Guidance for 2020 Crop Hail Season
Re: Administrative Bulletin 2014-5
This is a reminder to insurance companies writing Crop Hail insurance in Minnesota that Administrative Bulletin 2014-5 is in effect for the 2020 crop year. Administrative Bulletin 2014-5 provides that carriers must make rate filings for the year following a filing by National Crop Insurance Services (NCIS). Since NCIS made a filing for 2020, all insurance carriers writing this product in Minnesota are required to make a filing.
In addition, Administrative Bulletin 2014-5 allows insurance companies writing this product to deviate up to 15% (both positively and negatively) from the NCIS Final Average Loss Costs (FALCs), without having to provide full actuarial support, for those products which NCIS produces FALCs. (There is a transition program when NCIS first starts providing FALCs for a new product, so the 15% threshold is expanded for the first two years as specified in Administrative Bulletin 2014-5, Section 4.e.) Note that the 15% threshold applies to the amount for a crop type, location and form deviation combined, rather than applying to each element.
2020 Crop Hail Filing Compliance Review Timeline
The Minnesota Department of Commerce (Commerce) highly recommends that you submit your filing as early as possible to allow time to make corrections if problems are uncovered during compliance reviews. Commerce may be performing compliance reviews for crop hail filings for the 2020 crop year.
By statute (Minn. Stat. §60A.32, subd. 1), filings must be made prior to February 1
st, which would mean that corrections would not be allowed after February 1
st. As a result, if you are not compliant by February 1
st, action could be taken affecting your ability to write business in Minnesota during 2020.
Please note that subject to Minn. Stat. §60A.08, subd. 15(d) filings are not public until their effective date, so there is no competitive disadvantage to submitting rate filings at an earlier date. To complete the filing, please fill out and submit the forms shown as Exhibits A and Exhibit B of Administrative Bulletin 2014-5.
Clarifications to Administrative Bulletin 2014-5
Two issues have emerged since Administrative Bulletin 2014-5 was issued and Commerce provides the following clarifications and/or updates.
For low liability FALCs by township, NCIS now publishes county FALCs, which were not available at the time Administrative Bulletin 2014-5 was issued (see section 4.f.) As a result, the instructions in the bulletin on how to calculate FALCs for each county no longer apply, as you can use those county FALCs published by NCIS, if appropriate.
Also, the cash discount date deadline of July 1
st as specified in section 6.a of Administrative Bulletin 2014-5 can be extended to August 15
th.
