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Insurance must remain affordable for producers. "
Crop insurance is arguably the first farm policy
in history that is financed, in part, by the farmers
who benefit from it. But if farmers could not afford
to participate in crop insurance, not only would it
disrupt the actuarial soundness of the program,
but it would seriously undermine the efficacy of
the farm safety net. Affordability goes hand in
hand with availability and leads us to the Bridge
of Viability.
Bridge Three: Viability
For crop insurance to be successful, it must be
actuarially sound. The crop insurance actuarial
soundness mandate requires that historical premiums
must be sufficient to cover long-term losses.
Financial viability depends upon wide-scale availability
and participation, as well as affordability.
Moreover, actuarial soundness instills both public
and private sector confidence in the insurance system.
As rural America confronts climate change,
actuarial soundness speaks to the ability to measure
and quantify the ever-changing nature of risk
over time and on a national basis, establishing the
price of risk both fairly and accurately.
Bridge Four: Adaptability
Crop insurance must be adaptable to meet the
ever-changing risk management needs of America's
farmers and ranchers. Crop insurance must
be able to adapt to changing weather and climate
risks and changes in market risk. In addition, the
adaptability of the crop insurance system complements
efforts to incentivize the voluntary adoption
of climate-smart farming practices. According to
a peer-reviewed article published in the Journal of
Environmental Management in December 2020,
" ...results suggest that resiliency for Midwest operations
includes both crop insurance and conservation
practices. Neither behavior was found to
inhibit the other. On the contrary, corn producers
experienced complimentary outcomes from a
combined approach that was greater than participation
in either behavior by itself. "
Crop insurance has evolved to accommodate
the integration of conservation programs and
other farmer-led climate initiatives. For example,
crop insurers have worked with USDA to administer
the Pandemic Cover Crop Program and the
recently introduced Post Application Coverage
Endorsement helps improve water quality and
lower nutrient runoff. Over the years, the crop
insurance program has demonstrated its ability to
48 FIRSTQUARTER2022
be adaptable to the risk management needs of the
American farmer.
Bridge Five: Voluntary
Most of us would rather volunteer than be " volun-told. "
And most prefer carrots to sticks. In order
to be successful, the road ahead to new policy
initiatives will need to be designed such that adoption
and implementation are voluntary. America's
farmers have already leveraged advancements in
technology and best practices to farm more efficiently.
These changes need to be made voluntarily
by farmers to reflect the individualized risks and
considerations of each farming operation. Much
like there is no one-size-fits-all crop insurance policy,
there is no one-size-fits-all solution to climate
change or other policy objectives. That is why crop
insurers, RMA, and farmers are working together
to incentivize the voluntary adoption of the climate-smart
farming practices as well as other policy
initiatives that may be in our future.
Bridge Six: Data-Driven
The crop insurance industry is continually
working with RMA and its partners at land grant
universities to build upon decades of fundamental
research and agricultural science to further
improve crop insurance. The crop insurance industry
supports a national agronomic research
program with over 20 projects at the various land
grant universities aimed at improving existing or
developing new loss adjustment procedures. Each
year the actuarial database is updated in order to
develop more accurate premium rates. Planting
dates and transitional yields are also routinely updated
as new data becomes available. In addition,
data mining technology is employed to improve
program integrity. Simply put, crop insurance is a
data-driven system.
Bridge Seven:
Incentive-Based
A fundamental characteristic of today's crop
insurance system is its incentive-based structure.
The federal crop insurance program is a model
for the use of incentives in achieving both policy
and business objectives. Virtually each level
of the delivery system is characterized by some
degree of incentivization. Farmer premium support
keeps crop insurance affordable resulting
in wide-scale participation. Public-private risk
sharing deters fraud, waste and abuse and contributes
to actuarial soundness. As we traverse
the road ahead, it will be essential that crop insurance
remains incentive-based and that we
continue to advance the use of incentives to improve
the program.
In Closing
We have the privilege and opportunity to work
in an industry that is fundamental to our economy
and our society. Our role is to help farmers and
ranchers manage the uncertainty they face each
new season. As we have seen over the past several
years now, we cannot pretend to know the future
before us and how the uncertainty we face will
present itself. However, we can know with some
degree of certainty the " Bridges " we need to cross
to successfully travel the uncertain road before us.
" ...there are Stars in the Southern Sky...
down the Seven Bridges Road... "
In This Issue
In this issue we look back at 2021 and the activities
NCIS and the industry were involved with.
While the pandemic halted some events, NCIS was
proud to work with our members to provide loss
adjuster training schools and continue the important
work of regional/state committee and standing
committees to ensure the continued success of the
crop insurance program.
The industry was also very active in developing
new crop insurance products for America's farmers
and ranchers in 2021 and one of those, Micro
Farms Insurance, is explained in detail beginning
on page 11. This important product, which is part
of the Whole Farm Revenue Policy, is geared towards
small-scale farmers.
NCIS held its annual Claims Manager Conference
in January 2022 with just under 400 people in
attendance. This is an important conference to begin
the start of the crop year as companies prepare
for crop losses that could occur. Claims supervisors
and trainers attend this event to learn about changes
and updates to crop loss procedures so they can,
in turn, train their loss adjuster force.
Next, we highlight events from the 2022 Crop
Insurance Industry Annual Convention. We were
very happy to hold the Convention in person and
hopeful that the face-to-face meetings can continue
as we move through the year. One of the important
events that takes place during the Convention is
the presentation of industry awards. These awards
recognize individuals who have gone above and beyond
in their dedication and work in support of the
crop insurance industry. Each of those presented
with an award were well-deserving of the recognition
and we thank them for their excellent service.
We wish you all a wonderful spring and all the
best in 2022!
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