Farmers and ranchers are struggling through widespread severe flooding and excess moisture conditions in many parts of the nation, causing catastrophic damage to crops. Concerns have been expressed about the requirement to pay spring crop insurance premiums timely to avoid accrual of interest because some farmers and ranchers will not yet receive their crop insurance indemnity following this year’s widespread, significant crop losses.
Section 24 of the Common Crop Insurance Policy, Basic Provisions (18-BR) states that interest will accrue starting the first day of the month, following the issuance of the notice of premium due by the Approved Insurance Provider (AIP), provided that a minimum of 30 days have passed from the premium billing date.
For the 2019 crop year only, accrual of any interest on unpaid spring crop insurance premium is deferred to the earliest of the applicable termination date or two months, until Nov. 30, for all policies with a premium billing date of Aug. 15, 2019.
“USDA recognizes that farmers and ranchers have been severely affected by the extreme weather challenges this year,” U.S. Secretary of Agriculture Sonny Perdue said in a statement. “I often brag about the resiliency of farmers but after a lifetime in the business, I have to say that this year is one for the record books. To help ease the burden on these folks, we are continuing to extend flexibility for producers with today’s announcement.”
For any premium that is not paid by the earliest of the applicable termination date or Nov. 30, interest will accrue consistent with the terms of the policy. For example, without this change, policies with an Aug. 15 premium billing date would have interest attach starting Oct. 1 if the premium was not paid by Sept. 30. However, under this change, policies that do not have the premium paid by Nov. 30 will have interest attach on Dec. 1 calculated from the date of the premium billing notice.
AIPs should promptly notify potentially affected policyholders of said relief.
To assist the AIPs and provide relief from the requirements of the Standard Reinsurance Agreement that all uncollected premium be paid to the Federal Crop Insurance Corporation (FCIC), the Risk Management Agency will also defer collection of any unpaid producer premium from the AIPs, without interest, by two months. The November monthly settlement report will be the basis for determining premium due the FCIC from the AIP. Interest will then begin to attach according with the terms of the Standard Reinsurance Agreement.