On February, 25, 2020, the Risk Management Agency (RMA) issued Product Management Bulletin: PM-20-013 related to requests to increase prevented planting coverage. https://www.rma.usda.gov/en/Policy-and-Procedure/Bulletins-and-Memos/2020/PM-20-013. RMA states that it has been receiving requests regarding what factors approved insurance providers (AIPs) should consider when determining whether a cause of loss is present that may prevent planting, which would result in the denial of any request to increase prevented planting coverage. RMA quotes section 17(b)(4) of the Common Crop Insurance Policy Basic Provisions and paragraph 25(4) of the 2020 Prevented Planting Standards Handbook.
In its action section, RMA states that AIPs should consider conditions at the time of the request to increase the prevented planting coverage. RMA states that AIPs should consider:
- Historical Weather Patterns.
- Is the current condition common for the region at this time of year?
- Do these conditions typically resolve in time to result in availability to plant by the final planting date?
- Timing of the Final Planting Date.
- How likely is it that a cause of loss present prior to the final planting date will impact planting?
- Insured’s Individual Planting History.
RMA states that if the AIP determines a cause of loss is present that could prevent planting and denies the request, the AIP should notify the producers within 30 days of receiving the request.
ANALYSIS – The issues is whether there is a cause of loss that could cause prevented planting at the time the producer makes the request to increase prevented planting coverage. However, the factors stated by RMA are forward looking. They appear to suggest that even though there may be a cause of loss that could prevent planting on a certain date, if historical weather, common conditions, time to resolve conditions, etc. suggests that, at the time of planting, the cause of loss would not actually result in the producer being prevented from planting then coverage can be increased.
The problem with these factors is section 17(b)(4) of the Basic Provisions expressly states “You cannot increase your elected or assigned prevented planting coverage level for any crop year if a cause of loss that could prevent planting (even though it is not known whether such cause will actually prevent planting) has occurred during the prevented planting insurance period specified in section 17(a)(1)(i) or (ii) and prior to your request to change your prevented planting coverage level.”
The bolded provision requires the AIP to disregard whether the cause of loss will actually prevent planting and focus solely on the date of the request to increase coverage and whether the cause of loss that may prevent planting exists on that date. Therefore, PM-20-013 is in conflict with the policy provisions and at best would be considered a modification or waiver of a policy provision but the preamble to the Basic Provisions, codified in regulations, expressly prohibits any modifications or waivers of policy provisions after the contract change date. It does not appear that consideration of these factors is authorized by law.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.