The Whole-Farm Revenue Protection (WFRP) policy was introduced in 2014 to provide farmers a new, more flexible risk management tool. Unlike traditional multi-peril crop insurance (MPCI) policies, the WFRP policy provides coverage for all of a farmer’s commodities under a single insurance policy. The WFRP policy protects against the loss of farm revenue that a farmer earns or expects to earn from all commodities the farmer produces or purchases for resale during the insurance period. While the WFRP policy can provide a tremendous benefit for farms that grow a wide range of commodities, farmers must be careful to comply with the WFRP policy’s complex requirements. One aspect of the WFRP policy that has troubled farmers recently is the requirements associated with their farm’s approved revenue.

A farm’s ‘approved revenue’ is a key concept under the WFRP Policy. The total amount of coverage provided by the WFRP policy is referred to as a farm’s ‘insured revenue.’ A farm’s insured revenue is based on the farm’s approved revenue. The farm’s approved revenue is the lower of the (1) total expected revenue or (2) whole-farm historic average revenue. A farmer’s approved insurance provider (AIP) uses information submitted by the farmer during the underwriting process to determine the farmer’s approved revenue. The approved revenue is then used by the AIP to determine the amount of insured revenue under the WFRP policy. Once it has been determined by the AIP, the insured revenue represents the insurance safety net provided to the farmer under the insurance contract with the AIP.

Even when the AIP has determined a farmers’ approved revenue, and issued the farmer’s schedule of insurance, the approved revenue may be retroactively reduced under very limited circumstances. Section 9(g) of the WFRP policy requires that a farmer’s approved revenue be reduced if the information used to determine the approved revenue is “incorrect or is not supported by verifiable records.” The approved revenue may be reduced during the insurance period or after a farmer has suffered a loss and submitted a loss claim to the AIP. Moreover, the approved revenue can be reduced by the AIP or by the Risk Management Agency (RMA) when RMA elects to participate in the adjustment of a farmer’s loss claim.

The legal team at McAfee & Taft has handled several National Appeals Division (NAD) appeals on this very issue. In those cases, RMA elected to participate in the adjustment of our clients’ loss claims and ultimately reduced our clients’ approved revenue. RMA reduced our clients’ approved revenue not because the information used to determine their approved revenue was incorrect or unsupported by verifiable information, but because RMA disagreed with the AIPs’ conclusions as to what the information submitted by our clients actually meant. We conducted in-person hearings before NAD administrative judges in two of those cases and argued that the WFRP policy does not authorize RMA to reduce our clients’ approved revenue merely because it disagreed with the substantive underwriting determinations made by the AIP. This argument proved successful. The NAD administrative judges in both cases concluded that, absent evidence that the information provided to an AIP is incorrect or unsupported by verifiable records, RMA lacks authority to retroactively reduce an insured’s approved revenue under Section 9(g).

Based on our experience with the WFRP policy, we have developed certain best practices that should be followed by farmers during the WFRP underwriting process. These practices include:

• Ensuring that the information provided to the AIP during underwriting is correct.
• Ensuring that the information provided to the AIP during underwriting is supported by verifiable records.
• Ensuring the expected value (i.e., expected price) information provided to the AIP during underwriting is realistic; consistent with available market information; takes into account local markets, cycles, and trends; and supported by verifiable or direct marketing sales records.
• Ensuring that the expected yield information provided to the AIP during underwriting is reasonable, realistic, consistent with local agronomic information; and supported by verifiable records.
• Documenting all communications with the AIP during underwriting, as well as all information and records submitted to the AIP during underwriting.
• Consulting the Whole-Farm Revenue Protection Pilot Handbook (the “WFRP Handbook”) for your policy year. The current WFRP Handbook, as well as WFRP Handbook for prior policy years, can be found here.