Risk Management Agency
RMA GUARANTEES PAYMENTS
WASHINGTON, Nov 25, 2002 - USDA officials today announced actions taken to assure producers that crop insurance payments and services will continue despite the failure of an insurance company. The risk management tools available to American's producers are delivered by 18 private insurance companies and USDA's Risk Management Agency (RMA) acts as regulator and reinsurer.
Acceptance Insurance Companies, Inc., the parent company of American Growers Insurance Co., one of the Federal crop insurance providers, recently announced a $131 million loss. The Nebraska Department of Insurance, the state regulator for American Growers, recently issued an Order of Supervision to guarantee the safe and continuing operation of American Growers. RMA is moving expeditiously in concert with the Nebraska Department of Insurance and company management to ensure that all outstanding policy claims and service will continue uninterrupted.
Administrator Ross J. Davidson said today, "Our goal is to have all claims paid in-full and on time." Producers insured by American Growers Insurance Company will continue to receive payments and service by the company on all their Federal crop insurance policies.
Davidson also stated that RMA is devoting as many resources as needed to ensure a timely resolution of all 2002 claims. RMA has dispatched a review team to American Growers' headquarters to monitor and review their operations. "Service to producers will not be disrupted," Davidson said. Further, RMA will announce plans for the transfer of American Growers' 2003 crop year book of business and will guarantee that all policyholders will be provided crop insurance coverage.
During this transition, "It is critical that service to the producer is seamless and the integrity of the insurance program is upheld," Davidson said. The recent Order of Supervision issued by the Nebraska Department of Insurance will ensure a smooth transition of the business by allowing Nebraska to exercise appropriate oversight over the operations of American Growers as they continue to service all policyholders. Equally important is USDA's reinsurance role which guarantees that all Federal crop insurance claims will be paid timely. RMA will work closely with the Nebraska Department of Insurance and American Growers to maintain normal business operations during this transition.
Rain and Hail L.L.C. entered into a non-binding letter of intent with American Growers to obtain their 2003 book of business. However, Rain and Hail conditioned their offer upon RMA's agreement to waive certain procedures. RMA determined that such a waiver was not in the best interest of the policyholders or taxpayers and may have adversely affected the integrity of the crop insurance program.
American Growers is a private insurance company that is reinsured by the Federal Crop Insurance Corporation (FCIC) and authorized to provide crop insurance to producers.
Producers with questions or problems should contact their agent or American Growers at 1-800-999-7475. Davidson also indicated that should problems persist, producers should contact RMA at 1-800-205-9953.