On November 14, 2019, the Risk Management Agency issued Managers Bulletin: MGR-19-023.1 and a press release regarding the extension of the deferral of interest for crop insurance premiums. RMA states that on August 15, 2019, in MGR-19-023, it extended the date on which interest would start to accrue for unpaid premiums until November 30, 2019 for policies with an August 15, 2019 billing date. In MGR-19-023.1, for the 2019 crop year only, RMA is extending the date on which interest starts to accrue for unpaid premiums until the earliest of the termination date or January 31, 2019 for all policies with a premium billing date of August 15, 2019. If premiums are not paid by the extended date, interest will start to accrue. RMA has also stated that all uncollected premium required to be paid by the approved insurance provider to RMA under the Standard Reinsurance Agreement will be deferred without interest by an additional two months. RMA states that the January monthly settlement report will be the basis for determining premium due from the approved insurance provider.
ANALYSIS – In the past, an impossibility was the only defense to a failure to comply with the terms of the policy, such as when natural disasters prevented the payment of premiums because infrastructure was down, and in those insurances RMA allowed deferrals, see MGR-18-013. RMA has not provided the impossibility defense as a rational basis for its actions in MGR-19-023.1. As stated previously on August 15, 2019, this is another instance where RMA has waived or varied a provision of the policy after the contract change date. As stated several times, such actions adversely affect program integrity, actuarial soundness and may make administration of the more difficult in the future.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.