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APH Adjustment Election

APH Adjustment Election

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APH Adjustment Election

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  1. APH Adjustment Election

  2. 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

  3. 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

  4. 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.

  5. 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.

  6. 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

  7. 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.

  8. 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.

  9. 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.

  10. 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

  11. APH Adjustment Election Category B APH Calculation • 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.

  12. APH Adjustment Election Category B APH Calculation • 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.

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

  14. APH Adjustment Election Category B APH Calculation • 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.

  15. APH Adjustment Election Category B APH Calculation • Let’s look at an example YearActualAdjusted“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

  16. APH Adjustment Election • How will the premium for the insured be affected? • 4 AHP Calculation Methods • Average Yield • Yield Floor • Cupped Yield • Adjusted Yield

  17. APH Adjustment Election • Let’s look at a specific example. • Nemaha County, Nebraska • Non-irrigated Corn Premium Consideration ResultsPremium Average Yield = 100 $8.04 Yield Floor = 78 $6.27 Cupped Yield = 116 $9.79 Adjusted Yield = 117 $9.41

  18. APH Adjustment Election • Let’s look at the choices an insured may have with these new procedures. ResultsPremium Average Yield = 100 $8.04 Yield Floor = 78 $6.27 Cupped Yield = 116 $9.79 Adjusted Yield = 117 $9.41

  19. 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: ResultsPremium Average Yield = 100 $8.04 Yield Floor = 78 $6.27 Cupped Yield = 116 $9.79 Adjusted Yield = 117 $9.41 Higher of the Two

  20. 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. ResultsPremium Average Yield = 100 $8.04 Yield Floor = 78 $6.27 Cupped Yield = 116 $9.79 Adjusted Yield = 117 $9.41

  21. 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. ResultsPremium Average Yield = 100 $8.04 Yield Floor = 78 $6.27 Cupped Yield = 116 $9.79 Adjusted Yield = 117 $9.41 Higher of the Two

  22. APH Adjustment Election • The insured’s premium may prove to be a significant factor in choosing available options in APH determination! $$$$

  23. 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.

  24. APH Adjustment Election Summerfallow APH • 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.

  25. APH Adjustment Election Category C Crops • Peaches • Georgia • South Carolina • Standard APH procedures now apply. • Peaches in these states are eligible for APH adjustments.

  26. APH Adjustment Election Category C Crops • 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

  27. APH Adjustment Election Category C Crops • 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.

  28. APH Adjustment Election Category C Crops • 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.

  29. APH Adjustment Election Category C Crops • 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.

  30. APH Adjustment Election Category C Crops • APH • Databases that do not contain yield substitutions remain eligible for: • Cups; • Caps; or, • Weighted average APH yield determined using Unit Summary Worksheets.

  31. APH Adjustment Election Continuous Rating • 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.

  32. APH Adjustment Election Continuous Rating • Crop Year 2001 • Continuous rating applies to: • APH/R-span crops; • RA; • CRC.

  33. APH Adjustment Election Non Continuous Rating • 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.

  34. 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.

  35. 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.