The structure of Federal crop insurance is such that companies share in the risk of loss on every policy and are thus financially incentivized to administer program rules and adjust losses accurately while reducing errors and monitoring for potential fraud and program waste. The industry provides 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. The Standard Reinsurance Agreement incorporates numerous monitoring, review, audit, and other program oversight requirements through collaborative efforts between RMA and the private companies to deter and identify false claims. These efforts have resulted in the pioneering use of data mining, where millions of data points are analyzed to identify unusual or abnormal producer behavior resulting in claim reviews being routinely conducted to ensure a high level of program integrity.
Improper payments – a closely-watched standardized measure of waste and efficiency for all major federal spending programs – has been a focal point for insurers and the USDA continuously addressing and reducing the root causes or sources that may lead to improper payments. These can occur 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. While many errors can simply be rooted in data entry, reporting mistakes and process errors, both insurers and USDA work together to correct or initiate program improvements to reduce the potential causes and actions for such errors.
Crop insurance’s 2020 improper payment rate of 2.31 percent is down from 2.95 percent in 2019.
* Updated March 2021