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Guidance for Updating the SRA Appendix IV Review Matrix

This document establishes the guidance that will be generally followed to update the Standard 

Reinsurance Agreement (SRA) Appendix IV Review Matrix when new plans of insurance and 

endorsements are introduced. The guidance reflects the rationale and criteria used to construct 

the Review Matrix as published in informational memorandum COM-17-003 and subsequent 

guidance issued after 2017 (see below for $200K Indemnity Reviews).

The Review Matrix will be updated as needed to reflect the introduction of new plans of 

insurance and endorsements, or if the Appendix IV review requirements are changed. It is 

expected that most new insurance products (policies and endorsements) will readily be placed 

into existing categories of the Review Matrix, e.g., an extension of the Actual Production History 

plan of insurance to a new crop. Thus, updates will most likely only consist of minor 

adjustments. 

QUALITY CONTROL REVIEWS

Per SRA Appendix IV, section III(b), approved insurance providers (AIPs) are responsible for 

conducting reviews of eligible crop insurance contracts (ECICs) as described below in order to 

ensure the effectiveness of the company’s internal controls and assure that program integrity is 

maintained. 

Data Mining Reviews: RMA uses data mining to detect ECICs for which the experience is 

anomalous relative to some peer group. Any ECIC, along with included endorsements, is 

potentially subject to a Data Mining Review if individual loss adjustment is required to 

determine the amount of the loss. ECICs based on index or area insurance concepts (e.g., 

Rainfall Index, Area Risk Protection) are, in general, not subject to Data Mining Reviews because 

the loss experience of all similarly situated producers is the same, i.e., there are no anomalies 

to detect.

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Individual Policy Reviews: An Individual Policy Review, as described in Appendix IV, section 

III(b)(2), is a review of any ECIC specifically assigned and denoted as such by RMA. The trigger 

for an Individual Policy Review is the specific notification by RMA to an AIP to conduct a review 

and denoted as such in email, letter, or similar correspondence providing the instruction. Any 

ECIC is potentially subject to an Individual Policy Review.

Conflict of Interest Reviews: SRA Appendix IV, section III(b)(3)(A), requires AIPs to conduct 

Conflict of Interest (COI) reviews. However, in lieu of the COI criteria stated in Appendix IV, 

RMA provides each AIP with the specific list of ECICs for which a Conflict of Interest review is 

required if a claim is filed. If an ECIC is not on the list provided by RMA, the AIP is not required 

to conduct a COI review of the policy even if it would otherwise satisfy the Appendix IV criteria.

1 For area/index plans the guidance does not preclude the use of data mining. There may be specific issues that 

arise in the future that are amenable to a data mining approach, and the guidance allows for that possibility. 
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A Conflict of Interest Review is required for any ECIC that (1) is on the COI list provided to the AIP 

by RMA, and (2) a claim for indemnity is filed. 

Consecutive Loss Adjuster Reviews: A Consecutive Loss Adjuster Review is required of at least 

15 percent of the ECICs when individual loss adjustment is required and the same loss adjuster 

has signed the respective claims for indemnity for three consecutive years for the same 

producer/Substantial Beneficial Interest Holder (SBI), county, and commodity. To illustrate, 

consider a producer that has purchased an individual yield-based policy along with the HighRisk Land Exclusion Option (HRLEO). If the producer has an indemnity under the individual 

yield-based policy and/or the HRLEO for three consecutive years, and the same adjuster signs 

the claim for all three years, this producer would be subject to the 15 percent Consecutive Loss 

Adjuster Review requirement. Conversely, for a producer with an individual yield-based policy 

and the Supplemental Coverage Option (SCO), any SCO claim would not count toward the three 

consecutive years because SCO does not require individual loss adjustment. 

$200,000 Indemnity Reviews: SRA Appendix IV, section III(b)(3)(C), requires AIPs to conduct

$200,000 Indemnity Reviews for any ECIC for which prevented planting indemnity and/or all 

other indemnity exceeds $200,000. However, in lieu of the $200,000 Indemnity review criteria 

stated in Appendix IV, RMA provides each AIP with a list of ECICs with at least $200,000 of 

liability and designates each ECIC as required or exempt from review. Those ECICs designated as 

required will require a review if the total sum of losses paid, including prevented planting, 

harvested, and unharvested losses reaches or exceeds $200,000. The list of ECICs will include all 

policies, including endorsements, that make up the ECIC. Likewise, the list of ECICs is provided 

at the commodity level and does not separate situations when the insured may elect different 

coverage levels, prices or any other insurance element by type or variety. The Type Code 

reported on the Insurance In Force and the Acreage records are not taken into consideration 

and not summed separately for the commodity. For example, a producer that insures grapes in 

California; Chardonnay grapes insured at 55% coverage level, Malbec grapes insured at the 80% 

coverage level, and Melot at the 60% coverage level, none of which received $200,000 of 

indemnity independently, but in combination exceeded $200,000 of indemnity, would require a 

$200,000 Indemnity review provided it is not designated as exempt.

Rainfall Index Reviews: Review requirements for any ECIC based upon this insurance plan is as

stated in SRA Appendix IV, section III(b)(3)(D), augmented with the requirement to verify that 

the reported practice is a good farming practice, per element (4) in the definition of inspection in 

Section I of the SRA. The latter requirement was added because of concerns that some insureds 

were not reporting the practice correctly, which resulted in guarantees higher than otherwise 

warranted.
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CATEGORIES OF INSURANCE PLANS AND ENDORSEMENTS

The SRA Appendix IV review requirements apply to the ECIC for any insured commodity. Some 

commodities allow for different insurance coverages based upon type or variety. Additionally, 

new insurance features allow producers to purchase multiple insurance products for a given 

commodity, each covering a different aspect or layer of risk. All types and/or varieties as well as 

all insurance products for a given commodity purchased by the insured in a county from a single 

AIP will be combined into a single ECIC for the purpose of Appendix IV $200,000 Indemnity 

Reviews. The below provides guidance regarding the treatment of potential combinations of 

insurance plans and endorsements. 

Stand-Alone Insurance Plans

For review purposes, certain plans of insurance are grouped into larger categories. The defining 

characteristics for the groupings are described below. Certain insurance plans not readily 

grouped with other plans are maintained as separate, distinct categories in the Review Matrix. 

Individual Yield Based: This category includes plans of insurance that base the guarantee, at 

least in part, upon the production history of the individual producer. This category also requires 

a loss adjuster to make an assessment of the cause and amount of loss claimed by the 

producer. A review of an ECIC which includes an insurance product from this category will 

require an AIP to conduct an inspection as defined in section I of the body of the SRA, along 

with an Actual Production History Verification as defined in SRA Appendix IV, section III(c). 

Asset Based: Plans of insurance in this category base the guarantee on the physical stock/value 

of the productive asset rather than production, such as for tree and nursery crops. For review 

purposes, this category also includes the Dollar plans of insurance for which the guarantee is 

derived from a fixed monetary value established by RMA. This category of insurance plans 

requires a loss adjuster to make an assessment of the causes and amount of loss claimed by the 

individual producer. 

Area Based: These plans of insurance provide coverage based, at least in part, upon the 

production history of some broader geographic aggregate (e.g., a county) as reported by a 

governmental agency (e.g., USDA National Agricultural Statistics Service) or similar authority. 

Loss determinations are also based upon data reported by the governmental agency, such that 

a loss adjuster is not needed to validate the cause and amount of loss for an individual 

producer. 

Rainfall Index: Any ECIC that includes an insurance product based on the Rainfall Index

insurance model, including policies for Annual Forage and for Apiculture. Loss determinations 

are based upon precipitation measurements from a third-party source, such that a loss adjuster 

is not needed to validate the cause and amount of loss for an individual producer. 

Actual Revenue History, Whole Farm Revenue Protection, Margin Protection, and Stacked 

Income Protection: These insurance plans are maintained as separate, distinct categories in the 
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Review Matrix with specified review and inspection requirements for each. Both Margin 

Protection (MP) and Stacked Income Protection (STAX) reflect Area Based insurance principles. 

However, MP and STAX are offered as both stand-alone insurance plans as well as 

endorsements, unlike other Area Based plans. Thus, MP and STAX are not included in the Area 

Based category.

Two Insurance Plans

In certain situations producers have the option to purchase two plans of insurance that provide 

complementary coverage, e.g., a cotton producer who purchases a Revenue Protection policy 

along with a Stacked Income Protection policy. In these situations, the separate policies will be 

combined and considered a single ECIC for the purpose of Appendix IV $200,000 Indemnity 

Reviews and subject to the applicable review and inspection requirements of any insurance 

product that is a part of the ECIC.

Endorsements 

For purposes of quality control reviews, three types of endorsements are identified: 

• MUP Endorsement – modifies coverage of underlying policy. 

• Factored Endorsement – indemnity provided under the endorsement is a function of the 

indemnity of the underlying policy. 

• Independent Endorsement – indemnity provided under the endorsement is triggered 

independently of the indemnity of the underlying policy. 

MUP Endorsement: This type of endorsement modifies the coverage of the underlying plan of 

insurance, but does not itself provide for an indemnity payment. For example, the Dry Bean 

Revenue Endorsement adds revenue protection to the Dry Bean yield policy, and this modified 

policy is the basis on which coverage amounts, premiums, and indemnity payments are 

determined. The Dry Bean Revenue Endorsement, however, does not provide for an indemnity 

payment separate from that of the Dry Bean yield policy. The MUP Endorsement is not subject 

to any reviews that are independent of and distinct from those of the underlying ECIC. Rather, 

the review and inspection requirements apply to the ECIC as modified by the MUP 

Endorsement. 

Factored Endorsement: This type of endorsement provides for an indemnity that is derived 

from the indemnity of the underlying policy. For example, consider an endorsement in which 

the guarantee, production to count, and indemnity are set equal to 0.2 times the corresponding 

values for the underlying policy. Thus, once the amount of loss/indemnity is known for the 

underlying policy, the corresponding amount of loss/indemnity for a Factored Endorsement is 

also known (perhaps following some additional mathematical manipulation). Because the loss 

for a Factored Endorsement is wholly dependent on the loss of the underlying policy, the two 

indemnities are summed, along with any other indemnities for the ECIC, for purposes of a 

$200,000 Indemnity Review.
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Independent Endorsement: The indemnity provided with this type of endorsement is triggered 

independently of any indemnity determined for the underlying policy. For example, a rice 

producer could receive an indemnity under the Downed Rice Endorsement but receive no 

indemnity from the individual yield based policy. The review requirements are determined at 

the ECIC level and depend upon all the insurance products that constitute the ECIC (see 

guidance above for combining insurance products into a single ECIC for the purpose of 

Appendix IV $200,000 Indemnity Reviews). The inspection requirements for independent 

endorsements reflect those of the insurance plan category each endorsement most closely 

resembles. Thus, for example, the inspection requirements for the Downed Rice Endorsement

and HRLEO reflect those of the individual yield-based plan.
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