Tuesday, September 13, 2016

Crop Insurance Update: Understanding the Risk Management Agency

Written by M. Sean High—Staff Attorney

Established in 1996, the United States Department of Agriculture’s (USDA) Risk Management Agency (RMA) provides assistance to America’s farmers through the promotion, support, and regulation of risk management tools designed to “strengthen the economic stability of agricultural producers and rural communities.” According to RMA, the work of the Agency consists of three main program areas: (1) promoting and supporting crop insurance services; (2) developing, testing, and reviewing crop insurance products; and (3) assessing and investigating crop insurance compliance.

Significantly, RMA manages the Federal Crop Insurance Corporation (FCIC) which administers the Federal crop insurance program.  According to RMA, “FCIC promotes the economic stability of agriculture through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance.”

A wholly owned government corporation, FCIC is governed by a nine member Board of Directors consisting of three members from USDA and six members from the private sector.  The three FCIC Board members from USDA are: (1) the Under Secretary of Farm and Foreign Agricultural Services; (2) USDA’s Chief Economist; and (3) the current manager of FCIC (in a nonvoting role).  The six FCIC Board members from the private sector are: (1) four farmers, one of whom grows a specialty crop; (2) an individual involved in insurance; and (3) an individual knowledgeable about reinsurance or regulation.

Subject to the general supervision of the Secretary of Agriculture, “[t]he FCIC Board approves any new policy, insurance plan, or major modification to an existing plan or other materials under procedures established by the Board.”

According to RMA, under the Federal crop insurance program, “Approved Insurance Providers (AIP) sell and service Federal crop insurance policies in every state and in Puerto Rico through a public-private partnership with RMA…[and] RMA backs the AIPs who share the risks associated with catastrophic losses due to major weather events.” To locate an AIP or RMA insurance agent, an agricultural producer can contact any USDA service center or visit RMA’s Agent Locator webpage at: http://www.rma.usda.gov/tools/agent.html.  

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