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APH Election Adjustment

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					APH Adjustment Election
APH Adjustment Election
   • Insured’s may elect to substitute their
     actual APH yields with 60% of the
     county T-yield if their individual APH
     yields, in comparison, are lower.

   • Actual Yields include:
     – Assigned Yields
     – Temporary Yields
APH Adjustment Election
  – 2001 Crop Year
    • Crops with a 04/30/00 contract change
      date and later are eligible.

    • Crops with contract change dates
      earlier than 04/30/00 will be eligible
      for the 2002 Crop Year.
      – Florida Citrus
APH Adjustment Election
 – The APH yield substitution is
   allowable for low APH records due to:
   • Drought
   • Flood
   • Other Natural Disasters


 – Low APHs yields due to improper use
   of chemicals or poor farming
   practices are not eligible for the 60%
   T-yield substitution.
APH Adjustment Election
   – The APH 60% T-yield substitution
     may affect either a(n):
     • Additional Coverage Policy
     • CAT Policy


   – Elections may be chosen for both
     category B (annual) and category
     C (perennial) crops.
APH Adjustment Election
 • The APH election is available
   for the following plans of
   insurance:
   –   MPCI APH
   –   Crop Revenue Coverage
   –   Income Protection
   –   Revenue Assurance
   –   Avocado Revenue
APH Adjustment Election
 • The APH 60% T-yield
   substitution must be elected by
   the insured by the sales closing
   date for the respective crop.
     • For Crops with a Sales Closing date
       of 09/30/2000 and earlier, the 60% T-
       yield election date has been
       extended to 11/15/2000.
APH Adjustment Election
 • 60% T-yield Election
   – Must be indicated on an
     application or change form that
     includes the insured’s
     signature.
   – Will be elected on a crop by
     county basis.
   – Will be a continuous election
     unless cancelled by the insured,
     in writing, by the cancellation
     date.
APH Adjustment Election
 • Implementation       60% T-yield
   – The election is applicable on a
     crop by county basis but may be
     applied by unit/P/T/V (database).

   – Once elected, the insured may
     choose the implementation of
     the 60% T-yield option no later
     than the production reporting
     date.
APH Adjustment Election
  • Cups and Yield Floors
    – APH yields that do not contain
      yield substitutions are eligible
      for cups or yield floors.
      • Insured must opt for the cup or
        yield floor.


    – CAT policies are not eligible
      for yield limitations.
      • Cups and Yield Floors
APH Adjustment Election

 • APH calculation considerations
   – By the Production Reporting Date
     • Calculate the average adjusted APH
       yield by substituting 60% of the
       applicable T-yield for actual yields
       less than 60% of the applicable T-
       yield.
     • Calculate the cupped yield for the
       unaltered database.
     • Calculate the yield floor for the
       unaltered database.
APH Adjustment Election

  • Choice of 3 calculations!
    – By the production reporting
      date deadline:
      • The insured may choose the
        method to determine the
        approved APH yield.

      • CAT and Additional Coverage
        Insurance levels offer different
        choices for the insured.
APH Adjustment Election

 • APH Choices
  – CAT Coverage
    • The insured may choose:
      – Average Adjusted APH (60% substitution)
        or
      – Cupped Yield
          » As calculated under the APH
            procedure.
APH Adjustment Election

• APH Choices
  – Additional Coverage
    • The insured may choose:
      – Average Adjusted APH (60% substitution)
        or
      – The yield calculated under the APH
        procedure
          » Higher of the yield floor or cupped yield.
APH Adjustment Election

   • Let’s look at an example
  Year Actual   Adjusted   “T” Yield = 97
  1995   200      200      80% Yield Floor (5 years + records)
  1996     0       58      Yield Floor = (.80)X(97) = 78
  1997   155      155      Prior Yield = 127
  1998   160      160      Cupped Yield = (.90)X(127) = 114
  1999     0       58      Adjusted APH Yield = 115
  2000    60       60
         575      691
APH Adjustment Election
 • How will the premium for the
   insured be affected?
   – 4 AHP Calculation Methods
     • Average Yield
     • Yield Floor
     • Cupped Yield
     • Adjusted Yield
 APH Adjustment Election
• Let’s look at a specific example.
  – Nemaha County, Nebraska
    • Non-irrigated Corn Premium Consideration

           Results          Premium
     Average Yield = 100     $8.04
     Yield Floor = 78        $6.27
     Cupped Yield = 116      $9.79
     Adjusted Yield = 117    $9.41
  APH Adjustment Election
• Let’s look at the choices an insured
  may have with these new
  procedures.
           Results          Premium
     Average Yield = 100     $8.04
     Yield Floor = 78        $6.27
     Cupped Yield = 116      $9.79
     Adjusted Yield = 117    $9.41
  APH Adjustment Election
• If the insured elects the 60%T-yield
  option by the sales closing date,
  – the two possible APH choices for the
    insured are:
            Results          Premium
      Average Yield = 100     $8.04
      Yield Floor = 78        $6.27    Higher of
      Cupped Yield = 116      $9.79    the Two

      Adjusted Yield = 117    $9.41
 APH Adjustment Election
• If the insured elects the 60%T-yield
  option by the sales closing date and
  makes no further selection from the
  APH choices,
  – Great American will automatically
    select the highest APH.
            Results          Premium
      Average Yield = 100     $8.04
      Yield Floor = 78        $6.27
      Cupped Yield = 116      $9.79
      Adjusted Yield = 117    $9.41
  APH Adjustment Election
• If the insured does not elect the
  60%T-yield option by the sales
  closing date,
  – Great American will automatically
    select the highest possible APH.
    • based upon Cupped Yield and Yield Floor
     procedure and possibilities.
          Results        Premium
      Average Yield = 100    $8.04    Higher of
                                      the Two
      Yield Floor = 78       $6.27
      Cupped Yield = 116     $9.79
      Adjusted Yield = 117   $9.41
APH Adjustment Election
 • The insured’s premium may
   prove to be a significant
   factor in choosing available
   options in APH determination!
APH Adjustment Election
• Insured Reporting Requirements
  – The insured will experience no
    changes in the current method of
    providing APH information.
    • Actual acres and production must be
      timely reported as in the past.
APH Adjustment Election
• Special Instructions
  – Make applicable yield substitutions
    to both the summerfallow practice
    and the continuous cropping (CC)
    practices prior to determining “high”
    yield to be used for the
    summerfallow practice.
    • Continue to duplicate the CC data if
      higher, identify it as summerfallow, and
      submit duplicated information.
APH Adjustment Election
 • Peaches
  – Georgia
  – South Carolina
    • Standard APH procedures now apply.
    • Peaches in these states are eligible
      for APH adjustments.
APH Adjustment Election
 • RMA’s Role
  – RMA will calculate the approved
    APH yield if criteria is met or
    exceeded.
    • Great American may be allowed to
      calculate approved APH yields.
  – Appropriate yield adjustments
    may be made by both RMA and
    Great American to adjust for
    • Low yields for alternating years
    • Declining yields
APH Adjustment Election
• Yield substitution
  – Will be reported on APH
    • Do not use Block Production Worksheets
  – Weighted average T-yield
    • For current crop year, calculate for each
      APH yield/type 15 record if more than 1
      T-yield.
    • Calculations based on acres & T-yields
      for current crop year.
    • “Applicable T-yields” for yield
      substitution purposes.
      – Changes will occur from year to year.
APH Adjustment Election

• Weighted Average T-yield
 – 60% of the T-yield will be substituted
   for actual yields which are less than
   60% of the T-yield.
 – For each database
   • Calculate average adjusted APH yield;
   • Calculate cupped yield, if applicable;
   • Calculate weighted average APH yield
     using Unit Summary Worksheets, if
     applicable.
APH Adjustment Election

• Weighted Average T-yield
 – Insured may choose method used to
   determine approved APH yield for
   each database by Production
   Reporting Date.
   • Choices are:
     – Average adjusted APH yield; or
     – Higher of cupped yield or weighed average
       APH yield, if applicable.
APH Adjustment Election

• APH
 – Databases that do not contain yield
   substitutions remain eligible for:
   • Cups;
   • Caps; or,
   • Weighted average APH yield determined
     using Unit Summary Worksheets.
APH Adjustment Election
 • Determining Continuous Rating
   Premium Rates
  – For yield-substituted APH on
    crop/counties with continuous
    rating, use:
    • Average APH yield (prior to
      substitutions) to calculate premium
      rate.
    • Approved average APH yield (after
      substitutions) to calculate premium.
APH Adjustment Election
  • Crop Year 2001
   – Continuous rating applies to:
     • APH/R-span crops;
     • RA;
     • CRC.
APH Adjustment Election
 • Determining Non-CR Premium
   – For yield-substituted APH on
     crop/counties not continuous
     rated, apply to premium
     calculation:
     • A 5% surcharge unless actuarial
       document indicates an APH
       adjustment surcharge.
     • APH adjustment surcharge if
       indicated.
APH Adjustment Election

    Review   • New for 2001
               – Category B and
                 Category C crops.
               – Additional Coverage
                 and CAT are eligible.
               – Insurance Plans
                 included are:
                 •   MPCI APH;
                 •   CRC;
                 •   IP;
                 •   RA;
                 •   Avocado R.
APH Adjustment Election

    Review   • New for 2001
               – Election must be made
                 by the insured at
                 application time
                 before sales closing
                 date.
               – Insured may choose by
                 database at
                 production reporting
                 date.

				
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posted:12/23/2010
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