BULLETIN NO.: MGR-96-035


TO:       All Reinsured Companies
          FSA Headquarters, Program Delivery and Field
          Operations
          All Risk Management Field Offices

FROM:     Kenneth D. Ackerman
          Acting Administrator

SUBJECT:  Raisin Monitoring Program



BACKGROUND:

In recent years there has been increased inconsistency in the manner that 
raisin losses have been adjusted. The areas of most concern involve the 
handling of raisins sold off-grade as distillery material (DM) or salvage, 
the prices obtained for raisins sold for salvage, and the methods used for 
establishing tray weights and tray discard.  These inconsistencies have led 
to allegations that some raisin insureds are receiving more liberal treatment 
than others when losses are adjusted.  The Risk Management Agency (RMA) along 
with reinsured companies and the Farm Service Agency (insurance providers) 
must try to avoid inconsistent loss adjustment practices from occurring.

ACTION:

The Risk Management Sacramento Compliance Office (RMSCO) will initiate a 
raisin monitoring review.  The review will determine if (i) raisins 
identified to be disked or sold off-grade as DM or salvage should have been 
reconditioned; (ii) the highest salvage price was obtained; and (iii) 
accurate appraisals determining tray weights and field discards were being 
performed. To determine if applicable approved procedures are followed, RMSCO 
will monitor raisin loss adjustment activities.  

Effective immediately, all insurance providers will FAX a completed RAISIN 
MONITORING WORKSHEET (Exhibit 1) to the RMSCO when a policy contains unit(s) 
in which the insurance provider intends to release insured tonnage:

   (i)   to be disked; or 
   (ii)  sold off-grade as DM or salvage; or 
   (iii) appraised.  
   
No insured tonnage can be released until the RMSCO has given approval.

The insurance providers' field supervisor/representatives will be responsible 
for verification of intended disposition, valuation of off-grade raisins, and 
appraised tonnage.  RMSCO personnel will monitor the verification process for 
consistency with established procedures.  

Steps to follow during the Raisin Monitoring Program:

1.  Insurance providers will inform loss adjusters not to finalize claims 
    containing insured tonnage to be disked; sold off-grade as DM or salvage; 
    or appraised.  Loss adjusters should advise insureds to keep the raisin 
    trays intact until the unit(s) is released.

2.  Insurance providers will FAX the the completed RAISIN MONITORING 
    WORKSHEET to the following:

    USDA/Risk Management Compliance Office
    1303 J Street, Suite 460
    Sacramento, California 95814
    Phone Number: (916) 498-5288
    FAX Number:   (916) 498-5296

    RMSCO will review the FAX documents upon receipt and notify the insurance 
    provider within one day which policies have been selected for review.  The 
    FAX documents received at the RMSCO after 3:00 p.m. will be reviewed the 
    next day.

3.  Insurance providers are permitted to finalize the claims for those 
    policies not selected for verification once notified by RMSCO.

4.  Within one day of policy selection, RMSCO will coordinate with insurance 
    providers' field supervisors/representatives when the verification of the 
    loss unit(s) will be conducted.

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, resulting in a 
    difference of ten percent or more between the findings made by a 
    reappraisal and an original appraisal.

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RAISIN MONITORING WORKSHEET

INSTRUCTIONS: Complete and FAX this worksheet, to the Risk Management 
Sacramento Compliance Office (RMSCO) at FAX Number: (916) 498-5296, when a 
policy contains unit(s) in which the insurance provider (reinsured company 
or Farm Service Agency county office) intends to release insured tonnage: 

   (i)   to be disked, or 
   (ii)  sold off-grade as DM or salvage, or 
   (iii) appraised.

Incomplete worksheets will be faxed back to the sender for completion.  The 
RMSCO will review completed worksheets upon receipt and notify the sender 
within one day which policies have been selected for review.  Worksheets 
received in the RMSCO after 3:00 p.m. will be reviewed the next day.

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INSURANCE PROVIDER:

COUNTY:

POLICY NO.:

CLAIM NO.:

INSURED ENTITY:

SECTION I: To be completed for all units insured.

UNIT     ACREAGE      TRAY       LOCATION      COUNT         DESCRIPTION



SECTION II: To be completed for unit(s) in which the company intends to 
            release insured tonnage: to be disked, or sold off-grade as DM or 
            salvage, or appraised.  

UNIT NUMBER



TONNAGE TO RELEASE



SOLD



DISK



APPRAISED TRAY WEIGHT



TRAY DISCARD



REASON FOR RELEASE



INSURANCE PROVIDER             REPRESENTATIVE                     DATE