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Texas Agriculture Archive

December 2, 2005

FCIC fraud potential exposed

There is potential for fraud and abuse of the Federal Crop Insurance Corporation (FCIC) program because the management and enforcement tools available to the Agriculture Department's Risk Management Agency (RMA) and the Farm Service Agency (FSA) are not being fully employed, according to a recent Government Accountability Office report.

The report was requested by Senate Homeland Security and Government Affairs Chairman Susan Collins (R-Maine).

The FCIC program provided $47 billion in insurance coverage at a cost of $3.6 billion to the federal government in 2004, but there was an estimated $160 million in improper payments due to fraud and abuse, the GAO report says.

Between 2001 and 2004, FSA conducted only 64 percent of the inspections RMA requested from approximately 3,000 suspicious claim payments each year. In 2003, although required to report individuals or entities with an ownership interest in operations, 21,000 of the largest farming operations in the program did not fully report all ownerships. And, insurance companies have been extremely lax in completing their quality assurance program reviews during the entire period investigated by GAO, the report explains.