2009 AgriBank Insurance Template V04

Transcription

1 United States Department of Agriculture Risk Management Agency Changes in the Crop Insurance Program William Murphy, RMA Administrator / Seavey Anthony 2010 Crop Insurance Workshop Grand Island Nebraska November 3, 2010 Topics Changes in the Crop Insurance Program Participation Comb Policy APH Program Priorities SRA Yield Monitors Farm Bill CIMS and Data Mining Projects Acreage Crop Reporting Streamlining Initiative 2 Business Summary Federal Crop Insurance Program Crop Year 2009 National Nebraska Insured Crop Value (Liability) $79.6 Billion 5.4 Billion Acres Insured Million 15.3 Million Total Premium $8.9 Billion 580 Million (Producer Paid Premium) ($3.5 Billion) Claims Paid (Indemnity) 2009 $5.2 Billion Million Loss Ratio CY As of

2 Business Summary Federal Crop Insurance Program Crop Year 2010 National Nebraska Insured Crop Value (Liability) $77.7 Billion 5.4 Billion Acres Insured Million 15.2 Million Total Premium $7.6 Billion 465 Million (Producer Paid Premium) ($2.9 Billion) Claims Paid (Indemnity) 2010 $1.5 Billion 48.6 Million Loss Ratio CY As of Program Growth Participation by Insurance Plan (Billion) $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Liability by Plan Type Other Group Revenue APH As of Combined Common Crop Insurance Policy Combines principle features of APH, CRC, RA, IP, and IIP into single policy Single rating and pricing methods for consistency is coverage and cost Crop Programs Available Under Combo Coarse Grains (Corn, Grain Sorghum, Soybeans) Small Grains (Barley, Malting Barley and Wheat) Cotton Rice Canola/Rapeseed Sunflowers 2

3 Combo Single Basic Provisions now provides for following plans of insurance Yield Protection * Revenue Protection* Revenue Protection with Harvest Price Exclusion* Actual Production History Dollar Plans *Plans with commodity exchange price Combo Plans of Insurance Yield Protection: effectively APH for crops with commodity exchange Revenue Protection: Guarantee based on higher of projected or harvest price (similar to CRC or RA with Harvest Price Option) Revenue Protection with Harvest Price Exclusion: Guarantee based on projected price only (similar to RA without Harvest Price Option) Combo Crop Pricing Crops with Yield/Revenue Protection will NOT have an RMA established price election Will instead use Projected Price to determine insurance coverage based on commodity exchange values Commodity Exchange Price Provisions (CEPP) provides method for calculating projected and harvest prices Revenue Protection Revenue Protection with Harvest Price Exclusion Yield Protection 3

4 General Benefits Uniform Policy Acceptance System Requirements Rating Methodology Premium Calculation Price Discovery Policy Conversion Carryover policies automatically converted to plan closest to current coverage - no new application required New insureds must select: Revenue Protection Revenue Protection with Harvest Price Exclusion Yield Protection Combo Policy Conversion 4

5 Combo Other Plans APH and Dollar Plans APH for crops with no commodity exchange price discovery will continue to have established and additional price elections Dollar plans continue to allow the insured to select a percent of the maximum dollar amount APH Program In 2009, APH-based programs accounted for: 93 percent of all policies earning premium 85 percent of all program liabilities 91 percent of all premiums Fundamental basis of APH program is sound and does not require significant overhaul but: Does not reflect advances and capabilities in data, technology, etc. Need to reduce administrative burden, provide more appropriate insurance guarantees, and improve actuarial efficiency and program integrity APH Program Concepts under Consideration Permanent historical database by insured with location reference and maintained by RMA Reside within RMA IT System and be reported on its own record structure Linked to acreage, common land unit, APH yield, annual production, premium, liability, etc. Insured s historical data will be updated annually 5

6 Development Priorities CY2010 Farm Bill Requirements Organics Review Rating and Pricing Contracted Studies Posted On Aug. 30 th New Pricing for 2011 Corn, Soybeans, Cotton and Processing Tomatoes 5% Surcharge eliminated on certain tree/specialty crops Sesame Pilot Program (TX/OK) Grass Seed Pilot Program (MN/ND) Dedicated Energy Crops Contract out for Research and Feasibility Cotton Seed - Available for the 2011 crop year sales Development Priorities CY2010 Farm Bill Requirements (Cont.) Apiculture Honeybees Poultry Skip Row Cropping Practices Pistachios Yield Monitoring (Use of Combine Monitors and other technologies in the crop insurance program) Beginning Farmer AGR RMA Met its Goals SRA Renegotiation RMA Met its Goals Align Administrative and Operating subsidy closer to actual delivery costs Provide a reasonable rate of return Equalize reinsurance performance across States to more effectively reach under-served producers, commodities and areas Simplify provisions to make the SRA more understandable and transparent Continue to support producer access to important risk management tools Enhance program integrity The new SRA achieved $6 billion in scored savings over 10 years $4 billion of total was dedicated to deficit reduction $2 billion of total was used to benefit producers Pasture, Rangeland and Forage expansion Performance Based Discount Conservation Programs 6

7 Yield Monitoring Where we are currently: 2011 Crop Insurance Handbook allows yield monitors as acceptable production report Allows for separation of production from non-irrigated corners of a center pivot For 2011 Loss Adjustment Manual RMA plans to take steps to allow yield monitors to be acceptable for claims purposes. Continue to engage technology Common interfaces USDA application (one report of common data) Appropriate standards, procedures, etc. Going Forward... Priorities and Challenges Pay Go SRA provided savings continues to impact expansion and improvements to crop insurance programs New product submissions and concept proposals Sustaining well-run programs that are effective, reliable, and sound Congress is already talking about the next Farm Bill! Upcoming Farm Bill Crop insurance viewed favorably Most important risk management tool according to many farm/commodity groups Many in Congress view crop insurance as linchpin of farm safety net Talk of including provisions to bolster crop insurance Crop insurance is a big ticket item nationally Commodity programs = $63 billion Crop insurance = $76 billion Conservation programs = $64 billion With new SRA, much more efficient delivery system 7

8 Comprehensive Information Management System (CIMS) 2002 Farm Bill Initiative to develop a system to provide timely access to data for administering USDA programs Support the ARPA reconciliation requirement Standardize reporting of entity, location, crop names, codes, reporting dates, business reporting requirements, production history, etc. Provide Approved Insurance Providers, AIPs, RMA and FSA timely access to centralized source of data CIMS Current State Five years of data thru 2010 RMA Policy and FSA producer and acreage information that is updated weekly 97 % of the RMA primary policyholders and 85% SBI s are found in Service Center Information Management System that is used by FSA, NRCS and RD Users include RMA, FSA, OIG, NASS, NRCS, and AIPs 16 web applications, controlled by EAuth credentials, to integrate, visualize, and reconcile the data AIPs have made 25 million data requests since Feb 2009 AIPs have access to Notice of Loss, Cause of Loss and Prevented Planting web applications CIMS Discovery Reports CIMS identifies possible differences in RMA and FSA business entities and comparable crop acreage weekly. Entity 20% reduction in CIMS Entity Differences 2009 Policies 38, Policies 29,765 Acreage Only 52% of the 1.8 million RMA acreage can be translated/compared to the and 3.1 million FSA acreage records in CIMS Only translatable crop condition are compared (52%) Slight improvement of matching acreage % s between 2009 and 2010 Expected to increase with implementation of Location county matching 8

9 2010 Acreage Differences based on 772,474 CIMS acreage comparisons No Difference < 0.01% 0.01%-2.99% 3.0%-9.99% 10%-19.9% 20%-29.9% 30%-39.9% 40%-49.9% 50% and Greater 16,575 2% 39,706 5% 20,374 3% 27,059 3% 36,241 5% 51,630 7% 334,961 43% 3% 143,177 19% 3% 102,751 13% 75% of the comparable acreage has a 3% or less difference CIMS Reconciliation CIMS only identifies possible differences in entity types and acreage. There are valid business reasons for these data not matching CIMS and the Data Acceptance Process are implementing a new process to allow insurance companies to identify a reason for differences. If differences represent error, the company consult current program authorities, processes, and procedures to correct a confirmed error CIMS and CLU s CLU reporting requirement 2010 = 20 percent RMA is working on CLU implementation plan for 2011 and subsequent years Anticipate finalizing implementation plan later this fall o Currently 11% of the acreage is reported at CLU o 4 AIPs have not reported o 5 AIPs at less than 10% o 4 AIPS between 10 and 20% o 3 AIPs above 20% 9

10 April 8, 2010 FSA/RMA AIP CIMS Meeting 29 10

11 April 8, 2010 FSA/RMA AIP CIMS Meeting 32 11

12 12

13 Program Integrity Data Mining Spot Check Lists Growing Season Inspections National Operations Reviews Program and Contract Compliance Good Farming Practice Determinations Large Claim Reviews Over $1.5 billion in savings to taxpayers since initiatives began Data Mining Tools on the Horizon Develop an Automated System that Uses Satellite Data to Detect and Classify Crop Growth Patterns at a Field Level Applications under analysis Validate RMA and FSA Reported Data Falsified Claims Identify Situations Like First Crop-Second Crop Evaluate Field s Production Through Time Assess the Effects of Weather on Production Outcomes 13

14 Nationwide Automated Process Growth Curve Analysis Automated Data Analysis Link Satellite imagery to RMA and FSA data RMA Data Satellite Data FSA Data Automated analysis of nationwide satellite data integrated with FSA and RMA databases Satellite Imagery Crop Growth Curves Time Growth Curves are Derived from NDVI Values From Daily MODIS Data NDVI Values on the Curve Indicate Vegetation Activity in the Field The Noisy Appearance of the Curve is Due to Cloud Cover Identification of Harvested and Unharvested Fields Harvested: Growth Curve of a Crop That Was Planted and Timely Harvested Will Have Steep Ascending and Descending Slopes With Level Crest in Between First Crop Second Crop Unharvested: Growth Curve for a Crop That is Left Unharvested Will Show a More Gradual Downward Slope Than a Harvested Crop 14

15 Identification of First Crop Second Crop Situation Crop 1 Crop 2 Automated Analysis Can Detect Fields With Two Crops and Help in Enforcing RMA Regulations RMA Prevented Planting Map CY Matching CLUs to RMA Crop Units 90% of the Crop Unit Has Prevented Planting Crops: Corn, Soybeans Satellite Detected Prevented Planting Map CY Satellite Data Showed Good Correspondence With Reported Prevented Planting Crops: Corn, Soybeans Some False Positives were Identified on the Jersey Shore 15

16 Example of Anomalous Claim Detected Using Automated Analysis of Satellite Data Producer Claimed Prevented Planting for Corn Due to Excess Moisture RMA Crop Unit: Acres for Corn Prevented Planting Claim: Acres CLU: Acres Planting date estimated using satellite data: 15-May-2009 Growth Curve Indicates Harvested Crop 05/05/ /24/ /10/2009 True Color LandSat 5 TM images of the Field Estimating Planting Dates Using Satellite Data Crops: Corn, Soybeans, Sorghum, Cotton, Sunflowers, Barley Crop Growth Period Peak Estimated Planting Date FSA Reported Planting Date 16

17 Nationwide Hail Claim Validation Using Hail Core Data and Base Reflectivity Radar Hail Core Product From NCDC Processing Stage 3 NEXRAD Radar and Cloud Freezing Data Identifies Hail Cores Central Location of Hail Core Located Using Radar Scan Algorithmic Determination of Estimated Hail Size and Probability Results Span Continental U.S. Across Doppler Radar Stations Nationwide Hail Claim Validation The Average Hail Claim was Found within 1.13 Miles of a Hail Core Anomalous Hail Claim was Defined as Being 10 or More Miles Away from a Hail Core Nationwide Hail Claim Validation 16, 396 Crop Policy Hail Claims with a Total Indemnity of $351,186,124 were Validated in Reinsurance Year (RY) Producers were Identified as Anomalous in RY 2009, With a Total Hail Indemnity of $3,978,534 17

18 2009 Nationwide Anomalous Hail Claims New HyDRA Searchable Report HyDRA Packaged Output Spreadsheet - Normal and Departure From Normal for: Hail Excess Moisture Hurricane Severe Radar Reflectivity (Probability for Storm Activity) Storm Warned Area (National Weather Service) Storm Event Reports/Station Data o o o Tornado High Wind Hail Using Proximity data with Prevented Planting Claims Nearest Prevented Planting Claim is 23 miles away from Producer- A s Farms to the North 18

19 RMA and FSA Proximity Data Precipitation Data (NOAA) Acreage/Crop Reporting Streamlining Initiative The Secretary has asked Deputy Under Secretary FFAS Michael Scuse and USDA CIO Chris Smith to simplify the acreage reporting process. Project team has been formed to establish a common USDA framework for Producer commodity reporting Enable the producer to report common data once and RMA, FSA, NRCS and NASS to share the data to eliminate duplicate reporting of common information by producers. 19

20 Acreage/Crop Reporting Streamlining Initiative The stated goal of the ACRSI is to establish data standards for common information used for producer commodity reporting to USDA. The benefits for this goal will include: Simplify producer reporting. Facilitate the implementation of the comprehensive USDA reporting strategy. Minimize duplicate data entry. Maximize data reuse. Increase reliability, accuracy, integrity, and completeness of data. Assist in early detection and prevention of waste, fraud, and abuse. The project will: Consider the voluntarily use of precision ag software and equipment to assist producers in meeting program participation requirements ACRSI Project Scope Department-wide standardization of data and processes supporting for the following Business Areas Producer/Business Entity Identification Annual Crop/Commodity Report Land Location Information Crop/Commodity Production Implementing a USDA governance process Approved standards will be released to the public in the National Information Exchange Model system ACRSI Project Fast Track Items Common Producer/Business Entity Common RMA/FSA Acreage Report Dates Commodity Identification Commodity Name Commodity Type Irrigation Practice Intended Use 20

21 21

22 22