BULLETIN NO.: MGR-96-019 TO: All Reinsured Companies All Risk Management Field Offices FROM: Kenneth D. Ackerman Deputy Administrator For Risk Management SUBJECT: Wheat Appraisal Monitoring Program in Kansas, Oklahoma, and Texas BACKGROUND: Crop condition assessment reports, satellite imagery analysis, weather data, and crop modules all show that fall and winter growing conditions have been extremely poor for 1996 winter wheat in the plains states of Kansas, Oklahoma, and Texas. These reports indicate that inadequate topsoil moisture, extended periods of dry weather, and extreme cold last fall and winter resulted in poor plant growth and root development. In addition to the above mentioned conditions wheat currently breaking dormancy in extremely dry areas has also received moderate to severe wind damage. ACTION: Risk Management's, Risk Compliance Division (RCD), will initiate a wheat loss appraisal monitoring program review. The purpose of the review is to monitor wheat acreage releases to assure consistency between insurance providers and that approved policy and procedures are being followed. In order to determine that applicable approved appraisal procedures were followed, RCD will monitor reappraisals of unharvested acreage performed by insurance providers. The Kansas City Compliance Office (KCO) will supervise the monitoring efforts consisting of the following counties in Kansas - Barber, Barton, Cheyenne, Clark, Cloud, Comanche, Decatur, Edwards, Ellis, Ellsworth, Finney, Ford, Gove, Graham, Grant, Gray, Greeley, Hamilton, Harper, Harvey, Haskell, Hodgeman, Jewell, Kearny, Kingman, Kiowa, Lane, Lincoln, Logan, McPherson, Meade, Mitchell, Morton, Ness, Norton, Osborne, Ottawa, Pawnee, Phillips, Pratt, Rawlins, Reno, Republic, Rice, Rooks, Rush, Russell, Saline, Scott, Sedgwick, Seward, Sheridan, Sherman, Smith, Stafford, Stanton, Stevens, Sumner, Thomas, Trego, Wallace, and Wichita. The Dallas Compliance Office (DCO) will supervise the monitoring efforts consisting of Oklahoma Counties - Alfalfa, Grant, Kay, and Woods and Texas Counties - Concho, Jones, Runnels, Taylor, and Tom Green. Adjustments will be made to the monitoring region during the review by RCD to expand or reduce the states and counties involved as needed. Notification will be given to each insurance provider via fax. Effective today, all insurance providers in the monitoring regions should begin faxing the 1996 Wheat Crop Review form (See Exhibit 1), to the designated Compliance Field Office (CFO). No acreage can be put to another use until approval has been given by the CFO. Reappraisals of wheat acreage will be conducted by company Field Supervisors/Loss Adjusters and monitored by CFO personnel. Exhibit 2 outlines the steps to follow during the wheat reappraisal. Exhibit 3 establishes the tolerance policy for determining when an appraisal is unacceptable. The appropriate Compliance Field Office will be responsible for the logistical details related to these procedures. In the event a producer wants to plant to another crop immediately, the producer will be allowed to leave representative strips for reappraisal. This will be allowed provided ALL of the following conditions are met: 1. The representative strips will be ten feet (10') wide the entire length of the field. 2. The loss adjuster and policyholder decide the location of each representative strip. 3. The loss adjuster informs the policyholder to leave the representative strips intact until notified by the CFO. 4. The loss adjuster identifies on the aerial photo the location of each representative strip. Wheat Appraisal Monitoring Program - 1996 STEPS TO FOLLOW DURING THE APPRAISAL MONITORING PROGRAM: 1. Insurance providers will inform loss adjusters not to finalize claims (release acreage). These claims should be finalized at the FSA county office and company level. Loss adjusters should advise insureds to keep acreage intact until it is released by the FSA or Company. 2. Insurance providers will provide CFO with appraisal information worksheets via fax to the appropriate office at the following addresses: USDA/FSA/RISK MANAGEMENT Risk Compliance Field Office P. O. Box 419293 Kansas City, MO 64141 Phone Number: (816) 926-7963 FAX Number: (816) 926-5186 USDA/FSA/RISK MANAGEMENT Risk Compliance Field Office 1111 West Mockingbird Lane, Suite 280 Dallas, TX 75247 Phone Number: (214) 767-7700 FAX Number: (214) 767-7721 3. The CFO will review the worksheets upon receipt and notify the FSA/Companies within one (1) business day which policies have been selected for reappraisal. Worksheets received after 3:00pm will be reviewed the next business day. Exhibit 1 is the worksheet to be completed by FSA/Companies for the review selection. 4. Insurance providers should release acreage and finalize claims for those policies not selected for reappraisal once notified by the CFO. 5. The CFO will coordinate and monitor reappraisals with FSA/Company Field Supervisors/Representatives within two (2) business days of policy selection and FSA/Company notification. FSA/Companies should provide CFO with the name and location of Field Supervisors/Representatives (Point of Contact) who will be responsible for conducting reappraisals. 6. The CFO should be notified of quality control reviews, preharvest, and growing season inspections conducted by the FSA/Companies and provided a copy of the documentation. Wheat Appraisal Monitoring Program - 1996 THE TOLERANCE POLICY FOR DETERMINING WHEN AN APPRAISAL IS UNACCEPTABLE WILL BE AS FOLLOWS: 1. FCIC-approved policies and procedures were not followed resulting in a difference of any amount between the findings made by a reappraisal and an original appraisal. 2. FCIC-approved policies and procedures were followed, and: A difference of ten percent or more exists between the results of a reappraisal and that of an original appraisal of 20 bushels or greater. A difference of two bushels or more exists between the results of a reappraisal and that of an original appraisal of less than 20 bushels. When a unit is reappraised and found to contain a determination that is unacceptable, the original appraisal will be defined as incorrect. All differences in a unit loss determination defined as incorrect will be corrected by the FSA/Company.