Crop Insurance TODAY - May 2014

52
MAY 2014 • VOL. 47, NO. 2 PUBLICATION OF NATIONAL CROP INSURANCE SERVICES ® NCIS Celebrates Silver Anniversary

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Great insight into the world of crop insurance!

Transcript of Crop Insurance TODAY - May 2014

Page 1: Crop Insurance TODAY - May 2014

MAY 2014 • VOL. 47, NO. 2

P U B L I C A T I O N O F N A T I O N A L C R O P I N S U R A N C E S E R V I C E S ®

NCIS CelebratesSilver Anniversary

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Rural Community Insurance Agency, Inc., D/B/A RCIS. RCIS is an equal opportunity provider. © 2014 Rural Community Insurance Agency, Inc. All rights reserved. WCS-1178333

Industry-leading tools to connect you and your customers this planting seasonGain efficiencies with the Rcis pRecision faRminG tool

Are your policyholders taking full advantage of the precision farming capabilities in their equipment investments? With RCIS, agents and producers can upload precision farming data for acreage reporting electronically. We pair precision farming data with mapping services to complete multi-peril acreage reports, putting your policyholders’ equipment and data logging monitors to work during the busy acreage reporting season.

Our newly enhanced precision farming tool leverages both Ag Leader’s SMSTM software and Trimble’s Farm WorksTM mapping software to streamline communication between you and your policyholders, decrease paperwork, and increase electronic data usage. This user-friendly technology is now available for RCIS agents and policyholders.

To learn more, ask your field service representative or visit RCIS.com.

We grow stronger every day – together sm

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Page 3: Crop Insurance TODAY - May 2014

This will be the first issue of TODAY® magazine since the signing of the 2014 Farm Bill. For the past few years, many of us have spent countless hours spec-ulating, articulating, triangulating, and in some cases hyper-ventilating about the coming of the Farm Bill. At a time when Congress has been criticized for doing nothing, the fact that Congress passed a comprehen-sive, five-year Farm Bill by an overwhelming biparti-san margin is significant. And the fact Congress chose crop insurance as the centerpiece for the farm safety net in the bill is humbling.

Neither accomplishment would have been possi-ble if not for the tireless work of Congressional leaders from the Senate and House Agriculture Committees who refused to take no for an answer; the numerous agricultural associations and the farmers they rep-

resent who made crop insurance a top priority; our partners at the USDA’s Risk Management Agency (RMA); representatives from the AIPs who took countless trips to D.C.; the industry’s government relations team; and, new friends like the conservation community.

On behalf of the crop insurance industry, and the customers we serve, thank you.

“…So where to now, St. Peter?”Well, now what? As we look to introduce new risk management tools, such as Supplemental

Coverage Option (SCO) and Stacked Income Protection Plan (STAX), and the elimination of direct payments, SURE and ACRE, the lyrics of Elton John’s song, “Where to now, St. Peter?” come to mind here: “...I understand I’m on the road where all that was is gone...show me which road I’m on....”

First, we have to go (or is it “get to go?”) through the process of implementing the new legisla-tion. This process is currently underway as the Administration and the staffs of USDA and RMA draft the various policies, procedures, and regulations that will be required. As appropriate, the various stakeholders and partners in the delivery system are brought into the various stages of implementation. As the Carpenter’s used to sing “...we’ve only just begun....”

As we reflect upon the passage of the Bill, those of us in crop insurance need to keep a few constructs in mind as we go forward. For the Farm Bill and industry to succeed, crop insurance must be: 1) Available; 2) Affordable; and, 3) Viable. Each of these elements are interdependent and key to the further sucess of crop insurance. With these ideas in mind, I will be starting a three part series in the President’s Reports dealing with each of these topics. I will attempt to define each of them and put them into context with each other.

In this issue we will deal with the subject of availability. If crop insurance is to remain successful, it is vital that the program be widely available to all farmers growing all different types of commodities.

On a temporal scale, we can think of availability through the lens of Dickens’ “Christmas Carol”

Laurie Langstraat, Editor

TODAY® IS PROVIDED AS A SERVICE OF NATIONAL CROP INSURANCE SERVICES® TO EDUCATE READERS ABOUT THE RISK MANAGEMENT TOOLS PRODUCERS USE

TO PROTECT THEMSELVES FROM THE RISKS ASSOCIATED WITH

PRODUCTION AGRICULTURE.

TODAY is published quarterly–February, May, August, and November by

National Crop Insurance Services

8900 Indian Creek Parkway, Suite 600Overland Park, Kansas 66210

www.ag-risk.org

If you move, or if your address is incorrect, please send old address label clipped from recent issue

along with your new or corrected address to Donna Bryan, at the above address.

NCIS® EXECUTIVE COMMITTEETim Weber, Chairman

Mike Day, Vice ChairmanJim Korin, Second Vice Chairman

NCIS® MANAGEMENTThomas P. Zacharias, President

Charles Lee, General CounselJames M. Crist, CFO/COO

Frank Schnapp, Senior Vice PresidentMike Sieben, Senior Vice President

Creative Layout and Design by Graphic Arts of Topeka, Inc., Kansas

TODAY PRESIDENT’SMESSAGE

Printed on recycled paper. Printed with Environmentallyfriendly vegetable oil based inks. Continued on page 38

Tom Zacharias, NCIS President

“...Where to now, St. Peter?”

Rural Community Insurance Agency, Inc., D/B/A RCIS. RCIS is an equal opportunity provider. © 2014 Rural Community Insurance Agency, Inc. All rights reserved. WCS-1178333

Industry-leading tools to connect you and your customers this planting seasonGain efficiencies with the Rcis pRecision faRminG tool

Are your policyholders taking full advantage of the precision farming capabilities in their equipment investments? With RCIS, agents and producers can upload precision farming data for acreage reporting electronically. We pair precision farming data with mapping services to complete multi-peril acreage reports, putting your policyholders’ equipment and data logging monitors to work during the busy acreage reporting season.

Our newly enhanced precision farming tool leverages both Ag Leader’s SMSTM software and Trimble’s Farm WorksTM mapping software to streamline communication between you and your policyholders, decrease paperwork, and increase electronic data usage. This user-friendly technology is now available for RCIS agents and policyholders.

To learn more, ask your field service representative or visit RCIS.com.

We grow stronger every day – together sm

WCS-1178333-RCIS-Precision-Farming-Tool-Ad -7.875x10.5in.indd 1 3/28/14 1:50 PM

CROPINSURANCE TODAY® 1

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Table of Contents

4

VOL. 47, NO. 2

MAY 2014

Copyright NoticeAll material distributed by National Crop Insurance Services is protected by copyright and other laws. All rights reserved. Possession of this material does not confer the right to print, reprint, publish, copy, input, transform, distribute or use same in any manner without the prior written permission of NCIS. Permission is hereby granted to Members in good standing of NCIS whose Membership Class (and service area, if membership is limited by service area) entitles them to receive copies of the enclosed or attached material to reprint, copy or distribute such NCIS copyrighted material in its present form solely for their own business use and solely to employees, adjusters or agents who are under contract with them, and as a condition to receiving such copies, such employees, adjusters and agents agree that they will not reprint, copy or distribute, or permit use of any such NCIS copyrighted material to or by any other person and/or company, or transform into another work such NCIS copyrighted material, without prior written permission of NCIS.© 2014 National Crop Insurance Services, Inc.

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33

20

1 “...Where to now, St. Peter?”

4 2013 Year In Review

20 NCIS Celebrates Silver Anniversary

30 2014 Annual Convention Draws Record Numbers

33 Four Industry Stalwarts Presented Lifetime Achievement Awards

36 Dan Carothers Receives Outstanding Service Award

41 Kenny Shock Receives NCIS Industry Leadership Award

42 Tom Vetter Receives NCIS Industry Leadership Award

44 Committee Chairs Ready for the Year

48 Jo Anne Baker Retires Leaving NCIS

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CropInsurance TODAY

Year In Review

(Note: the data discussed in this arti-cle are as of April 21, 2014, unless indicated otherwise.)

OverviewAfter the devastating drought of 2012,

U.S. producers and the crop insurance indus-try experienced a more routine year in 2013, but still one with atypical events. Drought was eliminated in many areas, growing con-ditions turned out much more favorable and yields were near trend for many major crops, enabling farmers to harvest large production levels. The year also saw the Federal Crop Insurance Program attain several significant milestones. Total insured liability of nearly $124 billion was the highest ever, while gross premium of $11.8 billion was the second highest ever and insured acres at 296 million was a record high. Strong insurance policy base prices for major crops and the continu-ing increase in coverage levels contributed to the high insured value. Despite large produc-tion levels, the program’s gross loss ratio—in-demnities divided by premiums—turned out

to be 1.00 as of this writing, coming in behind 2012 as the second highest in the past decade.The loss ratio was pushed up by a sharp drop in market prices of major crops caused by the

rebound in crop production. The price declines, along with adverse weather affecting certain regions and crops, caused many losses on both revenue and yield policies. The $11.8 billion paid in indemnities as of April 21, 2014 was the second highest ever. The highest indemnities by state were paid in Iowa, $2.0 billion; followed by Texas, $1.5 billion; and Minnesota, $1.3 billion. Corn had the highest level of claims at $5.7 billion, followed by wheat at $2.3 billion and soybeans at $1.2 billion.

The high level of total claims has resulted in back-to-back subpar financial returns for crop insurance companies and the first back-to-back annual gross underwriting losses since 1999 and 2000. The drought of 2012 caused large underwriting losses both for the government and the companies, offsetting prior years of underwriting gains. The companies’ rate of return on retained premium is estimated as a negative 15 percent for 2012, and the losses incurred in 2013 will likely result in a rate of return on retained premium in the mid-single digit range. Compa-nies need successive years of favorable returns to build surpluses to meet the losses that come with catastrophic years.

With crop insurance providing financial support, farmers were able to plant 325 million acres in the spring of 2013, down slightly from a year earlier but four million above the previ-ous five year average. The winter was warmer than average across the country, supporting win-ter wheat, and above-average precipitation in the Eastern half of the county finally eliminated drought in the Corn Belt and Southeast. The Southern Plains drought experienced some relief, but dryness on the West Coast and North Central areas was a continuing concern. A cold, wet spring caused significant planting delays in the Northern Plains, Midwest and Mississippi Delta. Planting progress was dramatically worse than in 2012 when the pace of plantings far exceed-ed the previous five year average for all the major spring planted crops. By the end of April

By Keith Collins and Harun Bulut, NCIS

4 MAY2014

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2013, only five percent of corn was planted, the lowest level for that date since 1984. By June 2, only 57 percent of the soybean crop was planted, the lowest since 1996. Similarly, other major crops lagged their five year aver-ages throughout the spring.

Yields and production recovered from 2012 with better growing season weather. Corn production was record high, while soy-bean production was the third highest on re-cord. Rice and the all-wheat yields were each record highs, but production of each fell due to lower acreage. Winter wheat had its second highest yield on record and other spring wheat had its highest. With lower planted acreage, and drought in the Southwest hurting yields, upland cotton production contracted sharply. The improved weather made a big difference in the forage and hay crops, with production of all dry hay up 13 percent from 2012. Alfalfa production was generally up across the coun-try, although Southwest producers still faced dry conditions limiting non-irrigated alfalfa hay. The National Agricultural Statistics Ser-vice’s (NASS’s) 18-state total for all forage pro-duction was 13 percent above the year earlier.

The 2013 marketing year saw a strong in-crease in global use of grains and oilseeds, but the increase in global use fell short of the even larger increase in global production, thus in-creasing global stocks. While global grain and oilseed stocks are expected to be higher by the end of the 2013 marketing year, stock levels are expected to remain below levels reached in 2009, 2004 and the 1990s, suggesting that successive years of large production are need-ed to push stocks to burdensome levels and that large production problems in 2014 could once again drive market prices to high levels. Reflecting the increase in available supplies in 2013, harvest prices on crop insurance reve-nue policies were 22 percent below base pric-es for corn, 18 percent lower for winter wheat and 13 percent lower for spring wheat. Soy-bean harvest prices were unchanged, while those for cotton and rice exceeded base prices.

The year’s big news on the policy front was the completion of new Farm Bills by the Sen-ate and House in late 2013, with the final bill—the Agricultural Act of 2014—signed into law in February 2014. While Federal funding was reduced for the Farm Bill overall and for farm programs, funding for crop insurance was in-creased. The main new feature is the addition of two new area-based insurance programs

designed to supplement a producer’s revenue. The programs are the Stacked Income Protec-tion Program (STAX) for upland cotton pro-ducers and the Supplemental Coverage Op-tion (SCO) for all producers. These programs will go into effect for the 2015 crop year, with crop and county eligibility to be determined by the Risk Management Agency (RMA).

This article begins with a review of weath-er and major crop production during the 2013 year. Commodity market developments are then reviewed, and the outcomes for insur-ance prices are presented. The implications for performance of the Federal crop insurance program and the U.S. and Canadian Crop-Hail programs are examined, and the article concludes with a brief discussion of the year’s policy and program developments related to crop insurance.

Weather and ProductionThe 2013/14 marketing years for major

crops kicked off with planting of winter wheat in the fall of 2012. Planted area for harvest was 43.09 million acres, up 1.87 million or 4.5 percent from 2012 and six percent more than 2011. The early harvest of spring crops and strong prices stimulated the area increase. Texas, Missouri and Oklahoma accounted for a total increase of over one million acres, while Illinois, Ohio, Tennessee and Indiana saw an increase of over 700,000 acres. A notable de-cline in planted area of over 800,000 acres oc-

curred in North Dakota and Montana. There was little change in the white wheat areas of Oregon and Washington. As the crop headed toward winter dormancy, it was mostly rated fair to good, with 24 percent rated poor or very poor, somewhat worse than the 13 per-cent rating for the year-earlier crop.

The winter was warmer than average for the contiguous United States and was the 20th warmest winter on record, mostly due to a very warm December. With vestiges of the 2012 drought pushing into 2013, precipitation helped by being above average, mainly east of the Rockies, producing the 26th wettest win-ter on record and ending drought in the east-ern Corn Belt (Figure 1). Drought also ended in the Southeast, as Louisiana, Mississippi, Alabama and Georgia each had winters that were among their top ten wettest, as did Wis-consin, Illinois and Michigan. Pasture, range and winter wheat benefitted from precipi-tation in the Plains. However, precipitation was below average in the northwest and the West Coast, lessening water supply prospects for 2013. With numerous snow storms, snow cover was also above average, with the winter experiencing the 15th largest seasonal snow cover over the period of 1966 to present.

In contrast to 2012, cold, wet weather dis-rupted spring planting in the Northern Plains and Midwest. U.S. spring temperatures were below average, resulting in the coldest spring since 1996. In the Central and Southeast re-

Figure 1. Winter 2012-2013 (Dec-Feb) Precipitation National Climatic Data Center/NESDIS.NOAA

Precipitation1=Driest

118=Wettest

RecordDriest

MuchBelowNormal

BelowNormal

NearNormal

AboveNormal

MuchAboveNormal

RecordWettest

CROPINSURANCE TODAY® 5

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gions, 14 states had spring temperatures rank-ing among the ten coolest on record. The West and New England were warmer than average, with California having its seventh warmest spring. Spring precipitation was about aver-age nationally, but above average in the Upper Midwest and below average in much of the West (Figure 2). Iowa had its wettest spring on record, with five nearby states having a top ten wet spring. Below-average spring precipi-tation was observed in the West and Mid-At-lantic. California had a top ten dry spring.

The cold, wet spring caused significant planting delays in the Mississippi Delta. Mid-western precipitation in April and late May caused flooding in the middle Mississippi Valley. By the end of spring, drought was eliminated from areas bordering the Missis-sippi River to the Atlantic Ocean. However, drought persisted or worsened from Califor-nia and parts of Oregon to the southern half of the High Plains. East of the Rockies, spring was slow to arrive, especially in the upper Midwest, with Minnesota and North Dako-

ta recording their coldest springs. The heavy precipitation and cool weather impaired win-ter wheat condition, slowing heading, and re-ducing planting progress for spring crops. By the end of April, only five percent of corn was planted, the lowest level for that date since 1984 (Figure 3). By June 2, only 57 percent of the soybean crop was planted, the lowest since 1996. Planting progress was dramatically dif-ferent than in 2012 when the pace of plantings far exceeded the previous five year average for all the major spring planted crops.

A key market issue during 2013 was the number of acres that were prevented from planting due to the cold, wet spring. With the strong crop prices of 2012, slightly more acreage was expected to be planted but was not. In addition, there were 1.6 million fewer acres in the Conservation Reserve Program (CRP) in late 2012 than the year earlier, some of which could return to production. USDA’s Farm Service Agency (FSA) reported 8.3 mil-lion prevented planted acres for major crops, including 3.6 million for corn, 1.7 million for soybeans and two million for wheat. Howev-er, actual planted area suggests smaller num-bers. NASS reported that acreage planted to principal crops in 2013 was 324.8 million, down only 1.5 million from the level planted in 2012. For corn, planted area was 95.4 mil-lion acres, down 1.8 million. In March 2013, farmers indicated plans to seed 97.3 million acres to corn, thus actual area seeded was only 1.9 million below stated intentions. For soybeans, farmers planted 76.5 million acres, down 0.7 million from 2012. In March, pro-ducers had expressed intentions to plant 77.1 million, thus actual area was only 0.6 million below intentions. Further analysis may help explain the relationship among planted area and FSA and crop insurance data on prevent-ed planted acres.

Other decreases in planted area included upland cotton with 2013 area at 10.2 million acres, down from 12.1 million in 2012; pea-nuts at 1.1 million acres, compared with over 1.6 million in 2012; and dry edible beans at 1.4 million acres, compared with over 1.7 mil-lion in 2012. Wheat saw a notable increase in planted area at 56.2 million acres, compared with 55.7 million in 2012, as more winter wheat acres offset fewer durum and other spring wheat plantings.

The summer of 2013 had temperatures

Figure 2. Spring 2013 (Mar-May) Percipitation National Climatic Data Center/NESDIS/NOAA

Precipitation1=Driest

119=Wettest

RecordDriest

MuchBelowNormal

BelowNormal

NearNormal

AboveNormal

MuchAboveNormal

RecordWettest

Figure 3. Planting Progress: Share of Crop Planted in 2013 Compared with 2008-12

Corn

Soybeans

Spring Wheat

Cotton

Per

cent

of

pre

vio

us 5

-yr.

avg

.

120%

100%

80%

60%

40%

20%

0%14 15 16 17 18 19 20 21 22 23

Week in 2013

6 MAY2014

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that were above average, tying with 1937 as the 15th warmest summer on record. Above-average temperatures occurred in the West and Northeast, while below-average temperatures were in the Midwest and South-east. The summer was the eighth wettest on record and the wettest since 2004 (Figure 4). New York, South Carolina, Georgia, and Flor-ida each had their wettest summer on record. Early summer drying in the western Corn Belt became more widespread as the summer went on, expanding to much of the Midwest. Late summer temperatures also increased, putting corn and soybeans under greater stress by summer’s end. In the East, persistent rain adversely affected a variety of fruits, veg-etables and other crops. The Southern Plains received rain, but not enough to end the three year drought.

The U.S. drought monitor (Figure 5) and U.S. crop conditions by week (Figure 6), in-dicate the general growing conditions during the summer of 2013. The drought monitor is a snap shot of the state of drought in mid-2013. At the end of July 2012, 63 percent of the con-tiguous United States was in drought rated D1 to D4. By the end of July 2013, that share had dropped to 46 percent, concentrated in the Plains and Southwest.

The delayed plantings due to the cold, wet spring continued to affect crop development as both corn and soybean maturation lagged the normal pace. Dry and very hot weather in July and August starting in the Western Corn belt and spreading eastward caused crop conditions to deteriorate in mid-sum-mer, but periodic showers and more favorable temperatures helped maturity in late August and September. Despite lagging development, the spring wheat crop condition remained highly rated throughout the growing season. Although cotton crop conditions were rat-ed below other major crops throughout the growing season, conditions were near their previous five year average.

During the fall season, most of the Unit-ed States had temperatures close to average, with California notable as it continued to see below-average precipitation. Five states from Colorado to North Dakota had one of their ten wettest autumns on record (Figure 7). By the end of November, the share of the con-tiguous United States in drought had fallen to 31 percent. Drought improved across the

High Plains, Southern Plains, and parts of the Rockies but worsened in the Far West, with 98 percent of California in drought by the end of the fall season. While much of the west outside of California was experiencing wet weather, warmth in the Midwest spurred late-developing corn and soybeans, and Mid-western producers made excellent harvest progress during October. By October 27, 59

percent of corn was harvested, 32 percentage points below the drought-affected 2012 crop, but only three points behind the five year av-erage. In the South, cotton developed normal-ly and harvesting was only slightly behind av-erage. As autumn progressed, producers also made good progress planting winter wheat, with sowing ahead of the five year average at the start of November, although a major area

Figure 4. Summer 2013 (Jun-Aug) Precipitation National Climatic Data Center/NESDIS/NOAA

Precipitation1=Driest

119=Wettest

RecordDriest

MuchBelowNormal

BelowNormal

NearNormal

AboveNormal

MuchAboveNormal

RecordWettest

Figure 5. U.S. Drought Monitor July 30, 2013 (Released Thursday, Aug. 1, 2013) Valid 7 a.m. EST

Drought Impact Types: Delineates dominant impacts

S=Short-Term, typically less than6 months (e.g. agriculture, grasslands)L=Long-Term, typically greater than6 months (e.g. hydrology, ecology)

Intensity D0 Abnormally Dry D1 Moderate Drought D2 Severe Drought D3 Extreme Drought D4 Exceptional Drought

The Dought Monitor focuses on broad-scale conditions. Local conditions mayvary. See accompanying text summaryfor forecast statements.

http:/droughtmonitor.uni.edu/

Author:Brian FuchsNational Drought Mitigation Center

CROPINSURANCE TODAY® 7

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of concern remained the lack of soil moisture on the southern High Plains. Water supply concerns continued to increase in California as it moved toward a third consecutive year of sub-par precipitation.

The final production estimates for key major crops are summarized in Table 1. With much better growing season weather than in 2012, yield per harvested acre generally im-proved. A number of records or near records were set. Corn production was record high, with record-high yields in the Eastern Corn Belt and in many Southern and Southeastern

states. Despite the planting delays and slow development, U.S. soybean yield improved and production was the third highest on re-cord. The U.S. rice yield and the all-wheat yield were each record high, but with lower planted acreage of each, production declined. The winter wheat yield turned out to be the second highest and the other spring wheat yield was the highest on record. With a sharp drop in acreage and the U.S. yield seven per-cent below its 2012 record high, upland cot-ton production fell 24 percent. The improved weather made a big difference in the forage

and hay crops. Production of all dry hay for 2013 was up 13 percent from 2012. Alfalfa production was generally up across the coun-try, although Southwest producers still faced dry conditions limiting non-irrigated alfalfa hay. NASS’s 18-State total for all forage pro-duction was 13 percent above the year earlier.

[Information sources for this section include: NOAA, National Climatic Data Center, State of the Climate: National Overview for Annual 2013, published online December 2013, available at www.ncdc.noaa.gov/sotc/national/2013/13; USDA, Na-tional Agricultural Statistics Service, Crop Produc-tion 2013 Summary, January 2014, and Prospective Plantings, March 2013; USDA Farm Service Agency, Changes in CRP Acreage from 2007 to October 2013 by State, available online at www.fsa.usda.gov/FSA/webapp?area=home&subject=copr&topic=rns-css and Crop Acreage Data available online at www.fsa.usda.gov/FSA/webapp?area=newsroom&sub-ject=landing&topic=foi-er-fri-cad.]

Commodity Markets and Prices

With better weather in 2013 and a result-ing rebound in yields per acre for key U.S. crops, the primary risk farmers faced was a large decrease in market prices. After declin-ing in 2012, global grain and oilseed produc-tion increased by about 215,000 tons in 2013, the largest year-over-year gain since the 2004 marketing year (Figure 8). The United States led the increase with the record corn and large soybean harvests, however several for-eign countries added to the supply increase. The European Union, Australia and Canada all had large increases in wheat production. Coarse grain production was up sharply in the Former Soviet Union, especially Ukraine, offsetting a decline in Brazil. Brazil and Ar-gentina both had sizeable increases in soy-bean production. For other crops, world cot-ton production fell as both the United States and China contracted, while global rice pro-duction was about unchanged.

The 2013 marketing year also saw a strong increase in global use of grains and oilseeds, but that gain fell short of the increase in global production, thus increasing global stocks. The resulting lower crop prices spurred consump-tion and imports, and the year-over-year in-crease of over 110,000 tons in global use of grains and oilseeds was the largest in over a decade. The increase was highlighted by large import increases in Asia and Mexico and con-

Figure 6. U.S. Crop Conditions, 2013: Share of Crop Rated Good to Excellent

Corn

Soybeans

Spring wheat

Cotton

80%

70%

60%

50%

40%

30%22 24 26 28 30 32 34 36 38 40 42 44

Week in 2012

Note: Data for weeks 40 and 41 are missing due to the Federal Government shutdown.

Figure 7. Fall 2013 (Sept-Nov) Precipitation National Climatic Data Center/NESDIS/NOAA

Precipitation1=Driest

119=Wettest

RecordDriest

MuchBelowNormal

BelowNormal

NearNormal

AboveNormal

MuchAboveNormal

RecordWettest

8 MAY2014

Page 11: Crop Insurance TODAY - May 2014

tinuing strong demand in China, especially for soybeans. While global grain and oilseed stocks are expected to be higher by the end of the 2013/14 marketing year, stock levels are expected to remain below levels reached in 2009, 2004 and the 1990s, suggesting that successive years of large production are need-ed to push stocks to burdensome levels and that large production problems in 2014 could once again drive market prices to high levels.

Figure 9 summarizes the behavior of over-all U.S. agricultural prices as global crop pro-duction rebounded. The chart depicts indexes of prices received by U.S. farmers for all crops and all livestock products on a monthly ba-sis. After more than doubling from the mid-2000s to 2012, crop prices declined sharply during 2013. Meanwhile, livestock prices reached record highs in 2013. With improv-ing livestock profit margins, livestock supply rebuilding and stronger feed demand appears likely over the next several years.

Figure 10 shows the supply/demand sit-uation for U.S. soybeans and corn, which together accounted for 69 percent of insured liability and 61 percent of total program gross premium in 2013. Despite the large soybean production in 2013, very strong export de-mand is expected to reduce U.S. carryover stocks and keep prices from declining as much as corn prices. USDA expects a 2013/14 season-average farm price of $13.00 per bush-el, down 13 percent from the prior year. The large increase in corn production is forecast to sharply increase U.S. corn carryover and result in a season-average corn farm price of $4.60 per bushel, down 33 percent from the 2012/13 average price. Although U.S. wheat stocks are expected to decline with lower pro-duction, increased global wheat stocks due to large foreign production and the large in-crease in feed supplies are expected to reduce the all-wheat farm price to $6.85 for the 2013 crop, down 12 percent. Southern crops show

a contrast in price prospects, with rice farm prices expected to average $16.90 per cwt, up 12 percent from the 2012-crop price, as lower U.S. production reduces carryover stock lev-els. Cotton, in the face of a 24 percent drop in U.S. production due to both acreage and yield declines, is expected to experience a large drop in U.S. carryover stocks and a sea-son-average farm price for all cotton of 77.5

cents per pound, up seven percent from the 2012-crop average price.

Base prices for revenue policies for the current and prior recent years are shown in Table 2. As usual, base prices, which are fu-tures prices during a discovery month, are heavily influenced by both the prior year’s farm price and the current year’s expected farm price. Although wheat expected farm

Figure 8. World Grain & Oilseeds Production, Use & Stocks

2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

0.8

60%

40%

20%

0%

Bil. TonsStks/Use

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

% CHANGE 2008 2009 2010 2011 2012 2013 2014 2012-13 2013-14

Wheat, Winter ($/bu) 5.88 8.77 5.42 7.14 8.62 8.78 7.02 1.9 -20.0 Wheat, Spring ($/bu) 11.11 6.20 5.43 9.89 7.84 8.44 6.51 7.7 -22.9 Corn ($/bu) 5.40 4.04 3.99 6.01 5.68 5.65 4.62 -0.5 -18.2 Soybeans ($/bu) 13.36 8.80 9.23 13.49 12.55 12.87 11.36 2.5 -11.7 Upland Cotton ($/lb) 0.77 0.55 0.72 1.15 0.94 0.81 0.78 -13.8 -3.7 RICE ($/cwt) (AR, MS, TX 2011-14) 14.40 13.10 14.00 16.10 14.70 15.70 13.90 6.8 -11.5 1Revenue Protection for 2011-14 and Revenue Assurance for prior years. Source: Various RMA Manager’s Bulletins

Table 2. Major Revenue Policy Base Prices1

CROP 2012 YIELD 2013 YIELD 2012 2013 % PRODUCTION PRODUCTION CHANGE

Bu./Harv. Ac. Bu./Harv. Ac. Mil. Bu. Mil. Bu.

Corn 123.4 158.8 10,780 13,925 29.2 Barley 67.9 71.7 220 215 -2.3 Grain Sorghum 49.8 59.6 247 389 57.5 Soybeans 39.8 43.3 3,034 3,289 8.4 All Wheat 46.3 47.2 2,266 2,130 -6.0 Winter Wheat 47.3 47.4 1,641 1,534 -6.5 Other Spring Wheat 45.0 47.1 542,959 534,529 -1.6 Lbs./Harv. Ac. Lbs./Harv. Ac. 1,000 Bales 1,000 Bales

Upland Cotton 869 807 16,535 12,551 -24.1 Lbs./Harv. Ac. Lbs./Harv. Ac. 1,000 Cwt. 1,000 Cwt.

Rice 7,449 7,694 199,546 189,886 -4.8 Source: NASS Crop Production Annual Summary

Table 1. Crop Yields and Production

CROPINSURANCE TODAY® 9

Page 12: Crop Insurance TODAY - May 2014

prices were down for 2013/14, strong farm prices in 2012/13 affected wheat futures prices during the August-September 2011 base price discovery period, hence the 2013/14 base price is up slightly over the prior year. Similar-ly for spring wheat, stronger farm prices car-ried into early 2012 when the base price was established. Even though corn and soybean futures prices dropped sharply from the peaks reached during the 2012 drought, futures were still fairly strong during the 2013-crop base price discovery period resulting in base prices similar to those of the 2012 crops. Farm pric-es for corn, soybeans and wheat all dropped

sharply after the base price discovery period for the 2013 crops as the year’s improved pro-duction levels became reality. The lower farm prices heavily influenced the 2014 crop insur-ance base prices which were down sharply from 2013: 12 percent for soybeans, 18 percent for corn and over 20 percent for wheat.

Cotton was a different story from grains, as it was largely unaffected by the 2012 Mid-west drought, had strong yields per acre and saw increased carryover stocks during the 2012 crop year. The result was a sharp drop in 2012-crop farm prices which heavily influ-enced the 2013 cotton base price. The lower

2013 price, and prospects for higher produc-tion in 2014, kept the 2014 base price slight-ly below the 2013 level. The rice market had strong demand and reduced carryover stocks during 2012/13, which pulled farm prices up and contributed to the increase in the 2013-crop rice base price. For 2014, the lower base price reflects two opposing forces, a high 2013-crop price and a large expected increase in long grain rice production in the mid-South. The mid-South production is expected to more than offset any negative impacts of the Western drought on medium-short grain production in California.

With corn being the most valuable U.S. field crop produced and accounting for nearly one-third of U.S. planted acreage, corn prices heavily influence prices of other field crops and livestock. Figure 11 shows this important price, illustrating the pattern of the December futures contract prices on a weekly basis from 2006 through 2013. During 2011, futures prices increased as the U.S. corn crop appeared to be well below trend. Prices tailed off in the second half of the year as markets adjusted and foreign grain production was strong. Futures prices continued to trend down during the first half of 2012 with large corn planted acreage and fa-vorable spring planting progress. A large crop was expected and a $4.60 per bushel average farm price was forecast by USDA in May 2012 for the 2012 crop. The story quickly changed as the onset of the drought and its rapidly mount-ing severity caused corn futures to spike from near $5.00 per bushel in mid-June to a peak of $8.49 by early August. As demand fell in the face of high prices, market prices began trend-ing down but remained above $7.00 per bushel as the December contract expired. Finally, the story in 2013 was rather as expected. Coming out of a devastating drought, corn futures pric-es started the year around $6.00 per bushel and slid somewhat steadily throughout the year and ended at $4.31 per bushel, in tandem with the anticipation and then the realization of the record high corn production.

Table 3 shows “implied” volatilities for major crops in the implied price volatility col-umn. These volatilities, are calculated, or im-plied, from observed prices for futures mar-ket options contracts. As a forward-looking measure of the riskiness of prices expected for the year, the volatilities are used in rating the Revenue Protection (RP) plan of insur-ance. When base prices decline, as they have

Figure 9. U.S. Farm Prices for Crops & Livestock

300

250

200

150

100

50

0

1990-92=100

Index of Crop Prices

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Index of Livestock Prices

Figure 10. U.S. Prices & Carryover Stocks as a Share of Total Use

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00

% of Use Soybeans $/Bu.

1989

/90

1997

/98

2005

/06

2013

/14E

1981

/82

1989

/90

1997

/98

2005

/06

2013

/14E

1981

/82

30

25

20

15

10

5

0

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

70

60

50

40

30

20

10

0

% of Use Corn $/Bu.

10 MAY2014

Page 13: Crop Insurance TODAY - May 2014

for 2014, insured liability declines, provided other factors affecting liability are unchanged. When volatility factors decline as they have for 2013 and 2014, premium rates decline, provided other factors affecting the premium rates remain the same. Volatilities generally peaked in 2011 (even by historical standards, see the historical price volatility column in table 3) and have been declining since then, despite the uncertainty in markets created by the 2012 drought. The increase in production of most crops, first expected for 2013 and now again for 2014, apparently signals to market participants that greater stability of prices around their expected levels is in prospect.

Figure 12 shows how the 2013 base insur-ance prices related to the harvest prices. The harvest prices are the daily prices of the fu-tures contract used to establish the base prices averaged during the harvest price discovery month. The rebound in corn production in 2013 explains the decline in harvest price to $4.39 per bushel. The 22 percent drop in price combined with high coverage levels in corn was enough to trigger indemnities for revenue policies even with yields equal to the producer’s production history. The wheat harvest prices reflect the corn price drop, the large increase in foreign wheat production and the expected increase in foreign wheat stocks. Soybean supplies remain tight, as seen in Figure 10, and the harvest price turned out the same as the base price. Harvest prices for cotton and rice were similar to base prices.

[Information sources for this section include: USDA, Foreign Agricultural Service, P,S&D data base; USDA, Office of the Chief Economist, World Agricultural Supply and Demand Estimates Report (WASDE), various issues; USDA, NASS Quick Stats; RMA Manager’s Bulletins and the Price Discovery Application.]

Figure 11. Weekly Corn Futures Prices, Life of the December Contracts 2006-2013

9

8

7

6

5

4

3

2

1

01 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49

Week

$/Bu.

2006

20072008

20092010

2011

20122013

Figure 12. Prices for 2013 RP and RP-HPE Plans of Insurance

$/Bu.

Soybea

nsW

inte

r Whe

atSprin

g W

heat

Corn

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00

12.87 12.87

5.654.39

8.78

7.228.44

7.33

Base

Harvest

Up. Cotto

n

Rice

0.900.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00

$/Lb.

Base

Harvest

0.81 0.83

0.157 0.155

% CHANGE 1968-2013 2008 2009 2010 2011 2012 2013 2014 2012-13 2013-14

Wheat, Winter ($/bu) 0.20 0.24 0.33 0.27 0.33 0.26 0.24 0.19 -7.7 -20.8 Wheat, Spring ($/bu) 0.23 0.33 0.25 0.24 0.25 0.19 0.15 0.14 -21.1 -6.7 Corn ($/bu) 0.21 0.30 0.37 0.28 0.29 0.22 0.20 0.19 -9.1 -5.0 Soybeans ($/bu) 0.18 0.31 0.31 0.20 0.23 0.18 0.17 0.13 -5.6 -23.5 Cotton ($/lb) 0.24 0.20 0.27 0.21 0.40 0.19 0.17 0.15 -10.5 -11.8 Rice ($/lb) 0.23 0.15 0.22 0.19 0.22 0.14 0.11 0.10 -22.4 -9.1 1Historical volatility values are obtained by fitting log-normal distribution to the time series of the ratio of the harvest price to the base price from 1968 to 2013. For each year in that time period, the harvest and base prices are calculated by using relevant futures prices in that year. Source: Barchart.com

2Revenue Protection for 2011-14 and Revenue Assurance for prior years. Source: Various RMA Manger’s Bulletins

Historical Price Implied Price Volatility2

Volatility1

Table 3. Volatility Factors

CROPINSURANCE TODAY® 11

Page 14: Crop Insurance TODAY - May 2014

Federal Crop Insurance Program Experience

The Federal Crop Insurance Program reached significant milestones in 2013. Total insured liability of nearly $124 billion was the highest ever, while gross premium of $11.8 billion was the second highest ever. The 296 million insured acres was a record high, while

the $11.8 billion in indemnities was the sec-ond highest ever. As described in the prior section, the strong 2013 base prices for major crops contributed to their high insured value. Producers also continued to buy higher cov-erage levels in 2013, adding to total insured value (Figure 13). The program loss ratio on April 21, 2014 stood at 1.00 (Table 4), far be-

low 2012’s 1.57, but still the second highest since 2002.

Gross underwriting gains of the program are the gross premium less the total indemni-ties and these gains (or losses) are shared be-tween FCIC and the insurance companies, as determined by the provisions of the Standard Reinsurance Agreement. For the business re-corded to date, estimated total indemnities are very slightly above gross premiums re-sulting in a gross underwriting loss of $43.1 million. Thus 2013 and 2012 are first back-to-back years of gross underwriting losses since 1999 and 2000. The 2013 loss will result in a second year in a row of very low returns for the crop insurance companies. After a rate of return on retained premium in 2012 of about a negative 15 percent, the companies’ rate of return on retained premium is expected to be in the mid-single digit range in 2013.

Program costs can be calculated using program outlays and revenues and are equal to: gross indemnities less farmer-paid pre-miums plus administrative and operating (A&O) payments made on the producers’ behalf to the companies plus company un-derwriting gains. For the 2013 crop year thus far, net indemnities of $7.32 billion plus A&O payments of about $1.35 billion bring these two components of program costs to $8.67 billion. Adding expected underwriting gains would put the program cost in a range of $9.0 to $9.5 billion. Final costs will depend on fi-nal figures for indemnities, farmer-paid pre-miums and company underwriting gains, but the total cost is likely to wind up similar to the expected long-run levels shown in projections of the Congressional Budget Office (CBO).

Table 5 provides some insight on how

Figure 13. Share of Insured Acres Covered at 70% or Higher

90

80

70

60

50

40

30

20

10

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

1996

Sha

re o

f In

sure

d A

cres

, %

CROP 2012 2013 CHANGE % CHANGE

Wheat 46,560 48,588 1,853 4.4 Corn 81,448 84,733 3,302 4.0 Sorghum 4,683 5,797 1,075 23.8 Soybeans 65,195 67,451 2,269 3.5 Upland Cotton 11,432 9,876 -1,706 -13.6 Pasture, Range and Forage 48,278 54,242 5,963 12.4 Total of above crops 257,596 270,687 12,757 5.1 Total of all crops 282,708 295,719 12,684 4.6 1Data as of 4/21/2014 Source: RMA Summary of Business

Table 5. Insured Acres by Major Crop (1,000 Ac)1

CROP POLICIES UNITS WITH FARM-PAID GROSS INSURED LOSS YEAR WITH PREMIUM LIABILITY PREMIUM PREMIUM INDEMNITY UNDERWRITING ACRES RATIO PREMIUM GAIN

Number Million Dollars Million

2004 1,229 3,076 46,602 4,186 1,709 3,210 976 221 0.77 2005 1,191 3,022 44,259 3,949 1,605 2,367 1,582 246 0.60 2006 1,148 2,942 49,919 4,580 1,898 3,504 1,076 242 0.77 2007 1,138 2,966 67,340 6,562 2,739 3,548 3,015 272 0.54 2008 1,149 3,023 89,897 9,851 4,160 8,680 1,171 272 0.88 2009 1,172 2,729 79,548 8,951 3,524 5,222 3,730 265 0.58 2010 1,140 2,572 78,082 7,595 2,883 4,252 3,343 256 0.56 2011 1,152 3,321 114,207 11,971 4,509 10,864 1,107 266 0.91 2012 1,174 3,444 117,148 11,114 4,137 17,433 -6,319 283 1.57 2013 1,223 3,577 123,537 11,779 4,499 11,822 -43 296 1.00 1Data as of 4/21/2014 Source: RMA Summary of Business

Table 4. Federal Crop Insurance Program Performance, Gross Basis1

12 MAY2014

Page 15: Crop Insurance TODAY - May 2014

insured acreage changed in 2013. The in-crease in wheat insured acres reflected the increase in wheat planted acres. While both corn and soybeans saw planted area decline in 2013 partly due to prevented planted acres, insured acres increased. With sharply more sorghum area planted, insured acres were up 24 percent. Cotton planted area declined and took insured acres down 14 percent. Follow-ing the trend of recent years, insured area of pasture, range and forage increased markedly and accounted for nearly half of the 12.7-mil-lion-acre increase in insured acres of all crops.

The U.S. map in Figure 14 identifies states with similar loss ratios by color, and shading is used to identify states with similar premi-um volume. The data show 16 states with loss ratios over 1.0. Alaska and Vermont had the highest, at 2.55 and 2.16, respectively, fol-lowed by Iowa, at 2.12. The top five states in premium and their loss ratios were: North Dakota, 1.00; Texas, 1.43; Iowa, 2.12; Kansas, 1.12; and Minnesota, 1.59. Total indemnities in these states were $6.9 billion, 58 percent of the total U.S. payout. Many of the lowest loss ratios were in the Eastern Corn Belt, where drought had inflicted large losses a year earli-er. Indemnities by the top states and crops are shown in Table 6.

Figure 15 shows loss ratios by state for the revenue plans, RP and RPHPE, and the yield plan, YP. In the large premium states, particularly in the Corn Belt, the loss ratios for yield plans were much lower than for revenue plans, reflecting the large drop in harvest prices compared with base prices for corn and wheat. An exception is Texas where yield plan loss ratios were much higher than revenue, reflecting yield losses for cotton, rice and sorghum. Overall, the loss ratio for RP was 1.07; RPHPE, 1.25; and YP, 0.95. The declines in prices with generally good yields resulted in a loss ratio of 0.91 for the Group Risk Income Protection (GRIP) area plan, while the Group Risk Plan (GRP) and Group Risk Income Protection with Harvest Price Option (GRIPHRO) had loss ratios of 0.64 and 0.12, respectively. The highest loss ratio among plans was 2.34 for the 4.7 million acres covered by the PRF Vegetation Index; in con-trast, the loss ratio for the 49.6 million acres covered by the PRF Rainfall Index was 0.86.

[The information source for this section was the RMA Summary of Business.]

Figure 14. 2013 MPCI Premium and Loss Ratios All Plans Combined, as of April 21,2014

Total Loss Ratio

(0-0.25) (0.25-0.5) (0.5-0.75) (0.75-1) (1-1.25) (1.25-3)

PREM

(0-10,000,000) (10,000,000-100,000,000) (100,000,000-250,000,000) (250,000,000-750,000,000) (750,000,000-1,200,000,000)

STATE INDEMNITIES ($) CROP INDEMNITIES ($)

Iowa 2,005,176,659 Corn 5,704,579,232 Texas 1,529,840,519 Wheat 2,267,999,410 Minnesota 1,311,699,821 Soybeans 1,195,820,674 North Dakota 1,103,169,995 Cotton 973,838,633 Kansas 953,428,300 Grain Sorghum 362,107,099 Illinois 634,366,513 Pasture, Rangeland & Forage 176,958,463 Nebraska 534,323,938 Sunflowers 128,328,516 Wisconsin 440,009,820 Rice 119,794,341 Missouri 427,686,415 Canola 116,430,468 South Dakota 402,907,116 Flue-Cured Tobacco 78,715,010 Total of Above 9,342,609,096 Total of Above 11,124,571,846 Share of U.S. 79% Share of U.S. 94% 1Data as of 4/21/2014 Source: RMA Summary of Business

Table 6. Top 10 Indemnities by State and Crop1

Figure 15. State Loss Ratios for 2013

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

Loss Ratio

Revenue Plans (RP, RPHPE)

Yield Plan (YP)

AL

AK

AZ

AR

CA

CO CT

DE FL GA ID IL IN IA KS

KY

LA ME

MD

MA MI

MN

MS

MO

MT

NE

NV

NH

NJ

NM NY

NC

ND

OH

OK

OR

PA RI

SC

SD

TN TX

UT

VT

VA

WA

WV WI

WY

US

Data as of 4/21/2014

CROPINSURANCE TODAY® 13

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U.S. Crop-Hail ExperienceFor the United States, crop-hail insurance

generally refers to policies in which direct damage from hail is the primary cause of loss. In addition to hail damage, many policy forms carry endorsements for additional perils. For the most part, the added perils include wind and fire, although there are exceptions. For the purpose of this article, results will be re-ported for all losses on hail policies, including the experience of NCIS non-member compa-nies not included in NCIS’ Annual Statistical Summary reports.

Premium for 2013 as currently reported to NCIS was $959.9 million, up from $956.7 million in 2012, the largest in the history of the program. The premium amount in crop-hail has been steadily increasing since 2009. Crop hail provided $39.9 billion in privately insured crop-hail insurance protection to U.S. farmers in 2013. This coverage proved valu-able in 2013 as it paid out $650.6 million in losses, the third highest amount in the last de-cade (Table 7), after 2011 and 2012.

The program had the largest hail losses in its history in 2011 (influenced by extensive hail as well as losses in production plans), and 2011 became only the second year since 1948 in which the countrywide loss ratio, defined as paid losses divided by premium written, exceeded 1.00. In 2012 and 2013, the program loss ratio reverted back to below 1.00 and is estimated at 0.73 and 0.68, respectively. The loss ratio for production plans was 0.88 in 2012 and 0.84 in 2013, with both levels ex-ceeding each year’s overall loss ratio.

Large storms contributed importantly to losses for the year. In terms of statewide losses from storms on a particular day (for hail and wind perils), Nebraska took the top spot with

$34 million on August 1. That was followed by Minnesota with $24.8 million on August 6 and South Dakota with $19.5 million losses on June 21. The losses from the top ten storm days at a state level amounted to $156.7 mil-lion, which remained less than those in 2011 and 2009 ($259.9 million and $176.5 million, respectively) but was much more severe than those in 2012, 2010 and 2008 ($120.2 million, $78.2 million and $89.2 million, respectively). Regarding county level losses in 2013 from major storm events on a particular day (also for hail and wind perils), Clay County in Nebraska took the top spot, which occurred on August 1, resulting in $12.5 million paid out to farmers. The second highest one-day storm in 2013 occurred in Chouteau County, Montana, resulting in $7.4 million paid out to farmers. The third highest one-day storm in 2013 occurred in Spink County in South Dakota, resulting in $7.3 million paid out to farmers. The next two largest county losses occurred in North and South Dakota. The total of the top five county losses amounted to $38.6 million, which was above those in 2012 and 2010 by 57 percent and 92 percent, respectively but was less than those in 2011 and 2009 (the latter were above $50 million each). The next five largest county losses oc-curred in Washington, Minnesota, Montana, Minnesota and Nebraska (in descending or-der). Of the top 50 most damaging storms at the county level, 20 occurred in the month of August, 17 in June, 10 in July, two in May and one in September.

Crop-hail loss ratios by state are shown in Figure 16. Colors identify states with similar loss ratios, and shading is used to identify states with similar premium volume. Crop-hail insurance was written in 43 states in 2013.

Of these states, 10 had a loss ratio in excess of 1.00; they are shown in dark blue, light purple and red in the map. Particularly, New Jersey had the highest loss ratio of 3.65, albeit with a small premium of under $50,000. Georgia, with premium of $2.39 million, had the sec-ond highest loss ratio of 2.74. Montana, with $35.24 million in premium, had a loss ratio of 2.08, while Kentucky, with $5.82 million in premium, had a loss ratio of 1.91. Of the 43 states, 20 had loss ratios of 0.50 or less, shown in yellow and light green on the map, includ-ing Iowa with $118.9 million in premium, Illi-nois with $83.93 million in premium, Kansas with $59.31 million in premium and Indiana with over $25 million in premium.

[Information sources for this section include: NCIS’ Insured Crop Summary and claim files.]

Canadian Crop-Hail Experience

Crop-hail business in Canada is primari-ly written in the prairie provinces of Alberta, Manitoba and Saskatchewan. Denoting Ca-nadian dollars with C$, Table 8 presents the grand totals. Overall, 2013 was a good year for crop-hail business, with the loss ratio of 0.5, the second lowest since 2008, paying out C$172 million to farmers, while protecting nearly C$6 billion worth of liability. Crop hail premiums, increasing since 2009, were C$343 million in 2013, up slightly from 2012 and 19 percent above 2008. Crop-hail loss payouts and the number of claims in 2013 were both down from 2012, and were much smaller than record values set in 2008. Compared with 2012, the adjusters faced much better condi-tions in 2013, especially later in the season. Increasing size of farms over time has con-tributed to higher payouts per loss.

Saskatchewan had C$209 million in pre-mium 2013, 61 percent of the total; Alberta had C$85 million, 25 percent; and Manitoba had C$49 million, 14 percent. Compared with premiums in 2012, Alberta and Saskatche-wan saw increases of seven and 1.4 percent, respectively; while Manitoba premium re-mained the same. Manitoba and Alberta experiences indicated average performance, while Saskatchewan saw a lower than the av-erage loss ratio in 2013.

For Manitoba, an August 31 storm caused the highest number of claims, while a July 13 storm was the costliest, albeit with a lower number of claims. The latter storm also af-

CROP YEAR LIABILITY PREMIUM LOSSES LOSS RATIO

Mil. $ Mil. $ Mil. $

2004 15,186 427.5 245.9 0.58 2005 15,017 424.8 186.8 0.44 2006 15,545 405.2 203.2 0.50 2007 19,392 489.6 235.2 0.48 2008 27,540 669.4 555.1 0.83 2009 25,493 621.3 656.9 0.91 2010 27,170 682.2 460.4 0.67 2011 36,691 843.2 974.5 1.16 2012 39,320 956.7 701.4 0.73 2013 39,891 959.9 650.6 0.68 Data for 2013 are as of April 2, 2014 Source: Adjusted Verified Totals for NCIS member companies combined with the data from non-members.

Table 7. U.S. Crop-Hail Results, All Perils

14 MAY2014

Page 17: Crop Insurance TODAY - May 2014

fected Saskatchewan (discussed below). In 2013, C$30 million was paid out and the loss ratio was 0.61. In 2012, payouts edged up to C$31 million, and given that the premium re-mained the same as the year earlier, the loss ratio turned out a bit higher at 0.65.

In Alberta, C$61 million was paid out and the loss ratio was 0.72 in 2013, about the aver-age performance. In contrast, Alberta was hit hard in 2012, with C$90 million paid out and the loss ratio reached 1.13. In 2013, crop-hail companies saw harsh and costly storms in ear-ly July yet the conditions improved later in the season. Meanwhile, insurers in other lines in Alberta paid nearly $2 billion in indemnities triggered by rain-induced floods in June, and that was globally insurers third biggest loss in 2013 (The Economist; March 29, 2014).

Saskatchewan, the largest province for hail business, saw a 0.39 loss ratio in 2013, which was a break from rather high loss ratios three years in a row. In 2012, the loss ratio was 0.75 and crop hail companies paid C$159 million. In 2013, payouts were C$81 million, which accounted for major storm events on July 13th and July 19th. The July 13th storm made a marked difference in determining total loss-es for the year. The later months were quieter, generating a smaller volume of claims.

Overall, the Canadian crop-hail indus-try remained healthy and confident in its capacity to meet Prairie farmers’ risk man-agement needs.

[The information source for this section was The Hail Report, a publication sponsored by the Canadian Crop Hail Association. The Hail Report is produced every two weeks during the hail season.]

Program and Policy Developments

The crop insurance industry faced notable issues in the policy arena during 2013. The dominant development was the effort to en-act the 2014 Farm Bill. This section provides a brief recap of the Farm Bill activities and sev-eral other policy and program changes.

2014 Farm Bill. As 2012 ended, Congress had not passed the Fiscal Year 2013 appropri-ations bill, had not agreed on how to deal with the pending sequester required by the Budget Control Act of 2011 and had not reached an agreement on longer term deficit reduction. The full Senate and the House Agriculture Committee had each passed versions of a

2013 Farm Bill, but the House leadership de-cided not to bring their bill to the floor for a vote during the fall of 2012, concerned about the prospect of passing a large spending bill in the highly charged budget environment. With a new Congress and new agriculture commit-tee composition in 2013, the farm bill process had to start anew.

The Senate Committee on Agriculture, Nutrition and Forestry acted first, reporting out a Farm Bill on May 14, 2013, which re-duced projected spending by $24 billion over 10 years. Nutrition programs accounted for most projected spending, but crop insurance was second. The full Senate passed the bill on June 10. The House Agriculture Committee passed its version of the Farm Bill on May 15, however, dairy, nutrition and overall spend-ing were key issues that led to significant de-bate and delay in getting to full House approv-

al. Republicans pursued cuts to the nutrition programs while Democrats countered with proposed cuts to crop insurance. To resolve the impasse, the House split nutrition pro-grams from their bill and created two separate bills. The pared down version without nutri-tion passed the House in September 2013 but did not advance in the Senate without a nutri-tion title. In late September, the House passed a separate nutrition bill and then rejoined that with the rest of the bill to create a complete Farm Bill. Thus by late September, the Senate and House bills were ready to be reconciled.

In October 2013, the Congressional Re-search Service reported updated cost esti-mates after accounting for some $6 billion in 10 year savings from sequestration, noting that the Senate bill would reduce spending by $18 billion over 10 years, while the combined House bill would reduce projected spend-

Figure 16. 2013 Crop Hail Premium and Loss Ratios All Crops, Perls, Plans Combined, as of April 2, 2014

Total Loss Ratio

(0-0.25) (0.25-0.5) (0.5-0.75) (0.75-1)

(1-1.25) (1.25-3) (3-4)

PREM

(0-1,000,000)

(1,000,000-10,000,000) (10,000,000-50,000,000) (50,000,000-100,000,000) (100,000,000-200,000,000)

CROP YEAR PREMIUM LOSSES NUMBER OF CLAIMS LOSS RATIO1

Mil. C$ Mil. C$

2008 289 341 29,000 1.18 2009 262 76 4,075 0.29 20102 263 155 16,000 0.59 20112 269 164 15,000 0.61 2012 341 280 21,600 0.82 2013 343 172 13,320 0.50 1Loss ratios do not reflect loss adjustment costs. 2Number of claims exceeded value indicated. Source: The Hail Report, a publication sponsored by The Canadian Hail Association, which represents companies that sell crop-hail insurance in Western Canada.

Table 8. Canadian Crop-Hail Results, All Perils

CROPINSURANCE TODAY® 15

Page 18: Crop Insurance TODAY - May 2014

16 AUGUST2013

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Page 19: Crop Insurance TODAY - May 2014

ing by $52 billion, with nutrition accounting for most of the discrepancy. The Conference Committee reconciled the bills and the Ag-ricultural Act of 2014 was signed into law by the President on February 7, 2014. The Act was estimated to reduce projected spending by $16.6 billion over 10 years after accounting for sequestration. The new Act heralds a new era for crop insurance as the major compo-nent of the farm safety net. The Act increased public support for crop insurance, adding $5.7 billion to projected spending over the next decade, mainly through two new supple-mental revenue crop insurance programs.

The first major new supplemental program is the Stacked Income Protection Plan, or STAX, for upland cotton acreage only. STAX is an additional area revenue plan that may be used alone or in combination with a compan-ion policy and is to be made available for sale no later than the 2015 crop year. STAX is to be available in all counties with cotton pro-duction or in a larger geographical area where counties lack sufficient data. STAX covers rev-enue losses of not less than 10 percent and not more than 30 percent of expected county rev-enue, and coverage may be purchased in five percentage point increments. An indemnity is paid when actual county revenue falls short of expected county revenue less a deductible. Producers receive a premium discount equal to 80 percent of the STAX premium, and on behalf of the producer, an administrative and operating expense payment is paid to the crop insurance companies to compensate for a portion of delivery expenses. Because STAX replaces major farm programs for upland cot-ton producers but will not be in place for the 2014 crop year, cotton producers will receive a transition payment for 2014. A smaller tran-sition payment will be made for 2015 for areas where STAX is not available.

The second program is the Supplemental Coverage Option, or SCO, which provides all crop producers with the option to purchase area coverage in combination with an un-derlying individual policy that would allow indemnities to be equal to a part of the de-ductible on the underlying the policy or plan of insurance. SCO is to be made available for sale beginning with  the 2015 crop year on a county-wide level or on the basis of a larger area in counties that lack sufficient data. SCO indemnities are triggered if losses in the area exceed 14 percent of expected levels, with

SCO coverage not to exceed the difference between 86 percent and the coverage level selected by the producer for the underlying policy. SCO coverage is not available for crops enrolled in the Agriculture Risk Coverage program, a new supplemental revenue farm program also created by the farm bill. SCO is also not available for acreage covered by STAX. Producers receive a premium discount equal to 65 percent of the SCO premium, and on behalf of the producer, an administrative and an operating expense payment is made to the crop insurance companies to compensate for a portion of delivery expenses.

The 2014 Farm Bill may result in a number of other new crop insurance products coming to market. Margin protection is authorized and development of rice and catfish margin products is required. New product priorities are placed on policies for underserved com-modities, including sweet sorghum, biomass sorghum, rice, peanuts, sugarcane, alfalfa, pennycress, dedicated energy crops, and spe-cialty crops. Research and development of new products is required for peanut revenue, alfalfa, whole farm risk management, and bio-mass sorghum and sweet sorghum for use in renewable energy and bioproducts. The Farm Bill also requires several studies of the feasi-bility of insuring selected risks.

The Agricultural Act of 2014 will result in many new features for crop insurance. The enterprise unit discount is made permanent. Separate enterprise units will become avail-able for irrigated and non-irrigated acres. Producers will also be able to have separate coverage levels for irrigated and non-irrigated acres. A continuing issue has been the loss of insurable coverage a producer suffers as the result of low yields resulting from disaster. The new Act allows producers to exclude any year from their insurable production (APH) if the county’s yield per planted acre for the crop in that year is at least 50 percent below the previous 10 year average of the yield per planted acre for the crop in the county. This provision also applies to contiguous counties and allows for the separation of irrigated and non-irrigated acres. Another provision en-ables price elections for all organic crops pro-duced in compliance with USDA standards to reflect the actual retail or wholesale prices re-ceived by producers for their crops. Together, these and other changes in the Farm Bill will increase a producer’s ability to custom tailor

their crop insurance risk management solu-tions to more precisely fit the needs of their operation.

Other key changes include restrictions on future Standard Reinsurance Agreement (SRA) negotiations. To ensure crop insur-ance’s long-term workability and to protect the risk sharing arrangement now underpin-ning the crop insurance system, the Farm Bill also directs that terms of the next business contract between the insurers and the gov-ernment be budget neutral. In addition, the conservation title of the new Act requires that in order to be eligible for a premium discount, producers must adhere to conservation com-pliance requirements, intended to conserve highly erodible land and wetlands. Another provision in the crop insurance title is an ef-fort to protect native sod. If a producer breaks native sod and purchases crop insurance on that land, the yields used to calculate the in-surance guarantee will be 65 percent of the county average yield, and the premium dis-count will be reduced by 50 percentage points. This provision only applies to native sod in the states of Minnesota, Iowa, North Dakota, South Dakota, Montana and Nebraska.

Product Developments. Several insur-ance products were revised and others newly approved for sale during 2013. One example is release of the Area Risk Protection Insur-ance Plan (ARPI). The existing area-based insurance plans GRP, GRIP and GRIPHPO were combined into one policy offering both yield and revenue coverage on an area basis. The new policy is in place for the 2014 crop year. Other examples include the Downed Rice Endorsement which was approved for sale in 2012 for the 2013 crop year. The Actu-al Revenue History (ARH) Tart Cherry Pro-gram was made available for the 2014 crop year in select counties in New York, Wiscon-sin, Michigan, Utah, and Washington. Also, the Trend-Adjusted Actual Production Histo-ry yield adjustment was expanded for 2013 to wheat, canola, cotton, grain sorghum and rice in certain areas.

Program Developments. Several signifi-cant changes were made in programs during 2013. Interest has increased in recent years over the use of cover crops to improve soil quality, produce nitrogen, control weeds and erosion and retain soil moisture. However, this use has raised concerns over the effect of cover crops on yields of insured crops. USDA

CROPINSURANCE TODAY® 17

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worked with the crop insurance industry and other stakeholder groups to address the issue of cover crop practices and developed guide-lines for crop insurance policies that reference the USDA’s Natural Resources Conservation Service (NRCS) guidelines for cover crop practices. These guidelines will form what are considered “good farming practices” for a giv-en crop production area and provide manage-ment practices and termination dates for each crop production area. The guidelines were re-leased in June 2013 for non-irrigated crops for the 2014 crop year.

Prevented planting procedures continued to be refined during 2013. New special pro-visions were added to clarify acreage that is physically available for planting in regions of Iowa, Minnesota, Montana, North Dakota and South Dakota (Prairie Pothole National Priority Area) for the 2014 crop and succeed-ing crop years. One requirement is that acre-age must have been planted and harvested (or have incurred an insurable loss other than for excess moisture) in at least one out of the last four years, regardless of whether any of those years was abnormally dry, in order to be el-igible for a prevented planting payment. If a producer has been unable to plant and harvest a crop in at least one of the four most recent crop years, the producer must demonstrate that the land is farmable before the land will be eligible for prevented planting coverage. This will require planting and harvesting a crop for two consecutive crop years.

In a related activity, RMA awarded a re-search contract to determine if prevented planting payments are appropriate but not so excessive that producers benefit by not plant-

ing, as claimed by a report issued by USDA’s Office of the Inspector General (OIG). The prevented planting guarantee for most crops is 60 percent of the production guarantee for acreage that is planted at the normal time. The research will evaluate existing policy provisions by crop and region to determine whether the payments provided are adequate or excessive. If payments are found to be inadequate or excessive, alternatives will be provided for consideration.

Research. Many new research contracts were awarded by RMA covering new and existing products and rating issues in 2013. One example is irrigation. Irrigation issues have risen in prominence given continuing drought in the West and the pressure on ir-rigation water availability. In 2013, California experienced the driest January-June period in 90 years, resulting in sharp water supply re-ductions. This research is designed to address crop insurance irrigation policies in the face of reduced water supplies. The project is to as-sess whether current policies and procedures are appropriate for handling reduced irriga-tion practices and the feasibility of insuring limited irrigation using alternative models or approaches is being examined.

With the increased expected use of area plans as a result of the 2014 Farm Bill and the revisions to ARPI, another research effort initiated in 2013 is to focus on data reported to RMA under the crop insurance program. The analysis will include a review of existing data standards for area-based programs and the effects of alternative standards on the abil-ity to have actuarially sound expected yields and premium rates. Premium rates will also be examined.

The Acreage and Crop Reporting Stream-lining Initiative (ACRSI) started a pilot acre-age reporting web application for 2013 spring crops. The application was made available in four central Kansas counties to provide a con-trolled test and evaluation of the application and underlying systems that share data across multiple USDA agencies.

New AIPs. For the 2014 reinsurance year, starting July 1, 2013, RMA approved 19 insur-ance providers (AIP), one which sells livestock products only. A new AIP for 2014 is Atlantic Specialty Insurance Company, and its manag-ing general agency Climate Crop Insurance Agency (CCIA). The Climate Corporation

has marketed insurance products outside the Federal program for several years. They decid-ed to enter the multiple peril crop insurance marketplace and CCIA will administer their multiple peril crop insurance business.

ConclusionAgain in 2013, crop insurance helped

farmers deal with the year’s weather and mar-ket risks. Crop insurance was singled out by legislators during the development of the new Farm Bill as the primary program supporting production agriculture and was heralded as indispensable for successful farming today. The public-private partnership worked as en-visioned in 2013. Famers shared in the cost of the program by paying premiums of $4.5 bil-lion and incurring losses through deductibles before any claims were paid. Insurance com-panies effectively sold and serviced over 1.2 million policies, accurately determined losses and paid claims on over 475,000 policies, al-though experiencing a second successive low return year. The Federal government provid-ed premium support to ensure widespread coverage sufficient to avoid Congress needing to enact ad hoc disaster assistance.

Looking to the future, the American public is assured that crop insurance will be in place to provide financial stability for the many small, family farms that comprise the core of U.S. production agriculture. Crop in-surance will ensure that when the repeated disasters of recent years strike again, as they most assuredly will, U.S. farmers will be able to bounce back to produce again at high lev-els the food, feed, fiber and energy crops on which the U.S. and world population have come to expect and depend.

[Information sources used for this section in-clude: the Agricultural Act of 2014, Public Law 113-79; Congressional Budget Office, Estimate of the Effects on Direct Spending and Revenues of the Con-ference Agreement on H.R. 2642, Letter to Chair-man Lucas dated January 28, 2014; Congressional Research Service, The 2013 Farm Bill: A Compari-son of the Senate-Passed (S. 954) and House-Passed (H.R. 2642, H.R. 3102) Bills with Current Law, Ralph M. Chite, Coordinator, October 18, 2013; and various RMA Managers Bulletins and Informational Memorandums]

Crop insurance was singled

out by legislators during the

development of the new Farm

Bill as the primary program

supporting production agri-

culture and was heralded as

indispensable for successful

farming today.

18 MAY2014

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CropInsurance TODAY

Twenty-five years ago, in Feb-ruary 1989, crop insurance his-tory was made as the Crop Hail Insurance Actuarial Association (CHIAA) and the National Crop Insurance Association (NCIA) united to form what we know today as National Crop Insurance Services (NCIS).

The BeginningCHIAA and NCIA had

been serving the crop insur-ance industry under other named associations since the early 1900s. CHIAA’s focus was providing Crop-Hail premium rates and forms for the Crop-Hail indus-try while NCIA provided Crop-Hail loss adjustment procedures, conducted in-dustry training and maintained the Crop-Hail industry’s agronomic research program that has been in place since the early 1900s. Leaders of both associations were instrumen-

NCIS’ first staff officers in 1989. Paul Horel, Gary Schmidt, Lloyd Lindstrom, Harry Souza, Al Walter and George Bender

NCIS CelebratesSilver Anniversary

By Laurie Langstraat and Tom Zacharias, NCIS

20 MAY2014

Page 23: Crop Insurance TODAY - May 2014

tal in the passage of the Federal Crop Insur-ance Act of 1980, which brought the private industry into the sale and servicing of Federal crop insurance policies.

“The two Associations had a good working relationship with FCIC, and crop insurance was growing” said Rick Gibson, NAU Coun-try Insurance and 1st Vice Chairman of NCIS at the time of the merger. “It became apparent that to achieve the goals of the industry we would need to combine the two associations to simplify and better coordinate the policy and actuarial functions of both Crop-Hail and MPCI, as well as providing forms and adjust-ing procedures for member companies.”

“Although rather slow to progress, the advent of the multiple peril crop insurance (MPCI) policy in 1981 changed private crop insurance dramatically,” said George Bender, who worked for NCIA prior to the merger and remained with NCIS until 1992. “With the establishment of ‘CHIAA West’ in Over-land Park, Kan., in 1984 and NCIA’s move to Overland Park in 1986, I suspect the hand-writing [for a union] may have been on the wall,” said Bender.

“A great deal of credit [for combining the organizations] goes to Lloyd Lindstrom and George Bender for their support and efforts to better serve their members,” said Gibson. “The Boards of both associations worked very hard to accommodate the changes and to es-tablish NCIS as we know it today.”

In its 25 years, NCIS has provided lead-ership as the industry has navigated through five Farm Bills, the Federal Crop Insurance Reform Act of 1994, the Agricultural Re-search, Extension and Education Reform Act of 1998, the Agriculture Risk Protection Act of 2000 and numerous weather and disaster events including historic floods, droughts, hurricanes, and hailstorms. There have been eight different secretaries of agriculture and seven FCIC managers/RMA administrators since NCIS was formed in 1989.

The Early YearsIn 1989, only 102 million acres were pro-

tected by crop insurance in the United States. Private crop insurance companies and their counterparts with FCIC, the “master market-ers,” wrote $814 million in premium protecting $13.5 billion in liability. But the business was growing and NCIS was adjusting to the new

Gordon Smith, Troy Brady and Tom Zacharias

NCIS’ first office, 7601 College Boulevard,

Suite 100, Overland Park, Kansas.

Some of the NCIS staff on Halloween 2008.

CROPINSURANCE TODAY® 21

Page 24: Crop Insurance TODAY - May 2014

needs of its members. At the time, Crop-Hail premium was approximately $276 million.

In the early 90s, NCIS’ functions fo-cused primarily around processing MPCI data for its member companies, filing Crop-Hail forms and Crop-Hail premium rates with state insurance departments, utilizing the Regional/State Committee and Stand-ing Committee structure to make improve-ments to the Crop-Hail and MPCI program and training companies on changes to the programs through conferences and educa-tional seminars.

At the time, NCIS relied on mainframe computers, housed in a large, climate-con-trolled room, to process the MPCI data. Large copy machines produced millions of impres-sions as actuarial documents, bulletins, pol-icies and forms were distributed to agents and companies. NCIS also began providing hard-copy training units and videos for mem-bers on various MPCI and Crop-Hail topics. Throughout the early 1990s, NCIS began making the change from filing expense-load-ed Crop-Hail premium rates with state insur-ance departments to filing loss cost statistics.

As the industry became more of a partner with the Federal government in selling and servicing crop insurance policies, greater scru-tiny was placed on the private sector compa-nies as the industry became greater stewards of taxpayer dollars. Because of that, NCIS led an effort to identify and promote a Standards of Professional Conduct that all who worked in the crop insurance industry agreed to follow. This set of ethics is still in place today as part of all NCIS training materials.

In 1993, the Midwest was hit by devas-tating floods, followed by excessive rain-fall throughout the growing season. Eight months of heavy snow and hard rains re-

NCIS staff circa 2007. (Back row) Robin Williams, Derek Bruggeman, Linda Kovelan,

Therese Stom, Dana Ford, Bryan Baggett, Janet Straley, Mark Zarnstorff, Jon

Chowning, Shawn Hou, Jim Phillips, Shane Weaver and Dave Hall. (Front row): Don

Hutsell, Jim Crist, Laurence Crane, Troy Brady, Dean Strasser,

Mike Sieben and Dave Snider

So much has changed in the

crop insurance industry over

the last 25 years. The number

of insured acres, liability and

premium have grown signifi-

cantly since the late 1980s.

Loss Adjustment and Insurance Products Division 1994. (Back row): Laurie

(Thares) Langstraat, Dick Schwartzbeck, Chris Lindsay, Trevor Votruba,

Debbie Larberg and Jerry Puppe. (Front row): Steve Monson, Loretta

Sobba, Theresa Rainey and Steve Williams

Administrative Services Department early 1990s. June Cohen, Sherri Scharff, Donna Bryan, Jackie Anderson, Lyle Oeltjen, Jim Crist, Richard Whitmore and Howard Higgins

22 MAY2014

Page 25: Crop Insurance TODAY - May 2014

sulted in 21.6 million acres of farmland flooded causing more than $4 billion in damages. The Midwest flood, and subse-quent flooding in the Southeast in early 1994, led Congress to pass the Federal Crop Insurance Reform Act. This Act combined the crop insurance program and the vari-ous ad hoc disaster relief bills into a single unified program. Catastrophic coverage was introduced, as well as prevented planting and a greater reliance on individual farmer yields for determining coverage.

In 1994, NCIS introduced its first issue of the quarterly Crop Insurance TODAY® publi-cation and formed a new standing committee to provide direction on industry public rela-tions activities. Technology was also chang-ing and NCIS began providing members with electronic versions of the “760 Manual” (now the Crop Insurance Handbook) and the Loss Adjustment Manual. The Internet was just becoming popular and NCIS was continually search for avenues to apply new technology to improve service to its members. NCIS made the transition from mainframe com-puters to client-server PC-based computing in 1995 when it moved to new office space. The NCIS client-server transition was one of the first in the Kansas City area, particularly for a smaller company.

The mid-90s brought the 1995 Farm Bill and the introduction of revenue products to the portfolio of risk management tools avail-able to farmers. This successful line of products

Visitor from Japan and NCIS staff Phil Gose, Tom Zacharias, Dan Shelden and Frank Schnapp.

NCIS staff Rich Byrne,

Lisa Laberge, Dick

Schwartzbeck and

Mark Bean.

NCIS Board, Program Development Committee and members of the NCIS staff circa. 2009. (Back row): Bob Haney, Michael Smith, Mike Sieben, Greg Burger, Dave Hall, Ben Latham, Laurence Crane, Frank Schnapp, Tim Weber, Gene Grimsley, Ted Etheredge, Rod Clark, Jim Crist, Dallas Smith, John Owen, Ron Brichler and Greg Meek (Front row): Tom Zacharias, Steve Rutledge, Randy Tronnes, Bob Parkerson, Steve Harms, Jim Aldeman, Keith Collins and Troy Brady

NCIS led an effort to identify

and promote a Standards of

Professional Conduct that all

who worked in the crop insur-

ance industry agreed to fol-

low.” And you can continue it

with the last sentence if there

is room...”This set of ethics is

still in place today as part of

all NCIS training materials.

CROPINSURANCE TODAY® 23

Page 26: Crop Insurance TODAY - May 2014

is today the most popular type of crop insur-ance coverage. The Federal Crop Insurance Corporation also discontinued selling policies to farmers and crop insurance delivery was transferred solely to the private-sector compa-nies. The transition to exclusive private-sector sales and delivery has been a major milestone in the evolution of crop insurance.

It is probably safe to say that the advent of revenue products and the total transition to private-sector delivery marked the true begin-ning of the public-private partnership that is today the hallmark of the Federal crop insur-ance program. This partnership has combined the financial resources and backing of the fed-eral government with the sales, service and delivery of the private sector—featuring some 20,000 participating company employees, agents and adjusters—to bring about an array of risk management tools that today protects more than 90 percent of planted cropland.

During this same time frame, NCIS began an emphasis of working with limited-resource and socially disadvantaged farmers and this effort continues today. Under the leadership of Laurence Crane, Vice President, Program Outreach and Risk Management Education, NCIS has sought to provide these farmers, and the organizations that represent them, with information, not only about crop insur-ance products, but risk management tools in general. NCIS also began its sponsorship of the National FFA Organization and the Agri-culture Future of America (AFA). These two student organizations are committed to edu-cating and providing leadership skills to the brightest and best agricultural students.

In the late 1990s, the Board of Directors, under the leadership of John Joyce, Rain and Hail Insurance Services, introduced a new “layer” in the NCIS standing commit-tee process with the addition of the Program Development Committee (PDC). The PDC was established to review the recommenda-tions from each NCIS standing committee before going on to the Board of Directors for final action. The PDC also serves as a “training ground” for future Board mem-bers and is comprised of the chair of each standing committee. This approach helps provide the PDC members with first-hand insight into discussions that occurred at the standing committee level with regards to each proposed recommendation and helped

Some of the NCIS staff celebrating the birth of a co-worker’s baby. Donna

Bryan, Janet Straley, Linda Kovelan, Therese Stom, Dana Ford, Robin Williams, Lynnette Dillon, Adenir Belshe, Ida Barnes, Jo Anne Baker, Anna Williams and Roxanne Wise

Susan Penix and

Lisa (Pulst) Cain

Ron Miiller (center) at the 1992 NCIS National Claims Managers Conference.

John Owen

24 MAY2014

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Page 28: Crop Insurance TODAY - May 2014

serve as another “set of eyes” before final Board approval.

The New MilleniumWith the start of the new year in 2000, so

too began the expansion of crop insurance, providing more products and more crops insured. New pilot programs including Ad-justed Gross Revenue (AGR), Group Risk Income Protection (GRIP), cherry, blueberry, cabbage, cultivated clams and several others, were introduced or expanded to include more states and counties. NCIS and its members were very actively learning these new prod-ucts and training agents how to sell them and adjusters how to adjust the claims. Education and training was becoming a more important component of the services NCIS provides to its members. Additional training units were developed, update conferences became criti-cal to disseminate changes and introduce new products to companies and their employees, and professional development for company trainers became a reoccurring theme in ar-ticles published in the TODAY® magazine. Today NCIS conducts three major training conferences, two train-the-trainer and one national claims managers, training more than 700 company claims supervisors, underwrit-ers and training staff.

One of the most significant pieces of crop insurance legislation was signed into law by President Clinton on June 20, 2000. Among other things, the Agricultural Risk Protec-tion Act of 2000 (ARPA) provided increased premium subsidies for farmers, encouraging them to obtain higher and more meaningful levels of protection. An increased empha-sis on reducing program fraud, waste and abuse was also enacted under this legislation giving the FCIC, the Farm Service Agency (FSA) and private-sector companies addi-tional checks and balances as claims are re-viewed and indemnities paid. These entities, and NCIS, continue to work together today through Data Mining efforts, claims reviews, and presentations on program integrity at every industry loss adjuster school or confer-ence. The legislation also introduced the first national livestock program for swine.

In 2001, NCIS earned its status as a Fed-eral contractor and expert reviewer and throughout the years and has participated in more than a dozen Federal contracts or expert

George Tang and Dave Snider

Marlene Lamar

Kevin Wilson and

Imran Bhuiyan

Gail Florio and Bryan Baggett

26 MAY2014

Page 29: Crop Insurance TODAY - May 2014

reviews. This was significant because ARPA significantly changed the way that new crop insurance products or programs are devel-oped and approved by introducing the 508H submission process.

Another step in the professional devel-opment at NCIS was the establishment of the role of General Counsel for NCIS, which dates to February 2002 when P. John Owen assumed that role after a distinguished career in private practice. Over his 11 years with NCIS, John was instrumental in shepherding important industry legal issues and served a central role in SRA negotiations during his tenure. Including his time in private practice, John participated in the negotiation of every SRA from 1996 through and 2010.

John was succeeded as General Counsel by Chuck Lee who joined NCIS in 2012. As the position of General Counsel is presently structured and defined, Chuck is tasked in three broadly defined areas. First he serves as a resource and offers legal guidance in rela-tion to business and crop insurance issues for NCIS and its constituent members. Second, analysis and legal advice in relation to SRA interpretation and compliance and Farm Bill issues are fundamental responsibilities. Final-ly, and critically important, General Counsel at NCIS serves a vital role in developing an-titrust compliance policies and in presenting programs to industry participants that convey those policies and emphasize the importance of antitrust compliance.

In 2005, NCIS renewed its commitment to working with organizations selling crop insurance in the Canadian Prairie Provinces of Alberta, Manitoba and Saskatchewan, a relationship that ultimately dates back to the early 1900s. Representatives from the Cana-dian Crop-Hail Association and NCIS began working on needed revisions to a loss adjust-ment manual that is a requirement for licens-ing Canadian Crop-Hail loss adjusters, as well as the establishment of a loss adjustment committee and research program for the Ca-nadian Crop-Hail industry.

While NCIS transitioned from filing Crop-Hail premium rates to filing Final Aver-age Loss Costs (FALCs) throughout the ‘90s, it was not until 2006 when NCIS began tran-sitioning to filing all loss costs, policies and forms electronically through SERFF—System for Electronic Rate and Form Filing. SERFF

streamlined the filing process as it includes all of the current filing requirements by state, in-cluding copies of state required forms. SERFF was vastly more efficient than hard copy pa-per filing, convenient and allows for faster turnaround time for state approvals. The east of transition to the SERFF environment for NCIS and its members was in large part due to the efforts of Therese Stom, who currently serves as Vice President, Crop-Hail Actuarial and Statistics.

In late 2007, the NCIS Board of Directors approved the development of the Crop Ad-juster Proficiency Program (CAPP) to ensure that all loss adjusters of Federally insured crops have demonstrated an approved level of proficiency in adjusting claims. With CAPP, individual adjusters must first satisfy all com-pany level training required under the Stan-dard Reinsurance Agreement (SRA), then complete three required timed exams to ob-tain their CAPP certification, and lastly main-tain their CAPP accreditation by completing SRA continuing education requirements. To date, more than 5,000 adjusters have complet-ed these requirements and currently hold the CAPP certification. The CAPP program is a perfect illustration of the benefits of the pub-lic-private partnership. In the development of the CAPP program, NCIS worked with RMA and the National Association of Insurance Commissioners (NAIC) to bring together both state and Federal regulators to improve the integrity and delivery of the crop insur-ance program.

In 2008, with the 2007 Farm Bill still be-ing negotiated and extended by Congress, and proposed funding reductions to the crop insurance program becoming more and more likely, NCIS, under the direction of its Board of Directors, began a concentrated effort to improve the image of the industry by pro-viding accurate information about how crop insurance works, why it is important to pro-tecting American agriculture, and why the general public should care about agriculture and crop insurance. Critics had become more vocal and the news headlines were filled with misinformation and misrepresentation of the crop insurance program. NCIS created a brand, Crop Insurance Keeps America Grow-ing, and a website, www.CropInsuranceIn-America.org, to demonstrate how successful the public/private partnership is in providing

critical risk management tools for farmers and ranchers.

During 2009 and 2010, NCIS and its members were consumed with the renegoti-ation of the Standard Reinsurance Agreement (SRA). Throughout the renegotiation, NCIS held countless meetings and conference calls with its members and RMA. Integral to the process was the actuarial and financial analy-sis performed by Frank Schnapp, Senior Vice President, Actuarial Statistics and Informa-tion Services.

Admittedly, it was a difficult renegotia-tion. In the face of tremendous political head-winds, preceded by several years of favorable returns, the industry sustained significant re-ductions in funding and the basic economic structure of the SRA was permanently altered. However, with the signing of the 2011 SRA, NCIS and its members began efforts to meet the challenges of the upcoming Farm Bill.

NCIS TodayAs we began 2010, RMA introduced the

COMBO Policy, effective for the 2011 crop year. The COMBO policy combined the Ac-tual Production History (APH), Crop Rev-enue Coverage (CRC), Revenue Assurance (RA), Income Protection (IP) and Indexed Income Protection (IIP) policies into a sin-gle policy, simplifying the policy for farmers while maintaining the most popular features of each. NCIS organized a thorough training conference for approximately 300 individuals who needed to know how the COMBO pol-icy would work and how it affected farmers. When the attendees left this session, they took with them the valuable training materials they would need to successfully train agents who would soon be meeting with farmers to secure their insurance coverage for fall planted crops.

Throughout the extreme weather events of 2011 and 2012, Congress began debating what

Although the scope of NCIS

activities has expanded greatly

over the past 25 years, it is

still the case that NCIS con-

tinues to focus on the funda-

mentals of the business.

CROPINSURANCE TODAY® 27

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should have been the 2012 Farm Bill, and that ultimately became law in early 2014. During this period, NCIS recognized the need to re-spond to critics of crop insurance and better inform the public. NCIS stepped up its public relations efforts and in the process promoted Laurie Langstraat to Vice President of Public Relations. During the drought of 2012 and the Farm Bill debates, NCIS provided weekly radio broadcasts and numerous media inter-views explaining the benefits of the crop in-surance program and the need for an effective farm safety net.

In 2011, NCIS’ commitment to continually improving communications with its members was strengthened when it promoted Sherri Scharff to Vice President of Member Services. With routine meetings and conference calls of the membership Sherri’s role has become essential to ensure that members are provided with the information and tools they need to be successful in the crop insurance industry. With the passage of the 2014 Farm Bill, NCIS’ role as the focal point for industry commu-nications has never been more important especially as crop insurance has become the primary safety net for U.S. agriculture.

Although the scope of NCIS activities has expanded greatly over the past 25 years, it is still the case that NCIS continues to focus on the fundamentals of the business. Under the direction of Dr. Mark Zarnstorff, Director of Agricultural Research and Technology, NCIS conducts a nationwide agronomic research program, including research in Canada. Re-sults from the research program then form the basis of the loss adjustment procedures used by the industry. To complement our Crop-Hail research, NCIS annually conducts approximately 15 Crop-Hail and MPCI loss adjuster schools for more than 1,000 adjust-ers. Leading these efforts is Mike Sieben, Se-nior Vice President of Loss Adjustment and Insurance Products, who started with NCIS in 2006 but has been in the crop insurance industry for more than 30 years. Much appre-ciation is given to Mike and his entire team.

NCIS StaffCelebrating our 25th anniversary would

be remiss without acknowledging our most valuable asset—our staff. Through the years, NCIS and the industry have been blessed with a wonderful, dedicated and talented staff who

Marx Mannberger

Marie Hummel

Mark Splettstaszer

Pat Gaul

Crist, Chief Financial Officer, said that the biggest change he has seen in his more than 32-year career with CHIAA and NCIS is the advancement in technology.

“In 1989, NCIS had a large, climate-con-trolled computer room,” Crist said. “We had mainframe computers, each the size of a large refrigerator. Today, you can hold the same computing power or more in your hand—or even put it in your pocket.”

Even though the crop insurance program has grown significantly over the last 25 years

have spent countless hours analyzing new policies, products, handbooks, legislative lan-guage, answering questions, and providing leadership and expertise to the industry.

There are several staff that began with CHIAA who are still here today, including Jim Crist, Richard Whitmore, Chris Lindsay, Loretta Sobba, Jon Chowning, Sherri Scharff, Therese Stom, Rich Byrne and Robin Hill. Jim

28 MAY2014

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and technology has helped increase the speed of delivery of the products and services of the industry, one thing has not changed

“The dedication of NCIS staff to provide our members with the best service possi-ble, and the effort of NCIS as a company to provide its employees with a pleasant work-ing environment and competitive salary and benefits hasn’t changed,” said Crist. “There’s a reason our tenure is higher than most compa-nies: NCIS is a great place to work!”

The key to NCIS’s success has always been attributable to the quality of its staff.

“We have always been able to support and maintain a highly talented and commit-ted staff here at NCIS,” said Tom Zacharias, President of NCIS. “We believe the blending of our analytical and subject matter expertise in agriculture and crop insurance has paid huge dividends to our members throughout the years.”

In addition to the staff at NCIS it is im-portant to recognize the contribution of Dr. Keith J. Collins. Under the leadership of then NCIS President, Bob Parkerson, Dr. Collins joined NCIS in 2008 as an industry consul-tant. During his time at NCIS, Dr. Collins has actively participated in Board of Directors meetings, industry conferences and served as the primary policy analyst for the crop insur-ance industry during the course of the 2014 Farm Bill debates. His role in the 2014 Farm Bill debate cannot be overstated.

In conjunction with Keith’s efforts, Dr. Harun Bulut, Senior Economist (Ph.D. Iowa

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Richard Whitmore providing beautiful entertainment at an NCIS holiday party.

Therese Stom, Rich Byrne and Frank Schnapp

State University), joined NCIS in 2009. The work of Drs. Collins and Bulut has been pub-lished in peer-reviewed professional journals and presented at meetings of the American Agricultural and Applied Economics Associ-ation. Drs. Collins and Bulut, along with Se-nior Actuary, Frank Schnapp, have published a variety of articles in TODAY® magazine ranging from the SRA to the popular “Year in Review” series.

The Next 25 YearsThe strength of NCIS is its membership

and committee structure. Membership in-volvement and engagement are fundamental to the organization. Currently, all 19 AIPs that hold an SRA are NCIS members. Recent-ly, under the direction of the NCIS Board of Directors, the Program Development Com-mittee (PDC) was expanded to include rep-resentatives from any AIP that has company employees serving on at least four of the NCIS standing committees. This change will serve to better enhance the communication among NCIS and its members and provide for better understanding of the issues facing the indus-try. The NCIS Board of Directors has also es-tablished the newly formed Underwriting and Operations Committee, which focuses on the changing operational and financial aspects of the program. This new committee also has representatives from all AIPs serving as com-mittee members. Again, the ability of the or-ganization to meet the demands of the future rests on the commitment of the membership.

Under the initial leadership of Lloyd Lind-strom, and through the tenure of Al Walter,

Bob Parkerson and now Tom Zacharias, the roles and responsibilities of NCIS have grown right along with the success of crop insur-ance. Member companies rely on NCIS for the analysis and critical thinking required to tackle the complex set of issues facing the industry. From industry training to our agro-nomic research program; from our economic and actuarial analysis to our committee struc-ture and information distribution services, NCIS and its members stand poised to meet the challenges of agricultural risk manage-ment in the future.

Don Fraley, who served as the first Chair-man of NCIS in 1989 said one can only imag-ine what the next 25 years will bring.

“With climate change there will be differ-ent crops in different geographic locations, not only in the United States but in other parts of the world, which will probably require NCIS involvement,” Fraley said. “Methods of raising crops will dramatically change and whatever the challenges may be, I know the NCIS staff will be ready.”

The resource and knowledge base at NCIS today is solely a function of the support and leadership of the NCIS members and its Board of Directors. The staff of NCIS would like to express its appreciation for the support of the membership these past 25 years and we look forward to the challenges and opportu-nities of the next 25 years.

CROPINSURANCE TODAY® 29

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CropInsurance TODAY

The 2014 Crop Insurance Industry Annual Convention, spon-sored by the American Association of Crop Insurers (AACI) and the National Crop Insurance Services (NCIS), was a huge success again this year. Record attendance of over 500 company represen-tatives, reinsurers and agents was only part of the reason. The edu-cational sessions were excellent and included well-known speakers including Orion Samuelson, Paul Begala and Tucker Carlson. The meeting also provided attendees an opportunity to meet with rein-surers and network with other crop insurance professionals.

Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) addressed the convention attendees and noted that crop insurance is now the centerpiece of U.S. farm policy.

“Today, crop insurance is the foundation of this Farm Bill and the farm safety net,” Stabenow said.

Stabenow noted that during the Farm Bill debate that farm-ers stressed their support for crop insurance and asked Congress to strengthen it.

“By making crop insurance more readily available, including to spe-cialty crop growers,” she said, “the policy’s coalition of support has been strengthened.”

Tim Weber, Chair-man of both AACI and NCIS, was the opening speaker at the convention Monday morning.

“There can be no question that when it comes to managing the risks posed by Mother Nature or volatile world markets, Federal crop in-surance has no equal,” he said, adding “this success was achieved all the while overall federal spending on farm programs has trended down.”

When speaking about the recent passage of the 2014 Farm Bill, Weber said, “…we applaud our congressional leaders for overwhelmingly passing a Farm Bill that strengthens, not weakens, our commitment to crop insurance. I truly believe that 10 years down the road, when we look back at the 2014 Farm Bill, it will be elevated to one of the major legislative initiatives that established landmark developments for crop insurance and pro-duction agriculture.”

Crop insurance companies and agents worked closely with Ducks Unlimited and other conservation groups during the Farm Bill debate

Crop insurance companies

and agents worked closely

with Ducks Unlimited and

other conservation groups

during the Farm Bill debate

to establish common-sense

conservation compliance

requirements for crop

insurance participation.

AACI and NCIS Chairman, Tim Weber, Great American Insurance Company

2014 Annual Convention

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Draws Record Numbers

30 MAY2014

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to establish common-sense conservation compliance requirements for crop insurance participation. Dan Wrinn, with Ducks Un-limited, addressed the convention saying, “…our coalition drew a lot of attention because people saw what the potential was. We put the coalition together but it doesn’t end here.”

Brandon Willis, Administrator for the USDA’s Risk Management Agency (RMA) told attendees that now that a Farm Bill was approved, RMA is focused on quickly im-plementing the new law and cooperation be-tween the agency and crop insurers would be essential.

“There is not an agency that I would rath-er implement a Farm Bill with than the team that we have at the Risk Management Agen-cy,” Willis said. “I have a high degree of con-fidence that the staff we have there will get this done right. Throughout the process we will work with our [private sector] partners, because I know you bring valuable experience and a perspective that we don’t have.”

Dan Wrinn, Ducks Unlimited

Farm Rescue Chosen as 2014 Charitable Organization

Each year during the Annual Convention, AACI and NCIS selects a charitable organization involved in agriculture to highlight and encourages attendees to support financially through donations made during the convention. This year’s charity was Farm Rescue.

Farm Rescue provides planting and harvesting assistance to farm families that have experienced a major injury, illness or natural disaster. Our mission is to help family farmers bridge crises so they have an opportunity to continue viable operations.

One of the biggest financial drains on a family is an unexpected medical injury or illness and, of course, a natural disaster. It is even more pronounced on a farm where a family’s livelihood depends on the ability to plant or harvest a crop.

Farm Rescue gives families a chance to continue their livelihood by providing the necessary equipment and manpower to plant or harvest their crop, free of charge.

Farm Rescue was founded by Bill Gross, a native North Dakotan and full-time pilot for UPS Airlines. Like so many farm boys before him, Bill’s heart never left his family’s farm and ranch at Cleveland, ND. And like so many other farm families, his parents encouraged him to leave that farm in pursuit of a better life.

But from a bird’s eye view, flying back and forth across our nation at 40,000 feet, Bill kept looking at the farms below. The changing demographics of rural America—fewer farms, less children per family, fewer neighbors—troubled him. And always in the back of his mind, he remembered his father’s concern about what would happen to their farm should anything debilitating happen.

So, on a long flight over the Pacific Ocean one day, when one of Bill’s co-pilots asked him what he was going to do when he retired, Bill didn’t hesitate: “I’m going to be this Good Samaritan that buys a tractor and goes around and helps farm families plant their crops.”

That generated some laughter until his coworker realized Bill was serious. “Well, why wait until you retire?” he challenged.

Bill Gross launched Farm Rescue in 2005 and provides assistance to farm families in North Dakota, South Dakota, western Minnesota and eastern Montana. Farm Rescue has assisted more than 155 farm families in crisis since 2006.

The industry raised $7500 for Farm Rescue during the convention. If you would like to make a donation, or learn what other ways you can help Farm Rescue, please visit their website at www.FarmRescue.org.

Constantly improving crop

insurance availability, pro-

gram integrity and commu-

nicating with farmers and

the general public should

be top goals of both the

industry and RMA moving

forward, Willis said.CROPINSURANCE TODAY® 31

Page 34: Crop Insurance TODAY - May 2014

Constantly improving crop insurance availability, program integrity and commu-nicating with farmers and the general public should be top goals of both the industry and RMA moving forward, he said.

“There is one simple reason why crop in-surance has lasted for over 75 years while oth-er programs have come and gone,” he stated. “It’s because it makes sense…for consumers, for taxpayers and for farmers.”

Respected agricultural economists also presented at the convention on a panel moderated by Sara Wyant with Agri-Pulse Communications. Dr. Keith Collins, NCIS, Dr. Joe Outlaw, Texas A&M University, and Dr. Mechel Paggi, California State Univer-sity-Fresno, discussed various topics related to the recently passed Farm Bill, world trade markets and changes to the crop insurance program with the introduction of STAX, SCO, PLC and ARC.

Convention attendees were entertained with an inspiring presentation by well-known farm broadcaster and the “Voice of Agricul-ture,” Orion Samuelson. Samuelson has been with WGN Radio in Chicago since 1960. Ori-on presents 18 agricultural reports daily on the station and is also heard daily on radio stations with his syndicated National Farm Report and syndicated Samuelson Sez commentary pro-grams. In addition, Orion and Max Armstrong host the one-hour Saturday Morning Show on WGN Radio and are seen weekly on RFD-TV as co-hosts of This Week in Agri-Business.

Later in the week, former co-hosts of CNN’s “Crossfire,” Paul Begala and Tucker Carlson provided a lively discussion on sev-eral political “hot topics.” In the last 50 years only four Democrats have been elected to the White House, and Paul Begala helped two of them —former President Clinton and Presi-dent Obama. Begala, who is now a commen-tator for CNN, joked that he is “a liberal who was raised in the very conservative town of

Senator Debbie Stabenow

Orion Samuelson, “National Farm Report,” WGN Radio-Chicago

Brandon Willis, Administrator, Risk Management Agency

Sugarland, Texas, and Tucker [Carlson] is a conservative who was raised in the very liber-al town of San Diego, California. This comes as a bit of a surprise to those who meet us for the first time!” Carlson is a political commen-tator for Fox News and serves as a co-host of “Fox and Friends Weekend.” You can see why their conversation and banter back and forth was so enjoyable for those who were listening.

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CropInsurance TODAY

Kent Petersen, Hudson Crop Insurance, Robert Parkerson, ProAg Insurance, Russell Slade, Diversified Crop Insurance Services, and Charles “Chuck” Lassey, retired, were presented with a Crop Insurance Industry Lifetime Achievement Award at the 2014 Crop Insurance Industry Annual Convention.  Tim Weber, Chairman of the National Crop Insurance Services (NCIS) Board of Direc-tors, and Tom Zacharias, President of NCIS, presented the awards.

Kent PetersenKent Petersen began his career in the crop

insurance industry almost 40 years ago. From 1973 to 1990, Kent worked for Crop Hail Management, starting as a crop insurance adjuster and working up through the ranks to become the chief operations officer. From 1990 to 1992, Kent assisted with the transition and in 1992 was named manager of under-writing and reinsurance for Rural Communi-ty Insurance Services. He served in that posi-tion until 1997.

After a brief retirement from the in-dustry, Kent returned to the industry as president of CropUSA in January of 2003.

In 2008, Hudson Insurance Company pur-chased the assets of CropUSA and the em-ployment contracts of many employees. Kent supported that transition and was named senior vice president of Hudson In-surance Company and President of Hudson

Crop. He remained in that position until his retirement in September 2013.

Kent was a member of many industry or-ganizations including serving on the NCIS Board of Directors from 1992-1997. He was also an active member of the Ameri-

Four Industry Stalwarts PresentedLifetime Achievement

Awards

Kent Petersen was unable to attend the convention so accepting the award on his behalf was Dan Gasser (center), Hudson Crop Insurance. Tim Weber (left), Chairman of the NCIS Board of Directors and Tom Zacharias (right), President, NCIS, presented the award.

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CROPINSURANCE TODAY® 33

Page 36: Crop Insurance TODAY - May 2014

can Association of Crop Insurers, serving as a strong advocate for the crop insurance industry.

Robert ParkersonRobert “Bob” Parkerson has been dedicat-

ed to the crop insurance industry for many years, and in a leadership position since the early 1990s.  Bob worked with Old Republic in the 1980s, at a time when they were the largest industry company in the MPCI pro-gram.  He became president of National Crop Insurance Services (NCIS) at a time when the industry was in need of a true leader, which Bob filled with class and dignity.

As president of NCIS for 17 years, Bob was instrumental in the industry growing from a group that was struggling to reach $1 billion in premium to a powerhouse industry that exceeds $12 billion in premiums. Each step forward along this path included Bob repre-senting the industry with patient guidance, leadership and respect from other crop insur-ance stakeholders.  Bob was more often than not the first person reached out to on critical issues with USDA, Congress, reinsurance companies and the press.

Thanks to Bob’s leadership there is utmost respect for NCIS as an educational resource, providing detailed analytical input when change inevitably occurs in this industry.  Bob is also recognized in the international crop insurance arena, due to his long time and positive profile in the U.S. crop insurance program.  Many foreign operations seeking to learn from the best have consulted with Bob through the years.

Russell SladeRussell Slade has spent the better part of

the last three decades making his mark on the crop insurance industry landscape.  Prior to starting in crop insurance, he farmed in Geor-gia and also sidelined as a crop duster.  In 1983, Russell began his career with the Cotton States crop division as a claim and marketing man-ager and was later promoted to vice president of the crop insurance operation.  Subsequently, Russell joined Blakley Crop Insurance as vice president of their south/east region. In 2005, Russell joined Diversified Crop Insurance Services as general manager and played an in-strumental role as DCIS transitioned to a full service crop insurance company.

Russell’s efforts and passion for the in-dustry could be found on both the crop-hail and MPCI programs and he has gained the respect and goodwill from all those who worked with him, not only in the field but as a member of many of the NCIS standing committees.  Russell’s leadership, knowl-edge, influence, values and people skills made a mark on all those within Diversified Crop Insurance Services but also those in the crop insurance industry who have had the privilege of working with him.

A long-time advocate of NCIS and its committees, Russell has spent a significant amount of time championing the importance of a unified industry. His expertise on such crops as cotton, peanuts and tobacco proved to be invaluable to the industry in both the MPCI and crop-hail programs. He has served on many NCIS committees over the years in-cluding, but not limited to: the MPCI Policies and Forms Committee; Loss Adjustment and Insurance Products Committee; Crop-Hail Policy, Procedure and Loss Adjustment Com-

Tim Weber (left), Chairman of the NCIS Board of Directors, Bob Parkerson (center), and Tom Zacharias (right), President, NCIS

Tim Weber (left), Chairman of the NCIS Board of Directors, Russell Slade (center), and Tom Zacharias (right), President, NCIS

34 MAY2014

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Tim Weber (left), Chairman of the NCIS Board of Directors, Chuck Lassey (center), and Tom Zacharias (right), President, NCIS

mittee; the NCIS Board of Directors; and, the NCIS South/East, Gulf States and Kentucky/Tennessee Regional/State Committees.

Charles “Chuck” LasseyCharles “Chuck” Lassey began his crop in-

surance career working for Rain and Hail in North Dakota. In the mid 1960’s, he went to work for the Insurance Company of America. Later, Chuck joined American Ag, and later worked for Agro National. Chuck spent most of his career as a field representative, a super-visor and a branch manager in the North-western states of Idaho, Montana, Oregon and Washington, with some duties in North Dakota. Chuck earned the respect and admi-ration of his agents and his fellow competitors for his honesty and work ethic.

Chuck was always active in the industry, serving on many of the committees, from the old loss adjusting committees to more recent when he served on the NCIS Northwest Re-gional/State Committee.

Still today when speaking with the many of the agents he worked with over his ten-ure, he is well respected and thought of of-

ten.   Through the years Chuck recruited a large number of adjusters and field represen-tatives to the crop insurance industry, many of whom still work in it. His son, Paul Lassey, also works in the industry, traveling the same states as his father. Chuck is well known and

highly respected for his expertise in special-ty crops produced in the Northwest states. He was always willing to take on the most difficult tasks, including supervising and ad-justing apples on a project in Mexico for an international reinsurer.

CROPINSURANCE TODAY® 35

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CropInsurance TODAY

Dan Carothers was the recipient of the 2014 National Crop Insurance Services Out-standing Service Award in recognition for outstanding service and outreach to small, limited resource, and socially disadvantaged farmers. Tim Weber, Chairman of the Na-tional Crop Insurance Services (NCIS) Board of Directors, and Tom Zacharias, President of NCIS, presented the award at the 2014 Crop Insurance Industry Annual Convention.

Mr. Carothers served in the U.S. Army from 1970 to1975, and then obtained a Bach-elor of Science degree in Agriculture from California State University Chico. He was a County Executive Director for the Farm Ser-vice Agency from 1980 until 1988. In 1988 he formed Personal Ag Management Services in order to assist farmers in dealing with the USDA. In 1998 Mr. Carothers saw a need for professional crop insurance representation in Kern County, California, and started his ca-reer in crop insurance. With his expertise in farm programs he was in a unique position to provide comprehensive guidance for his farmer clients in all aspects of USDA farm programs.

Mr. Carothers has served on the Amer-ican Association of Crop Insurers (AACI) PAC Committee, the AACI Agent Advisory Committee, and as the Affiliate Representa-tive on the AACI Board of Directors. During his many trips to Washington D. C. Dan has met with members of the House and Senate Ag Committees as well as with members of Congress from California.

Narinder Dosanjh, Ron Cruz, Kathy Medina, and Todd Snider are all Califor-nia-based crop insurance agents who are em-ployed by Personal Ag Management. These agents were originally recruited, in part, to

effectively reach out and provide service to the diverse farming community in California. Narinder Dosanjh and Ron Cruz are both bi-lingual. Mr. Dosanjh is fluent in Punjabi and specializes in reaching out and servicing the Indian farming community. Mr. Cruz is flu-ent in Spanish and is able to reach out and communicate with the Mexican farming community. Kathy Medina is able to relate to and provide service for women in California

agriculture. Todd Snider provides service to limited resource and underserved growers and all four agents routinely attend the var-ious RMA-sponsored outreach seminars for underserved and minority growers. In addi-tion, Personal Ag Management has custom-er service representatives that are fluent in Spanish and Punjabi.

Congratulations to Dan Carothers on re-ceiving the NCIS Outstanding Service Award.

Dan CarothersReceives Outstanding Service Award

Tim Weber, Chairman of the NCIS Board of Directors, Dan Carothers, and Tom Zacharias, President, NCIS

Congratulations!36 MAY2014

Page 39: Crop Insurance TODAY - May 2014

Your agency and policyholders deserve

THE PERSONAL

SERVICE

When you do business with FMH, you feel like your agency matters. You call, and you immediately talk to a person. You’re not just a number. – Kim Ryan, Blair, NE, writing with FMH since 1996

C O M P L E T E F A R M I N S U R A N C E S O L U T I O N S

Our agents are the reason we’re in business. That’s why we treat them with the honesty, integrity and professionalism they deserve.

With our knowledgeable sales staff, highly-trained adjusters, and dedicated underwriters and claims staff, we strive to give our agents and policyholders the best and most personal service in the industry.

Page 40: Crop Insurance TODAY - May 2014

Continued from page 1

“Availability Past,” “Availability Present,” and “Availability Future.”

Availability Past“...What a long strange trip it’s been...”

(The Grateful Dead). (Somehow I just cannot avoid the lyrics and the metaphors this time around.) In 1980, the Federal Crop Insurance Act expanded the crop insurance program that began in 1938 by increasing the number of commodities insured and bringing in the private sector delivery system. However, par-ticipation remained lower than Congress had hoped for and even as late as the early 1990’s, crop insurance participation rates hovered in the 30 percent range and Congress was often spending considerably more money each year in disaster relief expenditures than it was on crop insurance.

The Federal Crop Insurance Reform Act of 1994 dramatically restructured the program and through discounts built into the new pro-gram guidelines, participation increased dra-matically. By 1998, more than 180 million acres of farmland were insured under the program, representing a three-fold increase over 1988.

In May of 2000, Congress approved another important piece of legislation: the Agricultural Risk Protection Act (ARPA). The provisions of ARPA made it easier for farmers to access different types of insurance products including revenue insurance and protection based on historical yields.

During this period, availability expanded in a number of ways. First, successive Farm Bills have continued to expand the number of crops covered by crop insurance. In the beginning, it was largely confined to major commodity grains. Today, crop insurance covers all major commodities and a long list of specialty crops including apricots, blueberries, cherries, olives and tangerines, just to name a few.

Crop insurance is also available for differ-ent levels of coverage. Just like other forms of insurance, different farmers are comfortable with varying levels of risk. Some farmers might want to shoulder a twenty-five percent loss of crop before their crop insurance protection can be evoked, others can only afford to lose a much lower percentage of the crop. In short, individual farmers purchase policies based on their own risk management needs.

The other aspect of availability that must be

mentioned is that unlike most other forms of insurance, crop insurance must be sold to any farmer, regardless of their risk profile, at a rate set by the USDA/RMA. This ensures that the most vulnerable farmers, who may be small-scale operators and underserved farmers, can purchase the coverage they need.

To this end, the crop insurance industry, in conjunction with the Risk Management Ad-ministration (RMA), holds seminars across the country focused on presenting risk manage-ment tools to socially and economically disad-vantaged farmers. NCIS has been instrumental in providing risk management and crop insur-ance education to these farmers through a se-ries of Cooperative Agreements funded by the Risk Management Agency.

Availability PresentIn 2013, 1.2 million polices were sold pro-

tecting more than 128 different crops covering 296 million acres with an insured value of $124 billion. Coverage is available on many crops in-cluding everything from blueberries to wheat, grain sorghum to mint. Today, more than 70 percent of specialty crops grown in the United States are protected by crop insurance. Also, margin products are available to livestock pro-ducers, including dairy cattle, swine and lambs.

One of the ongoing strengths of the crop insurance program remains the fact that cov-erage is tailored to each individual’s risk toler-ance. There is a range of deductibles available and a variety of products so producers can

choose what works best for them.Without question, the 2014 Farm Bill ex-

panded the availability of crop insurance on several levels. With the introduction of price decline and margin coverage, and the intro-duction of whole farm coverage, crop insur-ance continues to be at the forefront of a farm-er’s risk management toolbox and in many cases, the only safety net they have available to them. Additionally, Congress expanded cov-erage to beginning farmers, ensuring that the next generation of this nation’s farmers have the risk management tools in hand they need to manage the volatile markets and weather conditions they face.

The 2008 Farm Bill’s direct and countercy-clical payment programs and the state-based revenue program known as ACRE (Average Crop Revenue Enhancement Program) were eliminated in the new Farm Bill. In their place, a farmer may choose one of two new farm programs: 1) Price Loss Coverage (PLC) or 2) Agriculture Risk Coverage (ARC). These pro-grams are designed to supplement crop insur-ance by providing support in periods of multi-year price declines and helping producers cover the crop insurance policy’s deductible.

The major enhancement to crop insurance is the addition of two supplemental policies that will help producers expand their protec-tion against losses due to natural disasters or price declines. The first program, the Stacked Income Protection Plan, or STAX is an addi-tional area revenue plan that a cotton producer may use alone or in combination with an un-derlying policy or plan of insurance. The sec-ond program, the Supplemental Coverage Op-tion, or SCO, provides all crop producers with the option to purchase area coverage in combi-nation with an underlying individual policy or plan of insurance that would allow indemnities to be equal to a part of the deductible on the underlying the policy or plan of insurance. 

Availability FutureJust like the ghost of Christmas Future

explained in the movie the “The Scrooge,” the future is what we make it because it has yet to be written. But the future starts today, and with that in mind, we must all work together to ensure a smooth and successful implementation of the 2014 Farm Bill. This will require both cooperation and coordina-tion between and among all participants in the public private partnership that constitute

38 MAY2014

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the current crop insurance infrastructure. When talking about our future, we must

recognize that there is still work to be done on providing insurance for new and specialty crops that are without any form of crop insur-ance protection. Thankfully, language in the Farm Bill may result in a number of new crop insurance products including rice and catfish margin insurance, policies for sweet sorghum, biomass sorghum, sugarcane, pennycress and other energy and specialty crops.

Nothing speaks louder than success, and the success of crop insurance is largely based on its widespread availability. In 2012, when the greatest drought the nation had seen since the Dust Bowl days hit the nation, some 84 percent of planted cropland was protected by crop insurance.

This availability, in essence, planted the seed for future growth of the program, as farm-ers purchased even more coverage in 2013, with coverage for planted cropland increasing to 90 percent.

As an industry we take seriously our re-sponsibility to effectively deliver crop insur-ance to all eligible producers. In practice this includes educating producers, at their level of understanding, about risk identification and how crop insurance can be integrated into their personal risk management plans. With indus-try and RMA support, current NCIS outreach activities place special emphasis on helping small-scale, limited resource, socially disad-vantaged farmers, and producers of under-served commodities that are covered by crop insurance but have participation rates lower than the national average. Many of these pro-ducers have limited historical knowledge and/or personal experience with crop insurance programs. It is imperative that all farmers and ranchers are fully informed of available insur-ance tools, their merits, and learn how they can be used in concert with the other risk manage-ment and cost control strategies they employ.

Availability Why?It is easy for us to fall into “crop insurance

industry-farmer speak” when we talk about is-sues like availability, affordability, and viability. But beyond our world, why are these ideas im-portant? What is the broader perspective?

For this, we go back to first principles. Most people in this country, and it is probably safe to say even globally, believe that a viable and thriving agriculture is in the public interest and

that there is public benefit to a healthy agricul-tural sector. Given such a public interest, pub-lic support can be justified.

How is this public support for agriculture manifested? Look to the New Farm Bill, where we have transitioned from direct income sup-port for farmers to an insurance-based risk management system, in which farmers share in the cost of the program and only receive an indemnity in the event of an insurable loss. Yes, farmer premiums are discounted to make crop insurance affordable. By making the insurance more affordable to farmers, we have experi-enced broader participation in crop insurance and greater availability of new and improved coverage. In turn, there is less reliance on the need for costly ad hoc disaster programs, which are off budget. So why is crop insurance avail-ability important? Because crop insurance availability is a necessary condition for an effec-tive farm safety net. An effective farm safety net is important for stability of the agricultural sec-tor, which is fundamental to a modern society.

“...So where to now, St. Peter? Show me which road I’m on....” (thanks, Elton) With the signing of the 2014 Farm Bill and implemen-tation underway, we are definitely on a “new road.” And no doubt we will need a little divine intervention to stay on the right path.

In our next issue we will talk about the importance of crop insurance affordability, stay tuned.

In this issue, we feature some of the events from our Industry Annual Convention, which took place in Scottsdale, Ariz., in early Febru-ary. We also have our “Year in Review” article, which has become a regular feature in this publication. It is a look back at the 2013 crop season—weather events, data from both the Federal crop insurance program and Crop-Hail, including a look at the Canadian hail program, and commodity markets and prices. Another highlight in this issue is the 25th An-niversary of National Crop Insurance Services. NCIS has seen a lot of changes and growth in the industry the last 25 years, and has been a pillar of support for our members through it all. Many people have worked at NCIS over the years and we thank them all for their leader-ship, work ethic and dedication to NCIS and the industry. Several of these dedicated indi-viduals have been working here since the “be-ginning” and include: Jim Crist, Loretta Sobba, Richard Whitmore, Therese Stom, Rich Byrne, Chris Lindsay, Sherri Scharff, Robin Hill and Jon Chowning. They, along with the other NCIS staff, will continue to provide the best service and technical expertise to our mem-bers and the industry. We look forward to an-other 25+ years!

(I would like to personally thank Laurie Langstraat, Dave Ray and Phillip Hayes for their contributions to this piece and our ongo-ing public relations efforts.)

“ I’m very positive about Climate.com. It’s amazing, the amount of data they’ve collected and how remarkably accurate it is. It takes the guess work out of farming. Never thought I’d see a day where we could click a couple buttons on the mouse and bring up this much weather data.”

It’s an Exciting Time to Join The Climate Corporation

For more information on opportunities in our Sales and MP Divisions go to climate.com/careers

—John Jackle, Indiana Farmer

CROPINSURANCE TODAY® 39

Page 42: Crop Insurance TODAY - May 2014

40 MAY2014

At ADM Crop Risk Services, we’re constantly investing in new, leading-edge technology to help you work faster and smarter, with innovations like:

• Mobile crop insurance quotes—availableonline and off.

• Stronger, better infrastructure for faster(up to 10x) claims processing.

• New streamlined frames for consistent,effi cient batch printing of mapping booklets.

And so much more.

At ADM CRS, we’re not just committed to technology. We’re committed to your bottom line.

To learn more about the benefi ts of working with ADM CRS, visit admcrs.com today.

Cutting-edge technology.Designed for your bottom line.

The products and services described here are written by ADM Insurance Company (not licensed in AK, CA, CO, FL, HI, ID, MN, NH, NM, NY, RI, VT, WA or WY) Home Offi ces Princeton, NJ and reinsured to Agrinational Insurance Company. The insurance products described here are subject to availability and qualifi cations. Other terms, conditions and exclusions may apply. Not all products are available in all states. This does not constitute an offer of any product in any jurisdiction.

ADM Crop Risk Services

888-5ADMCRS | www.admcrs.com© 2014 Archer Daniels Midland CompanyADM Crop Risk Services is an Equal Opportunity Employer.

adm004539 CRS Agent Ads.indd 1 1/9/14 1:53 PM

Page 43: Crop Insurance TODAY - May 2014

Kenny Shock, Great American Insurance Company, was presented with the 2014 Na-tional Crop Insurance Services (NCIS) In-dustry Leadership Award at the 2014 Crop Insurance Industry Annual Convention. This award is given to individuals who are directly involved in the crop insurance industry and who consistently serve the industry by pro-viding outstanding leadership through NCIS committees. Tim Weber, Chairman of the Na-tional Crop Insurance Services (NCIS) Board of Directors, and Tom Zacharias, President of NCIS, presented the award at the 2014 Crop Insurance Industry Annual Convention.

Mr. Shock began his career in crop insur-ance as an adjuster with FCIC in the 1970s. Since those early days, he has been quick to sign the industry’s praises. Mr. Shock works hard to keep himself up-to-date with the con-stant change in our industry. As a result, he has developed a comprehensive knowledge of policy and procedure that serves him well in his current role as Claim Supervisor with Great American Insurance Company. One of his responsibilities in this position is the train-ing and development of a team of adjusters, a duty that he enjoys and takes very seriously. During training sessions, Mr. Shock is quick to point out that policy and procedure is in place and to be followed for a reason. That reason, he adds, is so that the claim adjust-ment is fair to the insurance company writing the policy and to the insured that has placed his or her trust in the company. His efforts to spread this message within Great Ameri-can, and within the industry as a whole, have served the industry well.

Mr. Shock has always been extremely ac-tive within the NCIS Indiana/Ohio/Michigan Regional/State Committee. Looking back over the past 15 years, he has been elected to

serve as Chairman three separate times and has also served as the committee vice chair-man. This means that he has served in a lead-ership role for this committee eight out of the last 15 years. The fact that others on the committee ask him to serve so consistently is a testament to the effort he gives and the lead-ership he provides in this role.

Mr. Shock’s quality of service within the committee is even more impressive than his length of service. He goes out of his way to ensure that the committee’s monthly meetings contain the most up-to-date information af-fecting the industry by including policy and

procedure changes, RMA bulletins and FAD issuances, pertinent information from FSA and other ag related organizations, etc. He works hard to make sure that the meetings are informative and worthwhile. He has also been instrumental in the training activities, wheth-er it is crop training apple/dry bean/sugarbeet training in Michigan or hybrid seed corn training in Indiana, Kenny has consistently volunteered to help lead the effort by giving classroom presentations or field training.

Congratulations to Kenny Shock, recipient of the NCIS Industry Leadership Award.

Kenny Shock Receives NCIS Industry Leadership Award

CropInsurance TODAY

Tim Weber, Chairman of the NCIS Board of Directors, Kenny Shock, and Tom Zacharias, President, NCIS

Congratulations!CROPINSURANCE TODAY® 41

At ADM Crop Risk Services, we’re constantly investing in new, leading-edge technology to help you work faster and smarter, with innovations like:

• Mobile crop insurance quotes—availableonline and off.

• Stronger, better infrastructure for faster(up to 10x) claims processing.

• New streamlined frames for consistent,effi cient batch printing of mapping booklets.

And so much more.

At ADM CRS, we’re not just committed to technology. We’re committed to your bottom line.

To learn more about the benefi ts of working with ADM CRS, visit admcrs.com today.

Cutting-edge technology.Designed for your bottom line.

The products and services described here are written by ADM Insurance Company (not licensed in AK, CA, CO, FL, HI, ID, MN, NH, NM, NY, RI, VT, WA or WY) Home Offi ces Princeton, NJ and reinsured to Agrinational Insurance Company. The insurance products described here are subject to availability and qualifi cations. Other terms, conditions and exclusions may apply. Not all products are available in all states. This does not constitute an offer of any product in any jurisdiction.

ADM Crop Risk Services

888-5ADMCRS | www.admcrs.com© 2014 Archer Daniels Midland CompanyADM Crop Risk Services is an Equal Opportunity Employer.

adm004539 CRS Agent Ads.indd 1 1/9/14 1:53 PM

Page 44: Crop Insurance TODAY - May 2014

CropInsurance TODAY

Tom Vetter, ProAg Insurance, was pre-sented with the 2014 National Crop Insur-ance Services (NCIS) Industry Leadership Award at the 2014 Crop Insurance Industry Annual Convention. This award is given to individuals who are directly involved in the crop insurance industry and who consistently serve the industry by providing outstanding leadership through NCIS committees. Tim Weber, Chairman of the National Crop Insur-ance Services (NCIS) Board of Directors, and Tom Zacharias, President of NCIS, presented the award at the 2014 Crop Insurance Indus-try Annual Convention.

Mr. Vetter has been working tirelessly in the crop insurance industry for three decades. His knowledge on crop hail policy develop-ment, adjustment processes and risk man-agement needs are well known and acknowl-edged across the industry. He participates extensively in NCIS committees, rarely miss-ing meetings (if ever) and is always thinking of what is best for the industry and not just the company he’s representing.

Mr. Vetter first began serving on standing committees through CHIAA and NCIA (pre-decessors to NCIS), which included develop-ing policies and loss procedures, analyzing loss costs, and helping with many aspects of agronomic research for the private crop-hail program. He was a member of the Arizona Regional/State Committee, serving as chair-man in 1986-87 and again in 1990-91, and currently serves on the NCIS Southwest Re-gional/State Committee. He also served as a member of the Chairman’s Select Committee on Programs and Services in 1993 and 1994.

He was a member of the industry com-mittee who worked with the Congressional

delegates in developing and writing the leg-islation that introduced the private sector into the Federal Crop Insurance Program. He also helped develop many of the first MPCI loss procedures (re-writes of the original Federal handbooks) and conducted some of the first train-the-trainer sessions of these procedures for the industry.

Mr. Vetter has always been very involved in the NCIS research programs and writing

hail loss procedures, including Chile Peppers and Cotton. His hard work and dedication to the crop insurance industry has always lead to better products for the industry and better protection for farmers.

Congratulations to Tom Vetter, recipient of the NCIS Industry Leadership Award.

Tom Vetter Receives NCIS Industry Leadership Award

Tim Weber, Chairman of the NCIS Board of Directors, Tom Vetter, and Tom Zacharias, President, NCIS

Congratulations!42 MAY2014

Page 45: Crop Insurance TODAY - May 2014

After 175 years of better equipment, we’ve set our sights on better crop insurance.

Innovation is at the heart of John Deere Insurance Company. The financial stability of John Deere helps us invest in agent training and simplified business processes. Advances in technology help lower your operating costs so your business can grow faster. All of it adds up to more profits for you and your customers. What Color Is Your Crop Insurance? To become a John Deere crop insurance agent today, call 877-853-4749 or visit www.WhatColorIsYourCropInsurance.com/Agent

CR0811015 Litho in U.S.A. (13-12)

John Deere Insurance Company of Johnston, Iowa, issues crop insurance products through its Managing General Agent and affiliate, John Deere Risk Protection, Inc. (DBA in California as JDRP Crop Insurance Services). John Deere Insurance Company and John Deere Risk Protection are equal opportunity providers. Coverage is subject to availability, terms and conditions. John Deere Insurance Company is not licensed or does not do any insurance business in AK, CT, D.C., HI, MA, ME, NH, NV, NY, RI, and VT. John Deere Financial is not an insurance company.

Agent_Crop Insur_JP2_JDRP3074.indd 1 12/16/13 9:56 AM

Page 46: Crop Insurance TODAY - May 2014

How do you find out what is going on out in the country about crop insurance? You ask the people that have the ‘boots on the ground’ that work out in the country.

National Crop Insurance Services (NCIS) recently held the Regional/State Committee Chairmen’s Training meeting in Overland Park, KS, with chairmen from all corners of the United States. The chairmen are volunteers who have recently been elected by the var-ious committees to lead their committee in the upcoming year. The training is an annual event that helps prepare the chairmen for official duties. Specific instruction was provided on:

• Anti-trust overview; • NCIS regional/state bylaws; • Planning and conducting effective meetings and summer schools

and field days; • How to make recommendations about policies, procedures or

research; • How to use the Interactive Actuarial Map (IMAP) on line; • Crop adjuster licensing update; and • Website training on crop sites.

A considerable amount of time was spent on letting the chairmen

Committee ChairsReady for the Year

Back row, (left to right): Don Hutsell, NCIS, IN/OH/MI and Southwest Committees liaison; Michael Smith, Rain and Hail, vice chairman, Southeast Committee; Brad Veenstra; Scott Altfillisch; Chad Groen; Chad Mixdorf; Dave Hall, NCIS, NE and SD Committees liaison; Bruce Van Loenen; and, Mark Askerooth.

Center row, (left to right): Ed Gribben; Chris Lindsay, NCIS, KY/TN Committee liaison; Loretta Sobba, NCIS, KS/OK Committee liaison; Lynnette Dillon, NCIS, Gulf States and Southeast Committees liaison; Mike Sieben, NCIS, IL/WI and Iowa Committees liaison; Mollie Dvorak, NCIS, East and Missouri Committees liaison; Cheryl Richmond-Witwer; Jamie Wells, ProAg, vice chairman, Missouri Committee; and, Kyle Sisk, NAU Country, vice chairman, Southwest Committee.

Front row, (left to right): James Houx, NCIS; Mark Flohr, NCIS, CA/NV and CO/WY Committees liaison; Jordan Atkinson; Spencar Diedrich; and, Dean Strasser, NCIS, MT and Northwest Committees liaison.

CropInsurance TODAY

By Mike Sieben, NCIS

44 MAY2014

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California/Nevada —Ed Gribben, Rain and HailMinnesota—Chad Groen, Farmers Mutual HailColorado/Wyoming—Pat Milford, NAU CountryMissouri—Jeff Dexter, Rain and HailEast Region—Jordan Atkinson, NAU CountryMontana—Kurt Laubach, HeartlandGulf States—Scott Altfillisch, Rain and HailNebraska—Chad Mixdorf, Farmers Mutual HailIllinois/ Wisconsin—Jon James, Rain and HailNorth Dakota—Mark Askerooth, ADM CropIndiana/Ohio/Michigan—Sharon Shock, Great AmericanNorthwest—Cheryl Richmond-Witwer, RCISIowa—Brad Veenstra, Great AmericanSouth Dakota—Spencar Diedrich, John DeereKansas/Oklahoma—Bruce VanLoenen, Farmers Mutual Hail Southeast Region—Andy Stanley, ARMtechKentucky/Tennessee—Zach Alexander, Rain and HailSouthwest Region—Steve Fortenberry, ARMtech

talk about what is going on in their various regions. Sometimes we get concerned about our own little piece of the world and forget that crop insurance is written in all 50 states. Issues that show up in California are not the same issues that are showing up in Florida. How many knew that the oil boom in North Dakota has created a problem finding motel rooms for adjusters in western North Dakota? Also the oil boom has reduced the number of rail cars to deliver grain in South Dakota. The drought in California could have an im-pact on much you pay for a can of almonds in 2014.

Some of the regional/state committees meet on a monthly basis, some quarterly and some as needed. All member companies are notified of the meetings and strongly encour-aged to attend, listen and discuss issues that may have happened or that could potentially be a concern for all companies. Each regional/state committee has an NCIS liaison that they work with and is the contact point to ensure that all member companies receive notices and minutes of the meetings. If an issue needs to be forwarded on to an NCIS standing com-mittee, the NCIS liaison is the person to do that. Not only do the chairmen gain knowl-edge from the training session but so does the NCIS staff in realizing what is happening out in the field.

It is a personal and professional honor to be elected to be chairman of an NCIS region-al/state committee. The expectations and re-

sponsibilities are great but so are the rewards for being selected by your peers to serve in this important leadership position.

NCIS Regional/State Committee Chairmen

NCIS Regional/State Committees

2014

VisitWebsiteag-risk.org

CROPINSURANCE TODAY® 45

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Expands INDUSTRY AWARDSNCIS VisitWebsite

ag-risk.org

The NCIS industry awards were established in 2001 to honor those individuals who provide exemplary service to the industry as a whole and/or to producers. The award criteria has been changed slightly and a new award category has been added.

Outstanding Service AwardThis award is presented to a crop insurance agent or individual

outside of the industry who provides exceptional service indus-try-wide and outstanding outreach efforts to all farmers, especially limited-resource and/or socially disadvantaged farmers.

Industry Leadership AwardThis award, targeted primarily to members of the NCIS region-

al/state cop insurance and/or NCIS standing committees recognizes individuals who are directly involved in the crop insurance industry and who consistently serve the industry by providing outstanding leadership. One award may be given to a member of a regional/state crop insurance committee and/or a member of a standing committee.

Lifetime Achievement AwardThis new category of award will be given to those people who have

served or are currently serving in leadership capacities within the in-dustry who exhibit(ed) outstanding leadership, guidance and knowl-edge to and of the crop insurance industry.

Criteria for all awards are: 1. Unyielding personal and business ethics. 2. Demonstrated service above and beyond the crop insurance

industry. 3. Represents themselves, their company and the crop insurance in-

dustry well.The winners will be presented with their awards at the crop insur-

ance industry annual convention held in February of each year.All nominations must be submitted in writing to NCIS by October

15, 2014, for awards to be presented at the 2015 Annual Convention. For nomination information and forms to be submitted, please visit the NCIS website at www.ag-risk.org to download. If you have any questions regarding the criteria or whom is eligible for the awards, please contact Laurie Langstraat at NCIS at [email protected] or 913-685-2767.

Policy Summary

Check Claim Status

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46 MAY2014

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CROPINSURANCE TODAY® 47

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CropInsurance TODAY

Jo Anne Baker, “the voice” of NCIS, retired from Novitex Enterprise Solutions the end of February, and leaves NCIS’ as our main re-ceptionist. Novitex, Jo Anne’s employer, has a contract with NCIS to run the mail, copy and receptionist services. If you have called NCIS almost anytime over the last 10 years, you most likely have spoken to Jo Anne.

“The most important, as well as most en-joyable, part of my job here at NCIS is greet-ing callers,” she said. “I know many by name or voice; and when members visit NCIS for meetings, it’s always fun putting a face with that name or voice.”

Jo Anne started working for Novitex (for-merly Pitney Bowes Management Services) in 1998 and came to NCIS in October of 2004. Along with answering the phones, Jo Anne had many responsibilities many of us on staff took for granted. She distributed the morn-

ing papers, ordered meeting room and break room supplies and always made sure confer-ence rooms were fully stocked and ready for the many meetings held in the office.

“It was a pleasure having Jo Anne with us for the past several years,” said Jim Crist, NCIS. “She gave new callers and visitors an excellent first impression of NCIS, and pro-vided excellent service to NCIS staff and our members. We’ll all miss Jo Anne and wish her the very best.”

Jo Anne and her husband Charles, who is also retired, plan to fix up their home to sell to relocate closer to their children. They have two grandsons, Nolan, 9, and Liam, 3, who they hope to spend even more time with, as well as traveling.

“Charles and I are excited and ready for the next chapter,” Jo Anne said. “NCIS—it’s the best job ever! I will miss everyone and

visiting with the members I’ve gotten to know over the years.”

Congratulations, best wishes to Jo Anne!

Jo Anne Baker RetiresLeaving NCIS

48 MAY2014

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CROPINSURANCE TODAY® 49Coverage is underwritten in by Great American Insurance Company. Great American is an equal opportunity provider.© 2014 Great American Insurance Company. Great American Insurance Group, 301 E. Fourth Street, Cincinnati, OH 45202Price Flex” is a trademark of Watts & Associates, Inc.

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Page 52: Crop Insurance TODAY - May 2014

8900 Indian Creek Parkway, Suite 600Overland Park, Kansas 66210

PRSRT. STD.U.S. POSTAGE

PAIDPermit No. 116LAWRENCE, KS

Rain and HailAgricultural InsuranceThe ACE Group of Companies

www.RainHail.com

Our policyholders filed over 165,000 claims in 2013, almost 10,000 more than 2012.

By March 1st, we completed over 98% of our claims.

THANK YOU to our agents for your hard work and commitment to provide the best service to our customers.