Crop Insurance Nightmare

Between the Fencerows

Why I'm switching underwriters this year

Published on: February 12, 2014

Well this goes on the list of things I have felt like doing, but will probably never do. I'll do my best at keeping this long story brief.

It was a long fall dealing with crop insurance. The story begins in 2011 when I rented additional ground in St. Joseph county. As normal, since the ground was not irrigated, I insured it using that entity (I had no other dryland ground in the county, I was already farming land under my irrigated entity). This has been our common practice for nearly three decades.

Everything went fine that year. In 2012 we had the drought, and I had a claim. No problems, I received my check, and all was good.

We continued into 2013 and made insurance selections and planted the crop. In late summer, I received notification that the insurance company had determined I was not a new producer, and they were reducing my yields, increasing my premiums (retroactive to 2011), and requiring re-payment of my 2012 claim.

You can imagine my disgust.

My agent appealed on my behalf and got nowhere. I went round and round with the underwriter. Through this I learned they do not track producers by legally established Entity Identification Numbers, but by the social security number of those who own the entity.

After understanding this irregularity, I then asked, "OK, so if I'm not a new producer, then why aren't we using my proven yields?" I still have not received a good answer to this.

Every question I asked I was referred to the 800-plus page manual. So I did some reading.

It turns out the insurance company was to have verified my 'new producer' status before making my 2012 payment. Had they done this my 2013 decisions very well may have been different. Never-the-less, when I pointed this out, I got absolutely nowhere.

There were other questions, many of them ignored. I wrote to everyone I could. I also sent my concerns to RMA, the supposed federal watchdog. Still, I never found a person with any sense to review the situation. I could go deeper, but you get the drift.

In the midst of this frustration I came up with the idea to send a stick and a handkerchief with my next letter. I would include instructions to tie the white hanky on the stick and wave it around while reading my note that says, "I give up!"

It is important to note, I did NOT send it. It was more of a stress relief just imagining the response when they opened the package.

In December, I dropped the issue. I knew I had a revenue claim coming for 2013, and at that point I didn't want to risk delay of that claim any longer. I also didn't want to risk being 'randomly' chosen for a yield history audit either. I went through one of those a few years ago (again during harvest). It was a pile of paperwork, and in the end they determined I was too conservative on my yields and raised them along with my guarantees.

Makes a lot of sense doesn't it? Needless to say, I will be using a different underwriter in 2014.

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  1. farm guy says:

    I guess I should have waived all insurance due to a bad rep of yours not submitting papers to me on time and yes he was axed. You do realize YOUR agents are supposed to submit those papers to me right? I'm trying to figure out what exactly you think your role is other than taking a cut. One thing you definitely have helped me to learn is I need to get even more aggressive about my situation. When you said "agent offering me a better deal" I could not understand how that could be so I did a search. It seems companies will about give you other policies they have for free to get your crop insurance. I read where RMA would like to see companies stop this practice but companies will have no part of it. It seems with your help I have found a way to get what I want from my company, which may be yours. All I have to do is lower my ethics to the companies standards. Thanks for the heads up.

    • Ins. Co. Guy says:

      Just so you understand you are part of an elite group. OIG identified 10,155 invalid New Producer records for 2009 of which 3,406 had improper claim payments. For 2010 they identified 9,409 invalid NP records of which 2,418 had improper claim payments. The process will be repeated for the 2011 and 2012 Crop Years. What you appear to be describing is rebating. If a Company get caught rebating they may lose their SRA which is their agreemnet wioth the Government to sell and service MPCI. I also would guess from reading your posts you ARE NOT someone willing to stoop to low ethics just to get what some other person may have gotten by fraudulent behavior. Just a heads up there are folks you can read about on the RMA web site that have attempted that, and yes many get by but others get free room and board. As I has stated earlier, not all agents are created equal and when it come to training the old saying (you can lead a horse to water, but.......) is very true.

      • Farm guy says:

        I don't think I'm referring to rebating but rather big dog takes all. The article I read was referring to hail insurance ( non govt. backed) and how insurance companies will take customers at a loss and loose money to get federal backed crop insurance from the same customers (apparently big profit). No, I don't like this at all, nor should the tax payer. I did not realize my claim was seen as bogus or I would not have reported it as such, nor would I have paid for high coverage. However, If I did not think I was at fault by not knowing more than the people you hire I would not have paid back the claim. As said, lessened learned. It's a farmer thing we have learned, all vendors are not responsible and we are somehow responsible for all mistakes made by them. Of course, I would prefer to see some responsibility by the companies over said vendors. Never happened yet though. If crop insurance was a money maker like markets, fertilizer, seed or anything else, I would have learned all angles. For me crop insurance is just a risk tool and that is it. From what I read though, big insurance companies can use such things as hail insurance policies at a loss to intise customers for the federal backed crop insurance. All legal like, all I have to do is put the twist in said companies to recieve such a remarkable deal. Like I said, I would like to see this matter take front stage because something is not right. I will try my own saying...if you live in a whore house long enough, you eventually stop doing it for free...

  2. Farm guy says:

    To add again. I have never, or ever will change an agent because he won't cheat for me. I know this because it never crossed my mind to ask. I play in dirt, not think of ways to scam. Heck, I'm just glad to finally find one that will perform what I consider his job. If an adjuster would have brought this to my attention, I would not have told my agent not to send him back. I would have investigated to see what the deal was. I have once told an agent not to send an adjuster back. Not because he would not cheat for me though but because he was worthless. He did not want to check my crop damage at our appointment because he just cleaned his truck and didn't want to drive back a dirt lane. All other adjusters I felt did their job correctly, but now I'm finding out maybe not. I guess that was my fault too. If I am going to be responsible for your agents and adjusters than please invite me to your classes for them so I can at least do my best...yep, still raw about it...try again...

    • Ins. Co. Guy says:

      Well I guess this says it all. You wouldnt ask and agent to cheat, but you would knowing commit fraud by back dating papers. Explains your other rantings very well.

  3. Farm guy says:

    Agent never claimed to get me a better deal. I've been around the block enough times to know that the federal backed insurance is one size fits all. Just as it very well should. If it is all my agents fault than that is sad for the insurance companies because he is the best I've had in 27 years. Not because he promises me better deals ( which he does not) but because to me anyway, he does his job timely. He seems to stay informed and passes that on to me in person. Not by a yearly phone call March the 14 or 15. With this agent, I have never had to back date forms because he finally decided to work (yes, that is common practice for the prior agents). This agent actually teaches me about crop insurance instead of me teaching him ( yep, done that with the prior ones). Believe me, I have fired more agents than I can even remember and in the process told them exactly what I thought. If my current agent is a bad one than what does that say about the rest that you have I've dealt with. My non new producer problem was not clean cut and dry but rather difficult. In fact, I'm still not so sure I should not have been a new producer. Regardless, I paid the money back because let's face it, what attorney could ever understand even the basics of this matter to represent me. I here you insinuate that you know there are some really bad agents and adjusters. That's like me telling a landlord that I know my bad employee ran that tractor through your house so you should be better about who you get to farm your land. Why is it all on my shoulders to make sure you guys get the right people to represent you. You guys cut the commission checks and per diem. Believe me that if I did, I would have thinned your herd a long time ago. But then I'm not making money from the bad ones, the companies are. I'm switching companies right or wrong. I realize the new company probably made some other producer pay back a similar situation also. You may think it is not right, but it is the only reprieve I have, and dammit, it just feels good. To stop all this, all you guys have to do is at least pay back the producer is high elective bogus coverage premium and take a little fault along with everyone else. To be clear, I will take the claim hit right or wrong. You take the premium hit. In any parallel world that would be a fair compromise. At the end of the day the producer is your customer. Your self admitted bad agents, agencies, and adjusters are your reps under you.

  4. Ins. Co. Guy says:

    Ultimately the outcome lies squarely on the producers shoulders unless an error was made by the UW. You are correct that the agent is considered an associate of the company, but a bit off on a couple other issues. Agents are required to carry E&O Insurance by every company I know of. I would have to say if your agent had determined you didn't qualify as a New Producer and gave you the lower guarantee, but a different agent told you they could get you a higher guarantee my guess is your agent would have lost your policy. When you say underwriters I assume you are referring to the Company. Although Crop Insurance Companies have what they call underwriters, in reality thy are simply key punchers that enter the information submitted and attested to by the insured. There is really no upfront underwriting, other than making sure forms are correctly completed and timely submitted, of the crop insurance policy because as I stated this is a self certification program. The underwriting all falls on the shoulders of the adjusters who may or may not really understand the New Producer process. I am also quite sure had your adjuster told you at the time of your claim that your guarantee was going to have to be reduced you would have not been any happier then and would have complained to your agent, and they to the Company. Most likely the agent, in your support, would have told the company to never send that adjuster back out to work for them because they were upsetting their insureds and the adjuster may have lost their job. Although your situation is an unfortunate one it really is no different than any other type of insurance process. You and several thousand other producers ended up getting guarantees reduced and owed back monies due to this RMA audit that was initial ordered by the Office of the Inspector General. The responsibility in this case lies with the buyer to know what they are buying no matter how confusing it might be. Some of the commenters are absolutely correct, NOT ALL AGENTS ARE CREATED EQUAL, but be very cautious if you have one telling you they can get you a better deal because ultimately the product is the same no matter who is selling it.

  5. Farm guy says:

    To add... Ultimately it is on the underwriters shoulders. The agents and agencies work under them. The underwriters sign on these people to sell there product. They are ultimately resonsible for them and any mistakes made. Just as I am financially responsible for anyone under me. They can screw me out of a few dollars if they wish. I can quit doing business with them so they can loose many more dollars if I wish. If I were to guess, the companies know very well they are ultimately at fault. But since it appears these are not small isolated instances they choose to cover themselves. Articles like this may bring much more to light and I for one would like to see it take front stage...Can you tell I'm still a little raw about this myself...

  6. Farm guy says:

    This little side article has raised more comments than any others so it must have hit a nerve. Sounds like the writer and I are not the only two this has happened to lately because I see the Insurance folks are doing their best to explain. I think the writer and I both understand no matter how stupid we feel a govt. rule is, we have to abide by that (after all we are farmers and deal with that daily). I think the main disgust is we made coverage selections based on erroneous information and coverage our underwriters said we had for 2 plus years and paid for that higher coverage. I know I personally would have not paid for high election coverage of such a lousy gaurantee if I knew. A high, erroneous coverage that agent, agency, and underwriter made money off of me on. I paid back my claim and have one more lessened learned notch on my belt. The rub is all seem fine with keeping my high election premium.

  7. IA Farm Guy says:

    This is probably the dumbest article I have read in an ag based publication. Your agent got paid a healthy commission to set up your policy wrong & is blaming the company & RMA. That's like walking into the feedstore to buy feed for your replacement heifers & the guy that you have bought feed from for the last 3 decades sells you feed with MGA in it cause he can get you a good deal. Do you blame the feed company for that? The poor feedstore guy doesn't have an E & O policy either....

  8. Ins. Co. Guy says:

    Unfortunately one big piece of these stories is missing. The audit of New Producers that triggered your audit and problems was ordered by the Government entity in charge (RMA). The Crop Insurance program is a self certification program and both of your companies relied on the information submitted by you, through your agent and was signed by you stating you qualified as a new producer. If you in fact had past history it could have been submitted by production reporting date. Unfortunately it could not be accepted by this late date. But can be used the year following as long as timely submitted. Please just remember the Insurance Companies don't make the rules they just have to follow them.

  9. agent observer says:

    Although there may be missing detail to the story, I would also suggest changing agents. This is Crop insurance 101 policy changes that should have never got past the agent.

  10. Farm guy says:

    This is almost the exact same thing that happened to me. Like you, the most frustrating thing is paying for higher coverage for two years when I would not have if I known. Also like you, I am changing the company this year. It would be interesting to see if we had the same company or just switching to each other past bad company???