2001 Agent Training Claims Section

1. 2001 Agent Training Claims Section

2. Agent Training 2001 • Replants • must notify company prior to replanting, replant payment may denied • policy still requires receipts • company may deny replant payment if information is not supplied to company timely • systems automatically issues drafts unless prior arrangements have been made with company • Cannot use field representative to decide replant

3. Agent Training 2001 • Self-Certify Replants • 50 gross acres (before share) or less • corn, dry beans, grain sorghum, soybeans, sugar beets, sunflowers, and wheat (if allowed) • advantages - controls loss adjustment expense and no waiting for adjusters • Can only be approved by company • mail letter to agent and insured, return paperwork

4. Agent Training 2001 • Loss Notices • allow notices by fax, e-mail, mail, or by phone if followed up by hardcopy within 15 days • notify the company • loss must be reported to the company and assigned (by the company) prior to the loss being worked • all notices must be signed and dated by insured

5. Agent Training 2001 • Loss Notices (continued) • complete the notice in its entirety and use the remarks section to list any information that may be needed to contact the insured • do not list all crops to blanket the notification, applies to Crop-Hail and MPCI • loss notices are used to set up reserves

6. Agent Training 2001 • Insured’s Responsibility • notify the company within 72 hours of your initial discovery of damage, but not later than 15 days after the end of the insurance period • show the insurance provider the damaged crop • allow the insurance provider to remove samples of the insured crop • provide records and documents requested and permit the insurance provider to make copies

7. Agent Training 2001 • Obtain Consent from Insurance Provider • prior to destroying any insured crop • putting the insured crop to an alternative use • putting the acreage to another use • abandoning any portion of the insured crop

8. Agent Training 2001 • Request to destroy or put crop to other use • company must be notified prior to putting crop to use other than specified in the policy • company will complete an APH appraisal which will be used for loss or APH purposes • notify the company/indicate “Appraisal Only” • any acres put to other use without notification will have no less than the guarantee applied to the loss and a zero for the APH

9. Agent Training 2001 • Conflict of Interest • insurance provider shall not permit an adjuster to adjust a claim of any family member of the adjuster’s, or a claim of a party in which the adjuster has a material or financial interest, or a claim of a policyholder for which the policyholders policy was sold by any member of the adjuster’s family of the family or of the family of an employee of the adjuster

10. Agent Training 2001 • Conflict of Interest (continued) • family includes, but not limited to: parents, brothers, sisters, children, spouse, in-laws, grandchildren, aunts, uncles, cousins, grandparents • company must complete APH audit of previous year to determine if guarantee is correct (proper records) • review the cause of loss and requires field visit • COI review only required if a loss situation • company must be notified of COI timely • consequences - subject to compliance

11. Crop Revenue Coverage (CRC)

12. CRC Basic Principles - Example • Consider the following example to demonstrate CRC’s basic principles: • Wheat Policy’s Base Price is $3.30/bu. • Selected coverage level percentage is 65%.

13. CRC Basic Principles - Example • A Wheat farmer with an Approved Yield of 45bu/acre has a Minimum Guarantee equal to $97/acre: • (45 bu/acre * $3.30/bu * .65) = $97/acre • The Final Guarantee cannot be less than $97/acre, but it can be greater if the Harvest Guarantee exceeds $97/acre.

14. CRC Basic Principles - Example • What happens if the Harvest Guarantee is greater than the Minimum Guarantee? • Minimum Guarantee = $97.00 • Harvest Guarantee = $102.00 • Final Guarantee = $102.00 • The Final Guarantee is the greater of the Minimum Guarantee or the Harvest Guarantee.

15. CRC Basic Principles - Example • Consider the following example: • Harvest Price $3.50/bu Coverage Level 65% • CRC uses the Harvest Price to calculate a Harvest Guarantee equal to $102/acre • (45 bu/acre * $3.50/bu * .65) = 102/acre • The $102/acre Harvest Guarantee is greater than the $97/acre Minimum Guarantee. • CRC will establish the Final Guarantee as $102/acre.

16. CRC Basic Principles - Example • Loss Payments • A CRC loss occurs if the Calculated Revenue is less than the Final Guarantee. • The resulting difference equals the CRC loss payment.

17. CRC Basic Principles - Example • Consider the following example: • $3.50/bu - Harvest Price • 45 bu/acre - Approved Yield • $102/acre - Harvest Guarantee • (45 bu/acre * $3.50 *.65) • $97/acre - Minimum Guarantee • (45 bu/acre * $3.30 *.65) • $102/acre - Final Guarantee (> HG or MG) • 20 bu/acre - Production to Count • $70/acre - Calculated Revenue • (20 * $3.50)

18. CRC Basic Principles - Example • If a CRC policy’s Calculated Revenue is less than its Final Guarantee, then CRC pays an indemnity equal to the difference. • Under the circumstances being considered: • the farmer is paid an indemnity equal to $32/acre • ($102/acre minus $70/acre) • Final Guarantee minus the Calculated Revenue

19. CRC Indemnity Payment • If an indemnity payment under a CRC policy, payment will be coordinated as follows: • If we do not know the Harvest Guarantee at the time a loss is determined, the CRC pays adjusted losses in two segments • (1) CRC pays an initial indemnity based upon the Minimum Guarantee

20. CRC Indemnity Payment • If an indemnity payment under a CRC policy, payment will be coordinated as follows: • (2) Once we know the Harvest Guarantee and if it is greater than the Minimum Guarantee, CRC recalculates the indemnity payment and pays the additional indemnity due • If we know the Harvest Guarantee at the time a loss is determined, then CRC will pay adjusted losses based upon the Final Guarantee.

21. CRC Indemnity Payment • Losses can only be complete after the Harvest Price and the Production to Count have been determined according to the policy and loss adjustment procedures established or approved by FCIC.

22. Soybean CRC Example No Yld Loss Price Drops

23. Wheat CRC Example YldLoss Price Goes Up

24. Wheat CRC Example No Yld Loss Price Drops

25. Soybean CRC Example Yld Loss Price Goes Up

26. Loss Reporting Requirements • The insured must comply with all loss notice requirements as outlined in the policy provisions. • In addition: • The grower must submit a claim for indemnity declaring the amount of loss and including all information required to settle a claim not later than 60 days after the Harvest Price has been released

27. Loss Reporting Requirements • Additional Information Required: • Notify us of your expected revenue loss not later than 45 days after the price is released • Growers must submit complete harvesting and marketing records for each insured crop by unit, including separate records showing the same information for production not insured.

28. Revenue Assurance (RA)

29. Revenue Assurance Wheat APH = 100 bushels Projected Price = $2.85 Expected Per-Acre Revenue = 100 X $2.85 = $285.00 Now include the coverage levels: 75% and 65% $285.00 X .75 = $213.75 $285.00 X .65 = $185.25 Let’s now select a Per-Acre Revenue Guarantee of $200.00

30. Revenue Assurance Loss Example #1 Production Loss with Price Increase without Harvest Price Option Projected Harvest Price $2.85 Fall Harvest Price $3.00 Expected Per Acre Revenue = APH X Projected Harvest Price $285.00/acre = 100 bushels X $2.85 Selected Per-Acre Revenue $200.00/acre Coverage Level .7018 Production to Count X Fall Harvest Price = Harvest Revenue 50 X $3.00 = $150.00/acre

31. Revenue Assurance Loss Example #1 Production Loss with Price Increase without Harvest Price Option Selected Per-Acre Revenue Guarantee - Harvest Revenue = Loss Payment $200.00/acre - $150.00/acre = $50.00 acre How would the calculation have changed if the Harvest Price Option had been elected?

32. Revenue Assurance Loss Example #2 Production Loss with Price Increase with Harvest Price Option Projected Harvest Price $2.85 Fall Harvest Price $3.00 Expected Per Acre Revenue = APH X Harvest Price $300.00/acre = 100 bushels X $3.00 Selected Per-Acre Revenue $211.00/acre Coverage Level .7018 Production to Count X Fall Harvest Price = Harvest Revenue 50 X $3.00 = $150.00/acre

33. Revenue Assurance Loss Example #2 Production Loss with Price Increase without Harvest Price Option Selected Per-Acre Revenue Guarantee - Harvest Revenue = Loss Payment $211.00/acre - $150.00/acre = $61.00 acre How would the calculation have changed if the Harvest Price Option had been elected? An additional $11.00 of indemnity per acre or an additional 22% of loss payment per acre.

34. Revenue Assurance Loss Example #3 Production Loss with Price Decrease Projected Harvest Price $2.85 Fall Harvest Price $2.50 Expected Per-Acre Revenue = APH X Projected Harvest Price $285.00 = 100 bushels X $2.85 Maximum Expected Per-Acre Revenue Guarantee $285.00 X .75 = $213.75 Minimum Expected Per-Acre Revenue Guarantee $285.00 X .65 = $185.25

35. Revenue Assurance Loss Example #3 Production Loss with Price Decrease Selected Per-Acre Revenue $200.00/acre Coverage Level .7018 Harvest Revenue = Production to Count X Fall Harvest Price $125.00/acre = 50 X $2.50 Selected Per-Acre Revenue Guarantee $200.00/acre - $125.00/acre = $75.00 acre Would the calculation have changed if the Harvest Price Option had been elected?

36. Revenue Assurance Loss Example #3 Production Loss with Price Decrease Would the calculation have changed if the Harvest Price Option had been elected? NO! The Projected Harvest Price is greater than the Harvest Price.

37. Revenue Assurance Loss Example #4 Revenue Loss Projected Harvest Price $2.85 Expected Per Acre Revenue = APH X Projected Harvest Price $285.00 = $2.85 X 100 bushels Maximum Expected Per-Acre Revenue $285.00 X .75 = $213.75 Minimum Expected Per-Acre Revenue $285.00 X .65 = $185.25

38. Revenue Assurance Loss Example #4 Revenue Loss Selected Per-Acre Revenue $200.00/acre Coverage Level .7018 Harvest Revenue = Production to Count X Fall Harvest Price $187.50/acre = 75 bushels X $2.50 Selected Per-Acre Revenue Guarantee - Harvest Revenue = Loss $200/acre - $187.50/acre = $12.50 acre

39. Revenue Assurance • Questions?

40. Agent Training 2001 • Commingled Production • specific guidelines must be met prior to company approval to commingle production • company personal can only approve • in the event production is commingled without proper approval, units are lost for current and following crop year • production is pro-rated

41. Agent Training 2001 • Unreported and Under-reported Acres • unreported acres - company has the right to accept acres if appraised at 100% of the APH and no loss exist, if acres not identified until loss time the production from these acres may be pro-rated to the insurable acres • under-reported acres - if in a loss situation the liability cannot be increased and the actual acres will be used towards the appraisal

42. Agent Training 2001 • Misreported Practices/Types Within the Unit • if determined misrepresented, policy should be voided in accordance with the policy provisions • if determined not misrepresented and decreasing liability, the acreage report may be revised • if determined not misrepresented and would result in increase of liability, the acres must be reduced to an amount that would result in the corrected liability not to exceed the reported

43. Agent Training 2001 • CC vs SF • production from acres of continuous crop and summerfallow (that are part of the same unit) must be kept separate by practice, otherwise, production within the unit will be pro-rated by liability

44. Agent Training 2001 • Rotation Requirements • must follow rotation requirements per provisions • some crops use the basic or crop provisions while others have exceptions in the special provisions • insured must certify a rotation worksheet which indicates crops and areas planted in the field • any acreage that does not meet the guidelines will effect the insurance coverage

45. Agent Training 2001 • Dormant Seeding

46. Agent Training 2001 • Quality Adjustment • any crops that qualify for deficiencies in quality must be determined in acordance with the Official United States Standards for grain • Samples must be analyzed by a grader licensed under the authority of the US Grain Standards Act or the US Warehouse Act with regards to deficiencies in quality, or by a laboratory approved by us with regard to substances or conditions injurious to human or animal health

47. Agent Training 2001 • Prevent Planting • prevent planting must be reported as crop in the field, unless meets 20/20 of the field and 2 crop/type/practice history within 1 of the last 4 years (acres will be denied if not met) • crop eligibility can only be rolled by the company • intended acreage reports (sales closing date) if in any of the 4 most recent years you have not produced a crop in the county for which PP insurance was available or not received a PP guar.

48. Agent Training 2001 • Crop-Hail • binding of coverage by e-mail or fax - original application must be received within 48 hours • not returning application timely may be denied • company must be notified immediately after storm - some crops must be inspected within 3 days of storm while others crops is 7-10 days • do not assign claims to adjuster, notify the office

49. Agent Training 2001 • Claim-Supervisors Responsibility • contact person if adjuster not following up with commitments • used to keep office informed of loss areas to set up reserves and workload • responsible to work large and complex claims • not a contact person to inform company of loss

50. Agent Training 2001 • Compliance Requirements • pre-harvest GSI’s, $100,000+, self-certify replants, prevent planting, conflict of interest • random claim reviews ($5000-10,000), ($10,000-20,000), ($20,000-30,000), discretionary reviews, APH tolerance, irrigated practice, acreage report field inspections, crop insurance contract, pre-acceptance, new agent and loss adjuster proficiency evaluations, etc.