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New County-Based Smoke Index Coverage
Due to increased smoke exposure losses and bipartisan legislation to find a solution, RMA created the Fire Insurance Protection Smoke Index (FIP-SI) policy. FIP-SI was developed through industry listening sessions and feedback. The policy works in conjunction with a grower's existing Multiperil Crop Insurance (MPCI) policy; it cannot be purchased as a stand-alone coverage option. This is an area plan coverage option, meaning losses are assessed based on an area and not the policyholder specifically. The FIP-SI policy utilizes air quality index data from NOAA to assess “smoke days” within a county. An indemnity will be automatically paid when the number of smoke days within the county surpasses the insured requirements.
Unlike MPCI smoke claims, the FIP-SI policy is an automatic payment with no additional adjustment process. The policyholders' underlying MPCI policy will continue to respond in the event the grower experiences a smoke loss. The MPCI policy will still require additional lab testing to determine whether smoke chemical markers are present.
Though they are purchased in conjunction, there could be cases where FIP-SI pays but the MPCI does not, and vice versa.
RMA is expected to release additional details in the coming month. Once the official details are out, CAWG and our partner insurance providers will host webinars and meetings to provide further insights into what the endorsement entails.
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