Crop Insurance: More Needs To Be Done to Reduce Program's Vulnerability to Fraud, Waste, and Abuse
Published: 2006-06-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. Dept. of Agriculture's (USDA) Risk Management Agency (RMA) administers the federal crop insurance program in partnership with private insurers. In 2005, the program cost $2.7 billion, including an estimated $117 million in losses from fraud, waste, and abuse. The Agricultural Risk Protection Act of 2000 (ARPA) provided new tools to monitor and control abuses, such as providing RMA sanction authority to address program abuse and having USDA's Farm Service Agency (FSA) inspect farmers' fields. This testimony is based on GAO's September 30, 2005, report, Crop Insurance: Actions Needed to Reduce Program's Vulnerability to Fraud, Waste, and Abuse (GAO-05-528). GAO assessed (1) USDA's processes to address fraud, waste, and abuse, and (2) the extent to which the program's design makes it vulnerable to abuse.
section_title: What GAO Found
paragraphs: RMA has taken a number of steps to improve its procedures and processes to address fraud, waste and abuse in selling and servicing crop insurance policies and has reported more than $300 million in savings from 2001 to 2004. However, RMA is not effectively using all of its tools. GAO identified weaknesses in four key areas. First, FSA inspections during the growing season are not being used to maximum effect. Between 2001 and 2004, FSA conducted only 64 percent of the inspections RMA had requested. Without inspections, farmers may falsely claim crop losses. Second, RMA's data analysis of the largest farming operations is incomplete. According to GAO's analysis, in 2003 about 21,000 of the largest farming operations in the program did not report individuals or entities with an ownership interest in these operations as required. Without this information RMA was unaware of ownership interests that could help it prevent potential program abuse. FSA did not give RMA access to the data needed to identify such individuals or entities. USDA should be able to recover up to $74 million in improper claims payments. Third, RMA is not effectively overseeing insurance companies' efforts to control program abuse. GAO's review of 120 cases showed that companies did not complete all of the required quality assurance reviews of claims and those that were conducted were largely paper exercises. Fourth, RMA has infrequently used its new sanction authority to address program abuse. RMA has not issued regulations to implement its new sanction authority under ARPA and imposed only 114 sanctions from 2001 through 2004, although it annually identifies about 3,000 questionable claims, not all of which are necessarily sanctionable. RMA's regulations to implement the crop insurance program, as well as some statutory requirements, create program design problems that hinder RMA's efforts to reduce program abuse. For example, RMA's regulations allow farmers to insure fields individually rather than all fields combined. This option enables farmers to "switch" reporting of yield among fields to either make false claims or build up a higher yield history on a field to increase its eligibility for higher insurance guarantees. High premium subsidies, established by statute, may also limit RMA's ability to control program abuse because the subsidies shield farmers from the full effect of paying higher premiums associated with frequent claims. Eight recent crop insurance fraud cases, investigated by USDA's Office of Inspector General and resulting in criminal prosecutions between June 2003 and April 2005, reflect the issues GAO noted. These cases show how farmers, sometimes in collusion with insurance agents and others, falsely claim prevented planting and low production. Several of these cases also demonstrate the importance of having FSA and RMA work together to identify and share information on questionable farming practices/activities.

section_title: Letter
paragraphs: I am pleased to be here today to discuss USDA’s efforts to address fraud,  waste, and abuse in the Federal Crop Insurance Program. My testimony  today is based on our September 2005, report to the Chairman of the  Committee on Homeland Security and Governmental Affairs. As you  know, federal crop insurance is part of the overall safety net of programs  for American farmers. It provides protection against financial losses  caused by droughts, floods, or other natural disasters. In 2005, the crop  insurance program provided $44 billion in insurance coverage for over 200  million acres of farmland at a cost of $2.7 billion to the federal  government, including $117 million estimated by the U.S. Department of  Agriculture’s (USDA) Risk Management Agency (RMA) to have resulted  from fraud, waste, and abuse.
RMA, which supervises the Federal Crop Insurance Corporation’s (FCIC)  operations, has overall responsibility for administering the crop insurance  program, including protecting against fraud, waste, and abuse. RMA  partners with private insurance companies that sell and service the  insurance policies.
In part, to improve the integrity of the crop insurance program, Congress  enacted the Agricultural Risk Protection Act of 2000 (known as ARPA).  This act provided RMA and USDA’s Farm Service Agency (FSA) with new  tools for monitoring and controlling program abuses. ARPA required the  Secretary of Agriculture to develop and implement a coordinated plan for  FSA to assist RMA in the ongoing monitoring of the crop insurance  program and to use information technologies, such as data mining—the  analysis of data to establish relationships and identify patterns—to  administer and enforce the program.
However, concerns have arisen that some farmers may have abused the  crop insurance program by allowing crops to fail through neglect or  deliberate actions in order to collect insurance and that some insurance  companies have not exercised due diligence in investigating losses and  paying claims. My testimony today focuses on two primary issues  discussed in the September 2005 report: (1) the effectiveness of USDA’s  procedures and processes to prevent and detect fraud, waste, and abuse in  selling and servicing crop insurance policies, and (2) the extent to which  program design issues may make the program more vulnerable to fraud,  waste, and abuse.
In summary, since the enactment of ARPA, RMA has taken a number of  steps to improve its procedures and processes to prevent and detect fraud,  waste, and abuse in the crop insurance program. Most notably, RMA  reports that data mining analyses and subsequent communication to  farmers resulted in a decline of at least $300 million in questionable claims  payments from 2001 to 2004. However, we found that RMA is not  effectively using all of the tools it has available and that farmers and  others can continue to take advantage of the program. We identified  weaknesses in four key areas: (1) field inspections, (2) data mining  processes that exclude many large farming operations when farmers do  not report their interest in them, (3) quality assurance reviews conducted  by insurance companies, and (4) imposition of sanctions. Weaknesses in  these areas continue to leave the program vulnerable to questionable  claims, and insurance companies and RMA cannot always determine the  validity of a claim to minimize fraud, waste, and abuse.
We also found that the program’s design, as laid out in RMA’s regulations  or as required by statute, can impede RMA officials’ efforts to prevent and  detect fraud, waste, and abuse in a number of ways. In terms of RMA’s  regulations, farmers can insure their fields individually instead of insuring  all fields combined, which makes it easier for them to switch production  among fields, either to make false insurance claims or to build up a higher  yield history on a particular field in order to increase its eligibility for  higher future insurance guarantees. Moreover, companies participating in  the crop insurance program bear minimal risk on some of the policies they  sell and service, giving the companies little incentive to rigorously  challenge questionable claims on these policies. In terms of statutory  requirements, RMA is obligated by law to offer farmers “prevented  planting” coverage—coverage if an insured crop is prevented from being  planted—but it is often difficult to determine whether the farmer had the  opportunity to plant a crop. Furthermore, statutorily established premium  subsidies are high and, therefore, may shield high-risk farmers from the  full effect of paying higher premiums.
Our report highlighted eight recent crop insurance fraud cases that reflect  some of the issues we identified. These cases, totaling $3.1 million in  insurance claims, were investigated by USDA’s Office of Inspector General  (OIG) and resulted in criminal prosecutions between June 2003 and April  2005. The cases show how farmers, sometimes in collusion with insurance  agents and others, falsely claim prevented planting, weather damage, and  low production. Some of the cases show farmers hiding or moving  production from one field to another. Several of these cases also  demonstrate the importance of having FSA and RMA work together to  identify and share information on questionable farming  practices/activities.
In our report, we made several recommendations to the Secretary of  Agriculture to strengthen procedures and processes to prevent and detect  fraud, waste, and abuse in the crop insurance program. We also noted that  the Congress should consider allowing RMA to reduce premium subsidies  for farmers who consistently have claims that are irregular in comparison  with other farmers growing the same crop in the same location.
subsections: section_title: Background
paragraphs: In conducting their operations, farmers are exposed to both production  and price risks. Over the years, the federal government has played an  active role in helping to mitigate the effects of these risks on farm income  by promoting the use of crop insurance.
RMA administers the federal crop insurance program in partnership with  private insurance companies that sell the insurance policies to farmers and  adjust any claims. The companies also share in a percentage of the risk of  loss or opportunity for gain associated with each insurance policy written.
Under the program, participating farmers are assigned (1) a “normal” crop  yield based on their actual production history and (2) a price for their  commodity based on estimated market conditions. Farmers can then  select a percentage of their normal yield to be insured and a percentage of  the price they wish to receive if crop losses exceed the selected loss  threshold. In addition, under the crop insurance program’s “prevented  planting” provision, insurance companies pay farmers who were unable to  plant the insured crop because of an insured cause of loss that is general  to their surrounding area, such as weather conditions causing wet fields,  and that had prevented other farmers from planting fields with similar  characteristics. These farmers are entitled to claims payments that  generally range from 50 to 70 percent of the coverage they purchased,  depending on the crop.
RMA establishes the terms and conditions that the private insurance  companies selling and servicing crop insurance policies are to use through  a contract called the standard reinsurance agreement (SRA). The SRA  establishes the minimum training, quality control review procedures, and  performance standards required of all insurance providers in delivering  any policy insured or reinsured under the Federal Crop Insurance Act, as  amended.
RMA is responsible for ensuring that the federal crop insurance program is  carried out efficiently and effectively and for protecting against fraud,  waste, and abuse in the program. In this regard, RMA uses a broad range  of tools, including RMA compliance reviews of companies’ procedures,  companies’ quality assurance reviews of claims, data mining, and FSA  inspections of farmers’ fields. Insurance companies must conduct quality  assurance reviews of claims that RMA has identified as anomalous or of  those claims that are $100,000 or more to determine whether the claims  they have paid are in compliance with policy provisions.
The Congress enacted ARPA, amending the Federal Crop Insurance Act, in  part, to improve compliance with, and the integrity of, the crop insurance  program. Among other things, ARPA expanded RMA’s authority to impose  sanctions against farmers, agents, loss adjusters, and insurance companies  that willfully and intentionally provide false or inaccurate information to  FCIC or to an approved insurance provider. It also provided authority to  impose civil fines for violations. ARPA also increased the percentage share  of the premium the government pays for most coverage levels of crop  insurance, beginning with the 2001 crop year. Although the percentage of  the premium the government pays declines as farmers select higher levels  of coverage, the government contribution significantly increases for all  levels of coverage, particularly for the highest levels of coverage. For  example, the government now pays fully one-half of the premium for  farmers who choose to insure their crop at 75-percent coverage.
section_title: RMA Has Strengthened Procedures for Preventing Questionable Claims, but the Program Remains Vulnerable to Potential Abuse
paragraphs: RMA has taken a number of steps to improve its procedures and processes  to prevent and detect fraud, waste, and abuse, such as data mining,  expanded field inspections and quality assurance reviews. In particular,  RMA now develops a list of farmers each year whose operations warrant  an on-site inspection during the growing season because data mining  uncovered patterns in their claims that are consistent with the potential  for fraud and abuse. For example, the list includes  farmers, agents, and adjusters linked in irregular behavior that suggests  collusion; farmers who for several consecutive years received most of their crop  insurance payments from prevented planting indemnity payments; farmers who appear to have claimed the production amounts for multiple  fields as only one field’s yield, thereby creating an artificial loss on their  other field(s); and farmers who, in comparison with their peers, have excessive harvested  losses over many years.
Since RMA began performing this data mining in 2001, it has identified  about 3,000 farmers annually who warrant an on-site inspection because of  anomalous claims patterns. In addition, RMA annually performs about 100  data manipulations to identify areas of potential vulnerability and trends in  the program.
RMA also provides the names of farmers from its list of suspect claims for  inspection to the appropriate FSA state office for distribution to FSA  county offices, as well as to the insurance company selling the policy to  the farmer. As a result of these inspections and other information, RMA  reported total cost savings of $312 million from 2001 to 2004, primarily in  the form of estimated payments avoided. For example, according to RMA,  claims payments to farmers identified for an inspection decreased  nationwide from $234 million in 2001 to $122 million in 2002. According to  RMA, some of the farmers on the list for filing suspect claims bought less  insurance and a few dropped crop insurance entirely, but most simply  changed their behavior regarding loss claims.
However, our review showed that RMA is not effectively using all of the  tools it has available and that some farmers and others continue to take  advantage of the program, as the following discussion indicates.
Inspections during the growing season are not being used to maximum  effect. Although FSA is assisting RMA as required under ARPA, by  conducting field inspections, FSA is not doing so in accordance with  USDA guidance. Between 2001 and 2004, farmers filed claims on about  380,000 policies annually, and RMA’s data mining identified about 1  percent of these claims as questionable and needing FSA inspection.  Under USDA guidance, FSA should have conducted all of the requested  inspections, but instead conducted only 64 percent of them; FSA  inspectors said that they did not conduct all requested inspections  primarily because they did not have sufficient time. Moreover, between  2001 and 2004, FSA offices in nine states did not conduct any of the field  inspections RMA requested in one or more of the years. Until we brought  this matter to their attention in September 2004, FSA headquarters  officials were unaware that the requested inspections in these nine states  had not been conducted. Furthermore, FSA may not be as effective as  possible in conducting field inspections because RMA does not provide it  with information on the nature of the suspected abusive behavior or the  results of follow-up investigations. About 80 percent of the FSA inspectors  we surveyed believe that receiving more information from RMA would  help them be more effective in detecting fraud, waste, and abuse. Finally,  these inspections do not always occur in a timely fashion, which would  help detect abuse during the growing season. Because of these problems,  the insurance companies and RMA cannot always determine the validity of  a claim.
RMA’s data analysis of the largest farming operations is incomplete.  RMA’s data mining analysis excludes comparisons of the largest farming  operations—including those organized as partnerships and joint ventures.  These entities may include individuals who are also members of one or  more other entities. Because it does not know the ownership interests in  the largest farming operations, RMA cannot readily identify potential  fraud. For example, farmers who are members of more than one farming  operation could move production from one operation to another to file  unwarranted claims, without RMA’s knowledge that these farmers  participate in more than one farming operation. RMA cannot make these  comparisons because it has not been given access to similar data that FSA  maintains. However, ARPA requires the Secretary of Agriculture to  develop and implement a coordinated plan for RMA and FSA to reconcile  all relevant information received by either agency from a farmer who  obtains crop insurance coverage.
Using FSA data, we examined the extent to which (1) farming operations  report all members who have a substantial beneficial interest in the  operation, (2) these farming operations file questionable crop insurance  claims, and (3) agents or claims adjusters had financial interests in the  claim. We found that of the 69,184 entities that had crop insurance  policies in 2003 and that were in both RMA’s and FSA’s databases, 21,310,  or about 31 percent, did not report one or more members who held a  beneficial interest of 10 percent or more in the farming operation holding  the policy—for a total of $224.8 million in claims paid.
RMA should be able to recover a portion of these payments. According to  RMA regulations, if the policyholder fails to disclose an ownership interest  in the farming operation, the policyholder must repay the amount of the  claims payment that is proportionate to the interest of the person who was  not disclosed. The average ownership interest of the persons not  disclosed for the 21,310 entities was 33 percent; as a result, RMA should be  able to recover up to $74 million in claims payments. Our analysis of  RMA’s and FSA’s databases for 2004 showed similar results. Of the 21,310  entities failing to disclose ownership interest in 2003, we found 210 entities  with suspicious insurance claims totaling $11.1 million. In addition, we  identified 24 crop insurance agents who sold policies to farming entities in  which the agents held a substantial beneficial interest but failed to report  their ownership interest to RMA as required. These farming entities  received $978,912 in claims payments in 2003 and 2004.
RMA is not effectively overseeing insurance companies’ quality  assurance programs. RMA guidance requires insurance companies to  provide oversight to properly underwrite the federal crop insurance  program, including implementing a quality control program, conducting  quality control reviews, and submitting an annual report to FCIC.  However, RMA is not effectively overseeing insurance companies’ quality  assurance programs, and for the claims we reviewed, it does not appear  that most companies are rigorously carrying out their quality assurance  functions. For example, 80 of the 120 insurance claim files we reviewed  claimed more than $100,000 in crop losses or met some other significant  criteria; RMA’s guidance states that the insurance provider must conduct a  quality assurance review for such claims. However, the insurance  companies conducted reviews on only 59 of these claims, and the reviews  were largely paper exercises, such as computational verifications, rather  than comprehensive analysis of the claim. RMA did not ensure that  companies conducted all reviews called for under its guidance and did not  examine the quality of the companies’ reviews.
RMA has infrequently used its new sanction authority to address  program abuses. Although ARPA expanded RMA’s authority to impose  sanctions on farmers, agents, and adjusters who willfully and intentionally  provide false or inaccurate information or fail to comply with other FCIC  program requirements, RMA has only used this authority on a limited  basis. RMA has identified about 3,000 farmers with suspicious claims  payments—notable policy irregularities compared with other farmers  growing the same crop in the same county—each year since the enactment  of ARPA. While not all of these policy irregularities were necessarily  sanctionable, RMA imposed only 114 sanctions from 2001 through 2004.  According to RMA officials, RMA requested and imposed few sanctions  because it had not issued regulations to implement its expanded authority  under ARPA. Without regulations, RMA has not established what  constitutes an “FCIC requirement” and how it will determine that a  violation has occurred or what procedural process it will follow before  imposing sanctions. Insurance agents we surveyed and company officials  we contacted believe that RMA needs to more aggressively seek to  penalize those farmers, agents, and adjusters who abuse the program.  RMA officials told us that they will give priority to issuing regulations  implementing the sanctions authorized under ARPA.
section_title: RMA’s Regulations and Some Statutory Requirements Hinder Efforts to Reduce Abuse in the Crop Insurance Program
paragraphs: While RMA can improve its day-to-day oversight of the federal crop  insurance program in a number of ways, the program’s design, as laid out  in RMA’s regulations or as required by statute, hinders officials’ efforts to  administer certain program provisions to prevent fraud, waste, and abuse,  as the following discussion indicates.
RMA’s regulations allow farmers the option of insuring their fields  individually rather than combined as one unit. Under RMA’s regulations,  farmers can insure production of a crop on each optional unit or insure an  entire basic unit. Farmers may want to insure fields separately out of  concern that they would experience losses in a certain field because of  local weather conditions, such as hail or flooding. If farmers instead  insured their entire crop in a single basic insurance unit, the hail losses  may not have caused the production yield of all units combined to have  been below the level guaranteed by the insurance and, therefore, would  not warrant an indemnity payment. Although optional units provide  farmers added protection against loss, this coverage option increases the  potential for fraud and abuse in the crop insurance program.
Insuring fields separately enables farmers to “switch” production among  fields—reporting production of a crop from one field that was actually  produced on another field—either to make false insurance claims based  on low production or to build up a higher yield history on a particular field  in order to increase its eligibility for higher future insurance guarantees.  Of the 2,371 farmers identified through data mining as having irregular  claims in 2003, 12 percent were suspected of switching production among  their fields. Furthermore, in our review of claim files, we identified 10  farmers with patterns of claims associated with this type of fraud.
According to a 2002 RMA study, relative losses per unit increase as the  number of separately insured optional units increases. However,  according to an RMA official, gathering the evidence to support a yield- switching fraud case requires considerable resources, especially for large  farming operations.
In some cases, insurance companies have little incentive to rigorously  challenge questionable claims. Insurance companies participating in the  crop insurance program share a percentage of the risk of loss or  opportunity for gain on each insurance policy they write, but the federal  government ultimately bears a high share of the risk. Under the SRA,  insurance companies are allowed to assign policies to one of three risk  funds—assigned risk, developmental, or commercial. The SRA provides  some criteria for designating policies to these funds. For the assigned risk  fund, the companies cede up to 85 percent of the premium and associated  liability for claims payments to the government and share a limited portion  of the gains and losses on the policies they retain. For the developmental  and commercial funds, the companies cede a smaller percent of the  premium and associated liability for claims payments to the government  and share a larger portion of the gains and losses on the policies they  retain.
Economic incentives to control program costs associated with fraud,  waste, and abuse are commensurate with financial exposure. Therefore,  for policies placed in the assigned risk fund, companies have far less  financial incentive to investigate suspect claims. For example, in one claim  file we reviewed, an insurance company official characterized the farmer  as filing frequent, questionable claims; however, the company paid a claim  of over $500,000. The official indicated that if the company vigorously  challenged the claim, the farmer would have defended his claim just as  vigorously, and the company would have potentially incurred significant  litigation expenses, which RMA does not specifically reimburse. With this  cost and reimbursement structure, in the company’s opinion, it was less  costly to pay the claim.
RMA and insurance companies have difficulty determining potential  abuse associated with prevented planting coverage. Under the Federal  Crop Insurance Act, as amended, RMA must offer prevented planting  coverage. RMA allows claims for prevented planting if farmers cannot  plant due to an insured cause of loss that is general in the surrounding  area and that prevents other farmers from planting acreage with similar  characteristics. Claims for prevented planting are paid at a reduced level,  recognizing that farmers do not incur all production costs associated with  planting and harvesting a crop. However, determining whether farmers  can plant their crop may be difficult. Annually, RMA pays about $300  million in claims for prevented planting.
Twenty-five of the FSA county officials that provided us written comments  on this issue reported that they believe some farmers in their county who  claimed prevented planting losses never intended to plant or did not make  a good faith attempt to plant their crop. Additionally, in some cases, it  appears that the insurance company’s claims adjusters may not exercise  due diligence in evaluating prevented planting claims. For example, a  farmer in south Texas received claims payments of over $21,000 for  prevented planting claims for corn in 2003 and 2004. The farmer claimed  that excess rainfall made his fields too wet to plant. However, according to  a June 2004 FSA field inspection report, there was no evidence the farmer  had made any attempt to prepare the fields for planting in either the 2003  or 2004 growing season. Among other things, the FSA inspection report  noted, and photographs showed, the fields contained permanent grasses  and 5-foot tall weeds, as well as large hay bales from the prior growing  season. In response to our review, RMA investigated the 2003 and 2004  prevented planting claims for this farmer and subsequently directed the  insurance company to seek reimbursement for the 2003 claims payment.
High premium subsidies may inhibit RMA’s ability to control program  abuse. To encourage program participation, ARPA increased premium  subsidies—the share of the premium paid by the government—but this  increase may hamper RMA’s ability to control program fraud, waste, and  abuse. Premium subsidies are calculated as a percentage of the total  premium, and farmers pay only between 33 to 62 percent of the policy  premium, depending on coverage level. High premium subsidies shield  farmers from the full effect of paying higher premiums. Because premium  rates are higher in riskier areas and for riskier crops, the subsidy structure  transfers more federal dollars to those who produce riskier crops or farm  in riskier areas.
In addition, premium rates are higher for farmers who choose to insure  their fields separately under optional units, rather than all fields combined,  because the frequency of claims payments is higher on the separately  insured units. Again, however, because of high premium subsidies, farmers  pay only a fraction of the higher premium. Thus, the subsidy structure  creates a disincentive for farmers to insure all fields combined. Over one- half (56 percent) of the crop insurance agents responding to our survey  believed that charging higher premiums for farmers with a pattern of high  or frequent claims would discourage fraud, waste, and abuse in the crop  insurance program.
section_title: Recently Prosecuted Crop Insurance Fraud Cases Highlight Program Vulnerabilities
paragraphs: Some of the issues we identified are reflected in eight recent crop  insurance fraud cases that USDA’s Office of Inspector General (OIG)  investigated and that resulted in criminal prosecution between June 2003  and April 2005. The cases show how a few farmers, sometimes in collusion  with others, falsely report planting, claims of damage, and production to  try to circumvent RMA’s procedures. In some cases, farmers hid  production or switched it from one field to another. Several of these cases  also demonstrate the importance of having FSA and RMA work together to  identify and share information on questionable farming  practices/activities. Table 1 summarizes these eight cases, which  accounted for $3.1 million in fraudulent claims payments. These cases  were researched and analyzed by our Office of Forensic Audits and  Special Investigations.
In conclusion, Mr. Chairman, federal crop insurance plays an invaluable  role in assuring the nation’s farmers that their crops will be protected from  natural disasters. However, fraud, waste, and abuse can result in higher  program costs and hurt the reputation of the program. In recent years,  with the assistance of the new tools in ARPA, RMA has made progress in  strengthening a number of program elements and thereby reducing fraud,  waste, and abuse, as well as the amount of funds paid in error.
Still, the weaknesses we identified in how RMA, FSA, and insurance  companies carry out their program responsibilities continue to leave the  program vulnerable to questionable claims and missed opportunities to  prevent losses to the federal government. In addition, RMA may be able to  reduce program vulnerability and costs by improving aspects of the  program’s design.
In our report, we said that the Congress may wish to consider allowing  RMA to reduce premium subsidies—and hence raise the insurance  premiums—for farmers who consistently have claims that are irregular in  comparison with other farmers growing the same crop in the same  location. We made eight recommendations to the Secretary of Agriculture  to strengthen program oversight and reduce vulnerability to fraud, waste  and abuse, including improved sharing of information between RMA and  FSA, improved inspection practices, regulations to implement sanctions,  and stronger oversight of companies’ quality control procedures. USDA  agreed to act on most of our recommendations. However, it disagreed with  our recommendation to ensure that FSA field offices conduct all  inspections called for under agency guidance, stating that FSA did not  have sufficient resources to complete all of these inspections. USDA also  disagreed with our recommendation to reduce the insurance guarantee or  eliminate optional unit coverage for farmers who consistently have filed  claims that are irregular in comparison with other farmers growing the  same crop in the same location. We continue to believe that it is  reasonable for USDA to use all tools at its disposal and that our  recommendations will reduce the federal crop insurance program’s  vulnerability to fraud, waste, and abuse.
Mr. Chairman, this concludes my prepared statement. We would be happy  to respond to any questions that your or other Members of the  Subcommittee may have.
section_title: Contact and Staff Acknowledgments
paragraphs: Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this statement. For further  information about this testimony, please contact Daniel Bertoni, Acting  Director, Natural Resources and Environment, (202) 512-3841 or by email  at bertonid@gao.gov. Key contributors to this statement were Ron Maxon,  Thomas Cook, and Carol Herrnstadt Shulman.
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