"Insurers Speed Payouts
By Marcia Zarley Taylor
Monday, October 22, 2012 2:22PM CDT
INDIANAPOLIS (DTN) -- Drought-stricken farmers with crop insurance have already alerted their creditors: Remain calm. The check for that next land payment or equipment loan is in the mail.
The Great Drought of 2012 is the crop insurance industry's disaster equivalent of Hurricane Katrina. Companies have been working overtime since summer to speed the avalanche of claims. They started surveying growers in August to gauge potential indemnities, scrambled to hire extra adjusters, automated documentation with iPhone apps, urged farmers to assemble audit records months ahead of time and even appealed to agents to curb the telephone chit-chat.
"My average phone call is 5.66 minutes," a John Deere Insurance claims manager told agents at a recent meeting. "If I could cut that in half I could process another 20 claims a day."
With potential for more than $24.3 billion in total claims -- more than twice the all-time record of $10.8 billion set in 2011 and sixfold the dollars of a decade ago -- speed is of the essence.
Only about 15% of Midwest corn acres had insurance when drought last decimated the Corn Belt in 1988. In contrast, 80% of the nation's corn fields were insured this year and some corn growers could trigger payments as high as $1,200/acre. Back in 1988, employees of at least one insurance company spent Christmas Eve stuffing checks into envelopes on the mailroom assembly line. Even then, the last payments didn't reach some recipients until spring.
"Everything was paper records back then," said Steve Wilson, a 40-year crop insurance veteran who now serves as national claims manager for John Deere Insurance. The payment delays in 1988 aren't something the industry wants to relive.
By mid-October, companies had processed 146,000 claims for $2.2 billion of insured losses, but that's just a trickle of what's to come. Growers have 60 days post harvest to notify companies of a yield loss. Insurance companies expect half of all policyholders nationwide to be affected this year.
To minimize backlogs, both John Deere Insurance and ADM Crop Risk Services report they are processing yield losses immediately, based on planting prices guaranteed last spring. Insurers provide additional checks for revenue protection: For corn, that's the difference between the $5.68/bu. spring price and what could be a $7.51 a bushel. final guarantee based on this month's average futures price. Soybean's guarantee will be set based on Nov futures prices next month. Currently, that guarantee is running around $15.34, vs. $12.55 a bushel for the spring price.
Claims over $200,000 automatically trigger audits by insurance companies, so checks will be postponed until after that review. If claims exceed $500,000, the company must notify RMA to see if it wants to participate in the review, although RMA involvement is rare.
For large growers with multiple bin sites, elevators and FSA farm numbers, assembling all the documentation for crop insurance audits can be cumbersome. A 10,000-acre farmer, for example, might have loads for 1,500 trucks they'd need to match back to specific fields and settlement sheets each year.
Technically, auditors have the opportunity to check up to three years of records. But to speed things along, claims managers say they aren't delving into older years if 2011-crop documents appear in order.
Deere continues to promote Precision Technology Claims, using automated GPS maps of planting, yield maps and calibration records. Compared to paper methods with settlement sheets and invoices, precision claims have the potential to cut audit times to under an hour, it estimates.
Automated paperwork isn't stopping there. ADM Insurance launched an iPhone app using AerosExpress technology last summer. It allows ADM Crop Risk Services' adjusters to provide faster, more efficient delivery of crop insurance claims, the company says.
"This new application allows adjusters to view and organize claims, take photos of damaged crops, map damaged acres of the fields, find contact information and take notes after a call -- all from the palm of their hand," says Greg Mills, president of ADM Crop Risk Services. "It also uploads all of the information into ADM's Aeros system, which is accessible by the insurance agent."
That dramatically shortens the claim process, from filing to receiving the check, Mills adds. In a disaster year like 2012, time is money.
Historical Crop Insurance Prices for Corn
Year Projected Harvest
2012 $ 5.68
2011 $ 6.01 $ 6.32
2010 $ 3.99 $ 5.46
2009 $ 4.04 $ 3.72
2008 $ 5.40 $ 4.13
2007 $ 4.06 $ 3.58
2006 $ 2.59 $ 3.03
2005 $ 2.32 $ 2.02
2004 $ 2.83 $ 2.05
2003 $ 2.42 $ 2.26
2002 $ 2.32 $ 2.52
2001 $ 2.46 $ 2.08
2000 $ 2.51 $ 2.04
1999 $ 2.40 $ 2.01
1998 $ 2.84 $ 2.19
1997 $ 2.73 $ 2.81
1996 $ 3.08 $ 2.84
1995 $ 2.57 $ 3.23
1994 $ 2.68 $ 2.16
1993 $ 2.40 $ 2.49
1992 $ 2.70 $ 2.09
For 2012 state-by-state crop insurance guarantees by crop, go to the Risk Management Agency at http://www3.rma.usda.gov/…
Follow Marcia Taylor on Twitter@MarciaZTaylor"
WOW Charlie... How much will Fall be over Spring prices in Alberta?
What is the max it can increase?
By Marcia Zarley Taylor
Monday, October 22, 2012 2:22PM CDT
INDIANAPOLIS (DTN) -- Drought-stricken farmers with crop insurance have already alerted their creditors: Remain calm. The check for that next land payment or equipment loan is in the mail.
The Great Drought of 2012 is the crop insurance industry's disaster equivalent of Hurricane Katrina. Companies have been working overtime since summer to speed the avalanche of claims. They started surveying growers in August to gauge potential indemnities, scrambled to hire extra adjusters, automated documentation with iPhone apps, urged farmers to assemble audit records months ahead of time and even appealed to agents to curb the telephone chit-chat.
"My average phone call is 5.66 minutes," a John Deere Insurance claims manager told agents at a recent meeting. "If I could cut that in half I could process another 20 claims a day."
With potential for more than $24.3 billion in total claims -- more than twice the all-time record of $10.8 billion set in 2011 and sixfold the dollars of a decade ago -- speed is of the essence.
Only about 15% of Midwest corn acres had insurance when drought last decimated the Corn Belt in 1988. In contrast, 80% of the nation's corn fields were insured this year and some corn growers could trigger payments as high as $1,200/acre. Back in 1988, employees of at least one insurance company spent Christmas Eve stuffing checks into envelopes on the mailroom assembly line. Even then, the last payments didn't reach some recipients until spring.
"Everything was paper records back then," said Steve Wilson, a 40-year crop insurance veteran who now serves as national claims manager for John Deere Insurance. The payment delays in 1988 aren't something the industry wants to relive.
By mid-October, companies had processed 146,000 claims for $2.2 billion of insured losses, but that's just a trickle of what's to come. Growers have 60 days post harvest to notify companies of a yield loss. Insurance companies expect half of all policyholders nationwide to be affected this year.
To minimize backlogs, both John Deere Insurance and ADM Crop Risk Services report they are processing yield losses immediately, based on planting prices guaranteed last spring. Insurers provide additional checks for revenue protection: For corn, that's the difference between the $5.68/bu. spring price and what could be a $7.51 a bushel. final guarantee based on this month's average futures price. Soybean's guarantee will be set based on Nov futures prices next month. Currently, that guarantee is running around $15.34, vs. $12.55 a bushel for the spring price.
Claims over $200,000 automatically trigger audits by insurance companies, so checks will be postponed until after that review. If claims exceed $500,000, the company must notify RMA to see if it wants to participate in the review, although RMA involvement is rare.
For large growers with multiple bin sites, elevators and FSA farm numbers, assembling all the documentation for crop insurance audits can be cumbersome. A 10,000-acre farmer, for example, might have loads for 1,500 trucks they'd need to match back to specific fields and settlement sheets each year.
Technically, auditors have the opportunity to check up to three years of records. But to speed things along, claims managers say they aren't delving into older years if 2011-crop documents appear in order.
Deere continues to promote Precision Technology Claims, using automated GPS maps of planting, yield maps and calibration records. Compared to paper methods with settlement sheets and invoices, precision claims have the potential to cut audit times to under an hour, it estimates.
Automated paperwork isn't stopping there. ADM Insurance launched an iPhone app using AerosExpress technology last summer. It allows ADM Crop Risk Services' adjusters to provide faster, more efficient delivery of crop insurance claims, the company says.
"This new application allows adjusters to view and organize claims, take photos of damaged crops, map damaged acres of the fields, find contact information and take notes after a call -- all from the palm of their hand," says Greg Mills, president of ADM Crop Risk Services. "It also uploads all of the information into ADM's Aeros system, which is accessible by the insurance agent."
That dramatically shortens the claim process, from filing to receiving the check, Mills adds. In a disaster year like 2012, time is money.
Historical Crop Insurance Prices for Corn
Year Projected Harvest
2012 $ 5.68
2011 $ 6.01 $ 6.32
2010 $ 3.99 $ 5.46
2009 $ 4.04 $ 3.72
2008 $ 5.40 $ 4.13
2007 $ 4.06 $ 3.58
2006 $ 2.59 $ 3.03
2005 $ 2.32 $ 2.02
2004 $ 2.83 $ 2.05
2003 $ 2.42 $ 2.26
2002 $ 2.32 $ 2.52
2001 $ 2.46 $ 2.08
2000 $ 2.51 $ 2.04
1999 $ 2.40 $ 2.01
1998 $ 2.84 $ 2.19
1997 $ 2.73 $ 2.81
1996 $ 3.08 $ 2.84
1995 $ 2.57 $ 3.23
1994 $ 2.68 $ 2.16
1993 $ 2.40 $ 2.49
1992 $ 2.70 $ 2.09
For 2012 state-by-state crop insurance guarantees by crop, go to the Risk Management Agency at http://www3.rma.usda.gov/…
Follow Marcia Taylor on Twitter@MarciaZTaylor"
WOW Charlie... How much will Fall be over Spring prices in Alberta?
What is the max it can increase?
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