NAU Country has made dedicated efforts in all facets of our team to become the Whole Farm Revenue Protection (WFRP) experts, providing you with updates, training, and the most knowledgeable staff in the industry. As we look ahead to 2019 there are many important changes coming.
We encourage agents to utilize the new Underwriter/Agent WFRP Checklists for new and renewal application packets and revised farm operation reports. We also encourage you to utilize the resources we have available on our WFRP webpage.
The following summary captures only the major changes.
RMA consolidated commodities with multiple commodity code entries on the actuarial documents into a single commodity code for purposes of calculating the producer’s diversification discount. They added a sub-category of “rate codes” to the actuarial documents and modified the premium rate and diversification discount calculations, to allow for different premium rates for specific types/practices of a single commodity. Consolidation will be staged over several years, but for RY2019 RMA consolidated the following commodity code entries: IRR/NIRR, Tobacco, Cattle, Hogs, Poultry, and Sheep.
Likely the most significant of the 2019 changes is the addition of a source hierarchy for yields like the expected value language. This hierarchy looks at whether the insured has produced the commodity and the existence of other coverage. New procedures detail requirements for setting expected yields based on whether:
- The commodity IS INSURED or IS NOT INSURED by another policy offered under the Act that provides individual yield coverage in the county;
- Has been produced by the insured during the whole farm history base period or not.
The new procedures also included a base period for non MPCI crops or producers not insured under other MPCI coverage.
Expected Yield - The yield that you reasonably expect your insured commodity to produce under normal growing conditions in the insurance period, determined in accordance with the expected yield guidelines in section 18.
- Existence of other coverage, etc.
- Consideration for commodities with alternate bearing tendencies.
- Source documentation required at underwriting/application time.
- Base period for non MPCI crops or producers not insured under other MPCI coverage.
With regard to expected values (prices), the new procedures modified the hierarchy to move the three-year average price down to the lowest priority in the hierarchy.
RMA clarified expected value and yield corrections can occur at any time the AIP determines the price or yield used to establish the expected revenue of a commodity does not reflect the price the insured could have expected to receive when the commodity was harvested or the yield the insured could expect to produce on their farm operation under normal growing conditions.
For beginning farmers and ranchers, RMA revised eligibility requirements so that first year insureds with less than five years of tax records and who qualified as a Beginning Farmer and Rancher in the previous year are eligible.
For Organics, WFRP insured revenue includes revenue from commodities produced on certified organic acreage under an organic plan. If such certified organic production is sold as conventional production at a conventional price, the reduction in value received will be due to an uninsured Cause of Loss (COL). Revenue from commodities produced on transitional organic acreage must be listed on a separate line of the Farm Operation Report and identified with the “Method of Establishment” code for transitional organic acreage
For expanding operations, language clarifications were added for when there was a physical reduction in production capacity, for perennial crops and for livestock. If there is a physical reduction in production capacity, we can only consider the net increase in production capacity from the production capacity of those years in the WFRP history period when determining your expanding operation factor. For perennial crops, beginning production on a new orchard (or other unit of land) will not be considered a physical expansion if any revenue from production on that land was generated during your whole farm history period. For livestock, an increase in the number of livestock expected to produce revenue in the insurance period with no other changes in facilities or production capacity will not be considered a physical expansion.
On the claims side, RMA added instructions specifying that no adjustment for inventory will be made at claim time when the producer does not report stored commodities at the beginning of the insurance period. They added instructions on handling commodities with no discernible expected value and addressed how to adjust revenue if it is determined that the insured filed their taxes using a method (net vs. gross in terms of allowable revenue) differently than any year within their whole farm history period. RMA clarified procedures for failing to comply with notice requirements for damage due solely to uninsured causes of loss. New provisions allow additional time to obtain necessary documentation to determine a more accurate value for claim purposes (suspend claim). At the company’s discretion, we may defer the adjustment of a loss up to 180 days from the date you filed a claim, as specified in section 25(a), when commodities produced during the insurance period are still in storage.
As always, our Marketing Representatives and Underwriters are always able to assist with your questions. We look forward to partnering with you on your Whole Farm Revenue Protection policies.
We have also updated two training files, one summarizing the 2019 WFRP program changes and the other a complete overview of WFRP with the 2019 changes incorporated. Both can be found on our WFRP page on the NAU Country website, and under Training Forms on the Agent Portal.
To learn how to quote for WFRP, check out our Whole Farm Revenue Protection quoting Tips and Tricks.