BULLETIN NO.:  MGR-97-012

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

FROM:     Kenneth D. Ackerman
          Acting Administrator
          
SUBJECT:  Acreage Determination and Other Loss Adjustment Verifications 
          for Multiple Peril Crop Insurance for the 1997 Crop Year

BACKGROUND:

The acreage determination verification procedures in effect for the 1996 
crop year have been revised to reflect a need for higher levels of review to 
assess program vulnerability and producer responsibility in reporting 
acreage for insurance.  As in 1996, the Risk Management Agency (RMA) 
continues to recognize that the Federal Agriculture Improvement and Reform 
Act of 1996 requires far less acreage certification at local Farm Service 
Agency (FSA) offices than in the past.

As in 1996, because of the decreased availability of certified acreage 
information and questions involving the validity of voluntary certified 
acreage information at local FSA offices, RMA authorizes the following as a 
modified continuation of the alternative to using acreage information from 
local FSA offices for claim purposes.

ACTION:

The following modifications of procedures will be incorporated into the 
FCIC-30010 LAM for 1997 and are effective upon issuance of this bulletin.

1    Items, forms, and services available from local FSA offices for the 
     1997 crop year are:

     (1) Copies of aerial photos, (2) official field measurement; i.e., 
     boundaries of field have not changed, (3) fly overs of growing crops 
     (may not be as comprehensive as in the past), and (4) measurement 
     service.  Farm Serial Numbers will continue to be maintained
     showing the owner/operator and crop land acres.  The FSA-423, -424, 
     and -425 will continue to be provided to reinsured companies free of 
     charge through October 1, 1997, along with copies of aerial photos, and 
     other forms needed to perform loss adjustment duties.  Acreage 
     determinations that can be made by local FSA county offices (e.g.,
     planimeter measurement of a partial field) may be requested by reinsured 
     companies.

2    Determined acres.

     Determined acres are required on some preliminary claims and all final 
     claims as specified in the crop handbooks.  To make acreage determinations, 
     substitute the following procedures in this paragraph for subparagraphs 
     A, B, C, and D in the "Acreage Determination" section of the LAM, and use 
     all other subparagraphs in the "Acreage Determination" section of the LAM.

     A    Measured acres.

          Previously measured acres will be used, if available.  Measured 
          acres are considered to be the following:

          (1)  crop acres measured by the FSA, a reinsured company, or other 
               firm engaged in the business of land measurements, and these 
               measurements have been made by using measurement methods 
               described in the "Acreage Determination" section of the LAM.  
               In addition to acceptable measurement methods described in the 
               LAM, surveying devices, global positioning systems (GPS), 
               remote sensing devices used in conjunction with aerial photos 
               or satellite imagery, etc., may be used if accuracy is
               comparable to the measurement methods listed in the LAM.

          (2)  prior year(s) measurements of a field by a reinsured company, 
               local FSA office, or firm engaged in land measurement services, 
               provided:

               (a)  the entire field is planted to a single crop (same 
                    practices or types if there are separate guarantees), and

               (b)  the field boundaries have not changed.

     B    Acres not measured.

          If measured acres as described in 2A above are not available:

          (1)  The crop insurance acreage report may be considered "determined 
               acres" for claim purposes if:

               (a)  the insured has signed the acreage report indicating 
                    certification of the reported information; and
               
               (b)  the loss adjuster can determine through visual inspection 
                    of the acreage, the use of FSA certified acreage reports 
                    or aerial photo copies (obtained from the local FSA 
                    office or other acceptable sources), landmarks, etc., that 
                    the acreage would measure within 5 percent of the acreage 
                    reported on the acreage report.
                    
          (2)  When a determination is made that differs from the reported 
               (certified) acreage, even within the 5 percent tolerance, the 
               determined acreage must be used on the claim.

               Note:     The following is an example of a situation where 
               the reported acreage is within the 5 percent tolerance, but 
               cannot be used as the determined acreage:

                    Previous measurement = 80 acres (field boundaries have 
                    not changed). Crop insurance acreage report = 80 acres of 
                    corn Entire field planted to boundaries, but about 2 acres 
                    are oats.

                In this instance, the reported acres cannot be used as the 
                determined acres.  Either an actual measurement must be made 
                (e.g., wheeled) OR because the reported acreage is within the 
                5 percent tolerance, the acreage can be determined as 
                follows: estimate the oat acreage and deduct from the reported 
                corn acreage.   Determined corn acres = 78 acres (80   2 = 78).

          (3)  Acreage must be measured (or re-measured, as applicable) IF it 
               fails to meet the criteria described in 2A or 2B (1) and (2) 
               above OR:

               (a)    part of a unit is released and that part released will 
                      lose its field identity (i.e., there will be no way to 
                      establish the amount of acres at the time of a final 
                      loss inspection because of the loss of field identity),

               (b)    the reinsured company or the insured has reason to 
                      question the accuracy of the measurement or does not 
                      agree with the previously measured acres, or

               (c)    acres of varying practices, types, appraisals, etc. 
                      (as appropriate to separate on the claim) are not 
                      separated.

     C    Reinsured companies must select "5 percent" of claims assigned for 
          loss adjustment inspections.

          (1)  The selection may be made based upon either: 

             (a)    a random 5 percent selection of claim units, or

             (b)    random selection of a sufficient number of policies with 
                    claims to result in 5 percent of the claim units.

          (2)  During the loss adjustment inspection process of these selected 
               units, the acreage must be measured if:

             (a)    part of a unit is released and that part released will 
                    lose its field identity,

             (b)    acreage has not been previously measured for the crop 
                    year or DOES NOT fit the criteria for measured fields as 
                    described in 2A,

             (c)    measured acreage is not acceptable or there is reason to 
                    question the accuracy of the measurement,

             (d)    the insured does not agree with the measured acreage, or
             
             (e)    acres of varying practices, types, appraisals, etc. (as 
                    appropriate to separate on the claim), are not separated.
               
          (3)  The loss units selected will be identified in a way that the 
               units selected can be identified for compliance/audit review.

          NOTE: In addition to the 5 percent selection of policies/units 
          outlined in 2C above, acreage in loss units that do not meet the 
          criteria set forth in 2 A and B must also be measured during loss 
          inspections.

     D    For ALL claim inspections requiring determined acres, the method 
          of acreage determination and any calculations used to arrive at 
          the determined acres must be documented in the narrative of the 
          claim or on a special report attached to the claim; e.g., 
          determined acres using crop insurance acreage report - would 
          measure within 5 percent.

     E    Whenever acreage measurements are required, measurements must be 
          made by the FSA, a reinsured company, or other firm engaged in the 
          business of land measurements, and these measurements must be made 
          by using any of the measurement methods described in the "Acreage 
          Determination" section of the LAM or additional methods described 
          in paragraph 2 A (1) above.

3    Reinsured company reporting and follow-up.

     A    Reinsured companies will submit a report to RMA at the end of the 
          1997 crop year indicating the results of the random acreage reviews 
          conducted for 1997. 
          These reports will include the following information.

          (1)  The number of loss units reviewed.

          (2)  The number of acreage reporting discrepancies identified in 
               four categories.

             (a)    Units reviewed with no acreage discrepancies.

             (b)    Units reviewed with acreage discrepancies between 0.1 and 
                    5.0 percent.

             (c)    Units reviewed with acreage discrepancies between 5.1 and 
                    10.0 percent.

             (d)    Units with discrepancies exceeding 10.0 percent.

     B    Discrepancies will include both over or under-reported acres.  In 
          addition, policyholders will be required to provide a written 
          explanation for any unit which is over or under-reported by more 
          than 10.0 percent.  The written explanation shall be reviewed and 
          signed by the reinsured company and placed in the policy file.

     C.   RMA will pursue regulatory changes for succeeding crop years to 
          require policyholders to measure all policy acreage at their own 
          expense in succeeding crop years if they exceed a specified 
          tolerance for acreage discrepancies.  RMA will also continue to 
          assess the legal implications of determining a policyholder to
          have misrepresented a material fact in order to meet the burden of 
          proof needed to void the policy if policy discrepancies exceed a 
          specified tolerance.        

4    Shares/Entities/Owner/Operator and crop acreage verifications.

     A    Reinsured companies are responsible for verifying crop share, 
          entity, and crop acreage.  These verifications may be done, but 
          are not required to be done, through information obtained from 
          local FSA offices, if such information is available.  Reinsured 
          companies can choose sources other than local FSA offices
          to validate these verifications.

          (1)  Reinsured companies are cautioned that share arrangements 
               recorded on documents other than the FSA-424 (FSA-578) may be 
               on a contract-payment basis rather than on a crop-share basis.  
               The share arrangements recorded on the FSA-424 (FSA-578) will 
               be on a crop-share basis.

          (2)  If the crop share or entity is not verifiable through the 
               local FSA office or the reinsured company chooses not to 
               verify this information at the local FSA office, loss 
               adjusters must follow the share and entity verification 
               procedures in the LAM for insureds who are not participating 
               in programs administered by the FSA.

          (3)  Reinsured companies are encouraged to obtain the FSA-424 (if 
               available) as a source for determining total crop land acres 
               for the Farm Serial Number.

          (4)  Reinsured companies are also encouraged to use aerial photos 
               copies (obtained from the local FSA office or other acceptable 
               source) to verify with the policyholder. The acreage planted 
               and insured as well as uninsured acreage.  The following 
               notations on aerial maps are also suggested to determine, if 
               applicable, whether policy requirements for crop rotation have
               been met from crop year to crop year:  The insured's name, 
               policy number, and crop year should be notated on the map and 
               the crop, practice/type, etc., should be notated on each field 
               planted.