Improper crop insurance payment rate cut in half | TSLN.com
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Improper crop insurance payment rate cut in half

The improper payment rate for the crop insurance program has been cut in half to 2.2 percent as part of an overall program with the Agriculture Department to make sure the program can stand up to scrutiny and continue to serve famers, USDA Risk Management Administrator Brandon Willis said in speeches to the crop insurance industry here Monday and last Thursday.

Willis spoke to the national crop insurance industry convention put on by National Crop Insurance Services and the American Association of Crop Insurers on Monday and the Crop Insurance and Reinsurance Bureau meeting on Friday.

“A lot of people are watching the program,” Willis said in an interview. “The program has always been well run and now we have the numbers to back it up.”

The development of a new methodology to analyze the payments took two years and involved consultation with the industry, Willis said.

Tim Witt, the civil servant who is deputy administrator for product management, said that USDA, the Office of the Inspector General and the White House Office of Management and Budget had developed and approved the methodology that RMA used to conduct the analysis.

The crop insurance improper payment rate was 5.58 percent in 2014 and was reduced to 2.2 percent in 2015, Willis said.

The government considers improper payments to be inaccurate amounts paid to individuals or payments to the wrong person. In the case of crop insurance, it covers payments made when farmers pay premiums and when they receive payments after suffering losses.

That compares with an overall improper 2014 payment rate of 5.52 percent within the Agriculture Department and 4.02 percent, he added.

The principal causes of improper payments have been inaccurate reports of acreage and production history, he said.

The government pays about 62 percent of the cost of crop insurance premiums for farmers and also administrative and operating expenses of the program.

–The Hagstrom Report


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