Posted On 17 Mar 2020
Why have you been selected for an APH Review?
APH Reviews are used as a safety check to ensure that your reported production is correct. The review is required on all crop insurance claims when the indemnity paid on a single crop goes over $200,000. Crop Insurance Companies also reserve the right to schedule an APH Review for a quality assurance at their discretion.
Here is some insight into high dollar claims. They are claims that go over $200,000. The Federal Crop Insurance Corporation Risk Management Agency (RMA) rules require the crop insurance provider to conduct an inspection on any eligible crop insurance contract that pays an indemnity of $200,000 or more. This inspection involves a review of your current year’s claim and a review of planted acres and production history for that crop for the preceding three years. The crop insurance contract is written on a crop by county basis so each crop in each county stands alone separately. The current year claim review will require a review of your current year’s acreage and production reports. Also, you will need to provide production records for the previous three years and your planted acreage for the previous three years. This could include the FSA 578 acreage report and any settlement sheets for your sold production as well as any measurement needed for farm stored production not yet sold.
Also, the rules identify a $500,000 high dollar claim review. The procedures and rules are exactly the same other than the inspection can be accompanied by an RMA representative. These inspections and audits are done to ensure that the APH used to determine the indemnity payment is correct and accurate.
There is one other situation when you may be required to be inspected and audited. The RMA rules require that each insurance provider audit 5% of their policies every year. Your name may be pulled randomly for this type of review even if you have not filed a claim that year. This type of inspection and audit is usually done on one crop for one-year basis.
What do you need to get ready for an APH review?
Here is a guide to prepare you for a successful review. You will need the following Production and Supporting Records.
As a producer you must keep separate records of production from all acreage on a unit basis. If you do not have contemporaneous records separating production by type within a unit, the reviewer must allocate the total production within that unit to the different types. If production was commingled between units, separate verifiable records must be provided.
Have readily available by insurance unit for the last 3 years any of the available items below:
- Settlement Sheets
- Load Records
- Bin Measurements
- Loss Papers
- Livestock Feeding Records
- Any type of approved record that would verify your reported acres and production
What are the requirements for acceptable production records for proving prior year acres?
Production reports must be substantiated by marketing records from a marketing outlet, processor, commercial facility or buyer, such as:
- Settlement Sheets or Weight Tickets
- Ledger Sheets
- Broker Sales Summaries
- Sales or Load Receipts
These records must include buyer’s name, production, crop type, producer’s name and delivery date.
Settlement / Summary Sheets
Settlement sheets must show production and production sold by crop year as well as:
- Buyer’s Name and Address
- Insured’s Name
- Load / Ticket Number
- Gross Weight
- Tare Weight
- Date Weighed
If an insured does not yet have his / her settlement sheets, weight tickets are also valid for production.
Signed appraisals from an approved insurance provider are acceptable forms of verified production. If an insured has any previously appraised production that was ultimately sold, they must provide settlement sheets.
Determinations of harvested production to be counted must be based on weights or measurements and conversion factors consistent with FDIC procedures used in loss adjustments.
- Records must be maintained on a unit/type basis.
- Insured’s must have old crop production measured by either by the company or FSA prior to new crop being added.
- If an insured does not have the production measured as stated above before combining production, the production must be considered commingled and the procedures for commingled production will apply.
Records must be specified by:
- Number of Head
- Type of Livestock
- Estimated Weight (average to the nearest 100 pounds) of Livestock
- Date Fed
- Bale Weight
- Number of Bales Fed
- Crop Type and Unit Number
These records are only acceptable for current year’s production.
Precision Farming Systems must be calibrated per manufacture’s specification. If the records provided by the insured are not reasonable, or the AIP has reason to question the records, the insured must provide the precision farming technology, yield monitor systems raw data and any additional records requested by the AIP.
For planted acreage records to be acceptable from an automated planter monitoring system, the insured’s determined acres and map must provide the following information in conjunction with production data:
- Insured’s Name
- Unit Number
- FSN / Tract / Field ID Number
- Legal Description
- Acres Planted
- Electronically Produced Maps of Planted Acreage and Acreage Summary Records
Where the rubber meets the road
The sole purpose of purchasing any type of insurance is to be paid for a loss. The sole purpose of Federal Crop Insurance is to be a safety net for crop losses due to weather related events. First, lets look at what is a covered claim. What is an insured cause of loss? Insured causes of loss (and any limitations) are stated in each crops policy provisions. They include:
- Adverse weather conditions
- Fire due to natural causes
- Insects, but not damage due to insufficient disease control measures
- Plant disease, but not due to insufficient disease control measures
- Volcanic eruption
- Wildlife, unless control measures have not been taken.
- Failure of irrigation water supply, if caused by an insured peril that occurs during the insurance
- Other insured causes of loss due to natural disasters may be determined by the Secretary of Agriculture
What we are really insuring is our loss of revenue or income to the farm due to loss of production of a crop. The sole purpose of this concept of a safety net is to provide enough income to get you through to the next year; to help cover your fixed costs so that you do not go into bankruptcy. It is not meant to provide you with enough money to buy a new truck or tractor or pay for a vacation.
When you understand that the highest coverage option for many Federal Crop Insurance Programs is either 75% or 85% leaving the rest of your loss as what is considered your deductible, you may still have a significant loss.
Paying claims is where the rubber meets the road! The claims process procedures, like other aspects of Federal Crop Insurance are full of regulations and rules. Some of these regulations and rules can make the time from loss to payment seem like an eternity. Knowing the regulations and your duties and responsibilities will speed up the claim process and payment. It is your responsibility to keep accurate records.