Written by Don Ratzlaff Wednesday, 22 August 2007 07:11
This year’s disaster of a wheat crop has caused producers to file claims for crop insurance. Some of these claims are taking longer than in the past, as reported by Kansas Wheat leaders from the central region of the state.
While the deluge of claims has resulted in later-than-normal delivery of the insurance funds in some areas, the process seems to be going expeditiously in Marion County, according to Jerry Cady, a primary handler of crop insurance.
“I got off the phone with a manager just a few minutes ago and I told him I thought everything was going real well,” he said. “We’re getting claim checks every day, and our adjusters are doing a real good job of keeping up with the enormous amount of claims we’ve had this year.
“I haven’t had any complaints and I haven’t had any customers complaining about it,” he added. “We’ve been real pleased with the speed with which these losses have been worked and the fact that checks are being cut and sent out right away.”
That’s no small accomplishment considering the widespread damage resulting from a late spring freeze and snow.
“So far, our records show that overall, Kansas has had the most severe losses in the nation with $149 million dollars in loss payments already issued this year,” said Rebecca Davis from the Topeka office of the USDA Risk Management Agency.
These loss payments are growing quickly as claims continue to be finalized and indemnity payments sent to producers.
Davis said they have been in contact with the 16 Approved Insurance Providers (AIP), that sell and service the crop insurance program in Kansas.
“Although loss adjustment staffs are busy, they are doing what they can to avoid unnecessary delays in the claims process,” Davis said.
In some circumstances, though, claims cannot be settled right away.
For instance, claims over $100,000 require an Actual Production History review. This APH Review is part of the Standard Reinsurance Agreement that each AIP has with the Federal Crop Insurance Corp. and cannot be waived.
The time-consuming review requires that companies verify the past three years of production and acres used to establish the guarantee.
To streamline the process, most companies have identified policies that are likely to trigger the $100,000 claim review so that additional staff can work on the APH review while the loss adjuster works the claim.
Producers can also do their part to prevent unnecessary delays by providing all necessary information for these reviews to their insurance provider as quickly as possible.
All companies indicate that a prominent reason for delays is waiting on supporting documentation from the policyholder.
One of the reasons the indemnities are higher this year than last year at this time is due to the higher commodity prices. A producer’s coverage is a function of yield and price. This year’s price elections are significantly higher than last year’s, increasing both overall liability and accumulated dollar losses.
More than $114 million of the indemnity payments paid to date were due to the weather conditions starting with the April freeze.
Producers in Sumner, Harper and McPherson counties have the highest crop insurance payments with $13 million, $11.6 million and $8.2 million, respectively.
The average wheat production since 2000 for these three counties are 13.8 million bushels, 8.4 million bushels and 9.8 million bushels, respectively.