Greetings readers! I believe the subject matter of acreage reporting is timely, though not due to the season of use, but rather that many have had another year of production and revenue losses paid on their wheat policies. Unfortunately, one does not learn of “misreported information” until the worst time for such discovery, that is, at a time of loss when the policy is expected to perform.
I believe a crop insurance policy can be likened to a three-legged stool. The three legs are components that are interconnected and collectively determine the coverage for an insured person. Simplified, these components are:
• Application. Submitting a timely application for wheat and coverage options to be insured for the person(s) to be insured.
• Production reporting. Timely submitting production record(s) that are then used to build a production database for each wheat type and practice to be insured. Coverage(s) choices noted on the application are based upon the actual production history that the insured person has.
• Acreage reporting. Timely providing planted acreages of crop(s) to be harvested and insured under the Multi-Peril Crop Insurance (MPCI) policy.
The acreage report is the first time during the wheat policy coverage year that liability is established and, correspondingly, premium is determined. Planted acres are reported to the agent/agency, who in turn electronically submits the acres to the approved insurance provider (AIP) via the crop company’s data processing system. This data is then electronically sent to the Risk Management Agency’s (RMA) system, which upon successfully passing RMA system edits, the AIP generates a summary of coverage for wheat for the crop year. If the information submitted does not pass the RMA system edits, the policy is suspended until the errors are resolved. This is a bit of an oversimplification of the process, yet provides you a snapshot of the steps involved.
A valid acreage report must contain the following items for wheat: type (fall or spring); practice (summerfallow or continuous crop); date planted; your interest/share of the crop; location of planted acres, which includes farm serial number; farm tract number; and farm field number, also known as common land unit (CLU) from your local Farm Service Agency (FSA) office.
Each county actuarial has special provisions of insurance that includes what crop/type/practice is insurable in that county, including the corresponding acreage reporting deadline dates. Fall acreage reporting deadline is Dec. 15, and spring reporting deadline is July 15. These are the dates acres must be reported and certified to by the insured, pen on paper. We have much less flexibility than the local FSA office for reporting acres. If acres are not timely reported, the insurance carrier can choose to accept or deny late reported acres pending an inspection of said late reported acres.
An issue that we occasionally find is reported share not coinciding with how they’ve been reported to the county FSA office or how the grain is marketed — loss adjustment procedures require acres to be reported how the crop is sold. If this is conflicting, any potential claim payment will be delayed until resolved. Typically, we learn of a change in the farming operation that occurred sometime between planting and harvest, and this change may not have been timely communicated by the insured and to us. Any changes to your farming operation must be shared with your crop insurance agent, not just the accountant and the lawyer.
Incorrectly reported acres can also cause some heartburn, especially true when the possibility of a crop loss exists. Correcting acres after the acreage reporting deadline can be done, but is difficult at best. The crop insurance policy does not allow for liability to increase, either increasing the acres above what was initially reported or increasing a crop share more than that what was initially reported, after a notice of loss has been submitted to the AIP. My experience has shown that acres may be correctable after a notice of loss has been submitted to the AIP; however, this is generally unlikely as the crop conditions are not ideal and crop yield potential does not meet the policy minimum requirements, hence the reason for loss notification submission. We strongly encourage you to always review your summary of coverage to verify that the information is accurate.
We are human and make mistakes. The last time I walked on water was January in the homeland as I was ice fishing! If the information associated with the planted acres, crop type and practice, plant date, insured share, and location are not submitted to us in a timely manner, accurate coverage cannot be provided. This could jeopardize the financial safety net crop insurance can provide as a valuable risk management strategy tool for your farm business.
I welcome your comments and wish all a blessed and safe Thanksgiving and Christmas season!
Curtis Evanenko serves as a risk management advisor with McGregor Risk Management Services. He can be reached at (509) 540-2632 or by email at firstname.lastname@example.org.