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Instances of Improper Crop Insurance Payments Well Below Government Averages

NATIONAL CROP INSURANCE SERVICES
8900 Indian Creek Parkway, Suite 600
Overland Park, KS 66210

For more information contact Laurie Langstraat at (913) 685-2767

The Acting Administrator of the USDA’s Risk Management Agency said yesterday that the improper payment rate — a closely-watched standardized measure of waste and efficiency for all major federal spending programs – fell again in 2016 for crop insurance.

The 2016 rate of 2.02 percent marked the second year in a row it declined, falling from 2015’s 2.2 percent.  Both are significantly lower than the 5.58 percent catalogued in 2014.

The announcement, made by Heather Manzano at the crop insurance industry’s annual meeting, was great news considering crop insurance’s results were far better than other government programs.  The government-wide improper payment rate was 4.67 percent in 2016 and 4.39 percent in 2015.

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.

Tom Zacharias, the president of National Crop Insurance Services, which sponsored this week’s meetings, said the news shows how well the current crop insurance infrastructure operates.

“Crop insurers and our partners at the USDA work closely together, and we are dedicated to being good stewards of taxpayer dollars by constantly improving efficiency,” he said.  “The private sector spends millions every year on new research and technologies, as well as monitoring, training, and education programs.”

Reducing improper payments has been a long-term goal for crop insurance providers and the USDA.  Zacharias said the new data is proof that the hard work is paying off, and he believes it will be key to defending the farm safety net in political circles.

“It proves how efficient the current system is, and it proves that crop insurance is a well-run public-private partnership,” he concluded.  “It’s a great story, and it’s one we will tell over and over again as perennial critics of farm policy look to weaken farmers’ risk management tools.”