On August 21, 2020, the Risk Management Agency (RMA) published Managers Bulletin: MGR-20-024 authorizing emergency procedures related to the August 10, 2020, derecho storm system in the Midwest. https://www.rma.usda.gov/en/Policy-and-Procedure/Bulletins-and-Memos/2020/MGR-20-024. MGR-20-024 was updated on August 21, 2020. RMA states that, in conjunction with the approved insurance providers (AIPs), it recognized the need for authorizing emergency procedures to streamline certain loss determinations on specific crops, which will accelerate the adjustment of losses and issuance of indemnity payments to crop insurance policyholders in impacted areas.
RMA states that it authorizes the use of these emergency procedures in Illinois, Indiana, Iowa, Michigan, Missouri, Nebraska, and Wisconsin counties impacted by the derecho event. RMA also states that the application of the emergency procedures is limited to those situations where the catastrophic nature of the losses, due to insured perils, would result in unnecessary delays in processing claims and the ability to make timely policy decisions. RMA states the emergency procedures are:
1) In lieu of requirements to report damage within 72 hours, RMA authorizes AIPs to consider individual circumstances in accepting delayed notices of loss in accordance with the 2020 Loss Adjustment Manual (LAM) Standards Handbook (FCIC-25010- 3H). Delayed notices of loss or delayed claims because of the derecho storm system do not require completion of the Special Report required by the LAM. Document such in the Narrative of the Production Worksheet.
(2) For all claims utilizing these emergency procedures, AIPs must:
(a) Submit all information through the Policy Acceptance and Storage System (PASS) for applicable Appendix III to the Standard Reinsurance Agreement (SRA) record types with a simplified claim flag of “F.”
(b) Document in each claim folder that these emergency procedures were applied. Record in the Narrative of the Production Worksheet: “Emergency procedures applied per MGR 20-20-24.”
(3) AIPs may use reported acres certified on the acreage report as determined acres for claim purposes, unless:
(a) Acceptable measured acres as defined in the LAM are readily available (e.g., acreage measured during a previous inspection, precision farming records available, etc.); or
(b) The loss adjuster can make a visual observation at the time of loss adjustment and it is determined the reported acres certified on the acreage report appear unreasonable. In this case, the acreage must be determined according to LAM procedures. If the loss adjuster is unable to make a visual observation at the time of loss adjustment and the acreage seems excessive compared to historically reported acreage, then use the acreage from past crop insurance measurements, precision farming records, previous acreage reports, Farm Service Agency (FSA) acreage reports, crop insurance claims, etc., to determine the acreage for the claim.
(4) For crops destroyed or damaged to the extent that they will never be harvested (e.g., unable to be mechanically harvest, etc.).
(a) On the entire unit:
(i) Complete the Production Worksheet, reflecting zero production to count.
(ii) An appraisal worksheet is not required.
(b) On part of the unit, field, or subfield:
(i) Estimate the acreage in the field or subfield based on the certified acreage from the acreage report (refer to (4) above).
(ii) Complete the Production Worksheet, reflecting zero production to count for the destroyed/unharvestable field or subfield.
(iii) An appraisal worksheet is not required on the destroyed/unharvestable acreage.
(5) For crops not destroyed on the unit or part of the unit:
(a) A minimum number of three representative samples per unit are required without regard to the size of acreage if the damage is consistent. If there are more than three fields or subfields within the unit and the damage is consistent, only one representative sample per field or subfield is required. AIPs must notate as such in the Narrative of the Production Worksheet.
(b) Estimate the acreage in the field(s) or subfield(s) based on the certified acreage from the acreage report (refer to (4) above).
(c) Record the harvested or appraised production on the applicable appraisal or Production Worksheet.
(6) RMA will monitor claims over $200,000 and if the level of claims in excess of $200,000 rises above 5% of all claims within the state, RMA may provide relief on the $200,000 review requirement found in Appendix IV of the SRA.
ANALYSIS – For the most part, these emergency procedures seem to relieve the AIP of certain paperwork requirements but does not appear to adversely affect program integrity. AIPs are still required verify acreage, make determinations of harvestability, and require representative samples when the crop is not destroyed.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.