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. 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.