The structure of crop insurance is such that companies have dollars at risk on every policy and are thus financially incentivized to reduce errors and cases of waste. Thus, the industry has extensive training and education efforts including a certified loss adjuster proficiency program in which all adjusters must participate.
The industry and the U.S. Department of Agriculture also work closely together to fight fraud, waste and abuse. There are numerous monitoring, review, audit and other oversight requirements in the Standard Reinsurance Agreement and collaborative efforts to deter and identify false claims have resulted in the pioneering use of data mining, where thousands of claim reviews are conducted to ensure a high level of program integrity.
Reducing improper payments – a closely-watched standardized measure of waste and efficiency for all major federal spending programs – has also been a long-term goal for insurers and the USDA. An improper payment occurs when funds go to the wrong recipient; when the correct recipient receives too little or too much; or when the recipient uses funds in an improper manner. Many errors are simply rooted in data entry and reporting mistakes.
Crop insurance’s 2016 improper payment rate of 2.02 percent is down from 2.2 percent in 2015 and 5.58 percent in 2014. By comparison, the government-wide improper payment rate was 4.67 percent in 2016 and 4.39 percent in 2015.
* Updated August 2018