Crop Insurance

FCIC Should Strengthen Actual Production History Program Controls Gao ID: RCED-89-19 December 15, 1988

Pursuant to a congressional request, GAO reviewed the Federal Crop Insurance Corporation's (FCIC) implementation of its Actual Production History (APH) Program, focusing on whether FCIC had adequate controls to ensure the accuracy of farmers' production guarantees.

GAO found that FCIC: (1) found in a 1987 review of companies that 37 percent of policies had inaccurate production guarantees, primarily due to overstated or understated production histories; (2) clarified its guidance to insurance companies for implementing the APH program, but did not change its policies or require farmers to provide actual production records during policy writing; (3) primarily relied on insurance companies to verify farmers' certifications of production history; (4) required insurance companies to sample policies and determine production guarantee accuracy, but did not require the companies to report the results of those checks; (5) required verification of guarantee accuracy only if the guarantee appeared to be unreasonable, and lacked criteria for establishing guarantee reasonableness; and (6) lacked guidance for interpreting the significance of the results of sample checks or for taking action if the samples revealed frequent or widespread problems.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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