Understanding Written Agreements in Crop Insurance

In the complex world of agricultural risk management, standard insurance policies are designed to cover common crops and practices within specific geographic areas. However, agriculture is diverse, and producers often engage in activities that fall outside the standard actuarial tables established by the Risk Management Agency (RMA). This is where Written Agreements come into play.

A Written Agreement (WA) is a document that modifies the terms of a standard crop insurance policy to provide coverage for crops, practices, or locations that are not otherwise available in a producer's county. It essentially creates a customized insurance contract between the producer and the Federal Crop Insurance Corporation (FCIC). For students preparing for the complete Crop exam guide, understanding the nuances of these agreements is critical, as they represent a significant portion of specialized underwriting questions.

Standard Policy vs. Written Agreement

FeatureStandard PolicyWritten Agreement
AvailabilityPre-established in the countyBy individual request only
RatingStandard actuarial ratesCustomized rates based on data
DeadlinesSales Closing DateRequest must precede specific deadlines
ApprovalAutomatic if eligibleRequires RMA Regional Office approval

Common Types of Written Agreements

Written agreements are not a "one size fits all" solution. They are categorized based on the specific reason the standard policy is insufficient. Mastery of these types is essential for success on the practice Crop questions.

  • New Crop (NC): Used when a producer wants to insure a crop in a county where there are no actuarial documents for that specific crop.
  • Practice or Type (TP): Used when a crop is already insurable in the county, but the producer is using a practice (like organic or double-cropping) or a specific type (like a different variety of grain) that is not currently rated.
  • High Risk (HR): Used to provide coverage for land classified as high-risk by the RMA, often allowing for adjusted rates or different coverage levels than standard high-risk maps might dictate.
  • Land Change (LC): Used when there is a significant change in the land's capability or when land is newly broken for cultivation.
  • County Crop Expansion (CE): Allows for coverage of a crop in a county where it isn't currently listed, provided it is listed in a neighboring county.

Key Requirements for Approval

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3+ Years
Production History
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RMA RO
Approval Authority
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Mandatory
Documentation
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Verified
Soil Suitability

The Application and Review Process

The process of obtaining a Written Agreement is rigorous and documentation-heavy. Producers cannot simply request coverage; they must prove the viability of their operation. The application typically includes:

  • Production Records: In most cases, the producer must provide at least three years of production history for the crop in the county or a similar crop in the area.
  • Soil Maps: Verification that the land is suitable for the specific crop and practice requested.
  • Evidence of Adaptability: Proof that the crop can be successfully grown in the climate and conditions of the specific county.
  • Consistency: The request must be consistent with the farming practices of the area and the producer's historical operations.

Once the application is submitted by the insurance agent, it is reviewed by the RMA Regional Office (RO). The RO has the authority to approve, deny, or offer a counter-offer with different terms or rates. If approved, the agreement is generally only valid for one crop year and must be renewed if the producer wishes to continue coverage under those terms.

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The Role of the Sales Closing Date

Most Written Agreement requests must be submitted to the Approved Insurance Provider (AIP) on or before the Sales Closing Date (SCD) for the crop. Late submissions are rarely accepted unless they fall under specific exceptions like physical inability to apply or administrative errors.

Underwriting and Actuarial Soundness

The primary goal of the RMA when reviewing a Written Agreement is to maintain actuarial soundness. This means the premiums collected must be sufficient to cover the expected losses. Because Written Agreements cover non-standard risks, the underwriting process is more intensive than standard Multi-Peril Crop Insurance (MPCI).

The RMA uses the data gathered from Written Agreements to determine if a crop or practice should eventually be added to the county's standard actuarial documents. If enough producers successfully use Written Agreements for a specific crop over several years, the RMA may eventually establish permanent rates and rules for that county, eliminating the need for individual agreements in the future.

Frequently Asked Questions

Generally, no. Most requests must be submitted by the Sales Closing Date, which occurs well before the typical planting period. There are very limited exceptions for things like 'New Producer' status or specific administrative changes.
No. Most Written Agreements are for a single crop year. Producers must re-apply or request a renewal, providing updated production data to ensure the agreement remains reflectively of current yields and risks.
If a request is denied, the producer may have the right to appeal the decision to the National Appeals Division (NAD) or request a reconsideration if they can provide additional supporting data that was not in the original application.
Not necessarily. The crop must be one that is already covered under the Federal Crop Insurance program in at least one other county. If a crop is entirely new to the federal program, a Written Agreement cannot be used to create coverage from scratch.