying to prevent flood damage and needed coverage to continue for potential wind damage. In
reaction, RMA provided guidance to AIPs in the
areas expected to be impacted by the storm so
modules could be removed from the field without affecting insurability.
Tropical Storm Harvey became Hurricane

Harvey and was the first Category 4 hurricane to
make landfall in the U.S. since 2004. The storm
made landfall near Rockport, Texas, on the night
of August 25 resulting in a prolonged period
of torrential rainfall, which caused flooding in
Southwest Louisiana and Southeast Texas. The
storm caused catastrophic damage in the Texas
Gulf Coast area and Louisiana. The governor of
Texas declared 54 counties in his disaster declaration with crop liability totaling more than $840
million. The entire state of Louisiana was declared as disaster area with a total crop liability of
$133 million (2016) in the nine major producing
parishes. The mitigation of damage from Hurricane Harvey required an extensive effort by RMA
and was a dominate part of the workload for the
remainder of the year.
Unfortunately, nature was not done with
2017. On the evening of September 10, Hurricane Irma made landfall in the Florida Keys,
another Category 4 storm that had downgraded from a Category 5 storm after causing catastrophic damage to Puerto Rico, other Caribbean
Islands, and finally Cuba. Hurricane Irma resulted in catastrophic damage in affected areas of
Alabama, Florida, Georgia, and South Carolina.
The RMA and AIPs reacted as quickly as possible
to begin authorization of emergency procedures
to designed to streamline adjustment of losses
and indemnity payments to crop insurance policy holders.
In a final weather-related action, the RMA
provided AIPs the authorization to allowed in-



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