crop insurance side by side

Comparison of Crop Insurance Bills

Subject	Cochran / Lincoln	Kerrey / Roberts	Combest (proposal)
Prevented Planting	Producers given option whether to choose prevented planting coverage for a commodity. Prevented planting coverage must be equivalent among all commodities. Eliminates current Ablack dirt@ requirement by allowing producers who are prevented from planting their insured commodity to receive the prevented planting indemnity but still plant another, uninsured crop on the same acreage without penalty. (Sec. 101)	No provision	Allow producers to opt out of prevented planting coverage. Allow producers who are prevented from planting an insured commodity to receive the prevented planting indemnity and to also plant another uninsured crop on the same acreage without penalty. These producers are ineligible for NAP payments.
Alternative Rating Methodologies	FCIC must develop and implement alternative methodologies for rating insurance plans by 9/30/00 that take into account (1) producers that elect not to participate in Fed crop insurance program and (2) producers that elect only to obtain CAT coverage. FCIC must review and make adjustments to methodologies and rates by 2001 crop year, based on expected future losses (adjusted to correct for adverse selection and old data), program errors and other factors that can cause errors in methodologies and rates. FCIC must implement rating methodologies in manner that results in lowest premium payable by producers of commodity in particular geographic area. Priority will be given to commodities with lowest level of participation in buy-up coverage plans. (Sec. 102)	Requires Office of Risk Management to review methodologies used to rate insurance plans by 9/30/00 and directs Office of Risk Management to enter into contract with private sector to develop new methodologies for rating plans of insurance to take into account non-participating farmers and experience from catastrophic program. No requirement for implementation. (Sec. 105)	Allow FCIC to review rating methodologies and require FCIC, by the 2000 crop year, to adjust rates if they are found to be excessive. This provision addresses implementation of current rating studies. Authorize RMA to contract with private entities to conduct all rating activities, so that only minimal rating is done by RMA.
Quality Adjustment	Quality adjustment coverage to be offered as optional coverage. (Sec. 103)	No provision.
CAT Coverage	Increases coverage level for CAT to 60% of APH at 70% of the price. (Sec. 105)	No provision, but see subsidy levels below. All coverages of 60/100 or lower are to be subsidized at 45%.	50/55 coverage to be subsidized at 100%. Allow producers to elect higher coverage level under a Group Risk Plan with equivalent subsidy level.
Loss adjustment	Reduces the fees for loss adjustments with respect to catastrophic coverage. (Sec. 106)	No provision.	No provision?
Limitation on Underwriting Gains	Limits the amount of underwriting gains companies can make on catastrophic policies to 50 percent of the premium, unless the loss ratio exceeds 1.0. (Sec. 114)	No provision	No provision?
Cost of production and Revenue coverage	Provides permanent authority for FCIC to provide cost of production and revenue insurance coverage. (Sec. 107)	Provides cost of production authority. Specifies method of determining market price for multi-peril, revenue or other plans, and cost of production plans of insurance. (Sec. 101)	Allow FCIC to insure cost of production as price election.
Crop Revenue Coverage Subsidy	Prohibts FCIC from subsidizing revenue or price insurance policies. (Sec. 113)	Revenue insurance can be subsidized at same rate as multi-peril (Sec. 101)	Require equalization of premiums only. No increase on A&O reimbursement.
Discounts	Requires FCIC to reinstate good experience discounts and to provide discounts for production practices that reduce risk of loss and for insurance that is issued on larger, more cost-effective insurable units. (Sec 108)	No provision.	Authorize RMA to reduce premiums for producers who illustrate a record of good performance.
Buy-Up Coverages Adjustment to Subsidy Levels	All levels of buy-up coverage to be subsidized at 50%. (Sec. 109)	Establishes subsidy as follows-- 45% for 60/100 coverage and lower, 50% for 65 and 70/100 coverage and 55% for 75/100. Subsidy is capped at 75/100. (Sec. 101)	Subsidy levels increased beyond 30% discount provided by ‘98 disaster legislation. No inversion--less subsidy at higher coverages. Range is as follows: 70% for 50/100 coverage 65% for 60/100 50% for 75/100 39.1% for 85/100 Enhance producer flexibility by allowing selection of any combination of price election and yield coverage levels.
Sales Closing Dates	FCIC given flexibility to determine sales closing dates. (Sec. 110)	No provision	Eliminate the statutory sales closing dates.
Assigned Yields	Ensures that beginning farmers or farmers who rent new land or produce new crops will be assigned a fair yield. (Sec. 111)	Similar language (Sec. 102)	No provision?
Actual production history adjustment for disasters	FCIC must adjust APH yields for producers who suffer multi-year disasters. FCIC must assign yield equal to 85% of county transition yield for any year in which a producer’s yield falls below that 85% level. (Sec. 112)	Multi-year disaster defined as 3 out of five year loss with 25% or greater APH decline. If qualify, then get to drop 1 out of 5 years of records. (Sec. 103)	Allow one-time only APH adjustment at enactment to allow producer with 10 years of production history to drop 2 yields; 1 yield in 5 year period between 1990-1994, and 1 yield in 5-year period between 1995-1999. A producer with 5 years of history can drop 1 yield between 1995-1999. Protect producer’s future APH by limiting annual APH decline to 5% instead of current 10%.
Livestock Insurance	No provision	Authorizes livestock insurance (Sec. 106)	Remove the livestock exclusion under Section 518 and specify the expenditure of not more than $55 million for livestock pilot programs beginning in 2001. No more than 20% of the funds allocated to the livestock pilots may be expended toward a specific pilot.
Coverage for all commodities	No provision	Requires RMA to provide adequate coverage for all commodities and contract with private sector to ensure coverage availablility (Sec. 204)	No provision?
Increasing coverage policy	No provision	Authorizes increasing coverage policy. (Sec. 104)	No provision?
Low-risk producer pilot program	Pilot program designed to encourage participation by producers who rarely suffer insurable losses. Participants would receive reduction in payable premium if they incur yield loss greater than 10%, but not great enough to trigger indemnity. (Sec. 104)	No Similar Provision.	??
Title II
Board of Directors of Corporation	Expands the board to include 4 producers from 4 regions of the United States, 1 person engaged in the crop insurance business, 1 person engaged in reinsurance, the Undersecretary for Farm and Foreign Agricultural Services, the Under Secretary for Rural Development and the Chief Economist of the Department of Agriculture. (Sec. 201)	Same provision	Expands board by 3. Adds producer to provide for one producer from 4 regions of US; Adds USDA Chief Economist; Adds person experienced in regulation of insurance Total–10 persons 4 Feds/6 Private 9 voting/1 non-voting Board remains subject to general supervision of Secretary.
Office of Risk Management	Clarifies that the FCIC board of directors shall have direct oversight of RMA. (Sec. 202)	Same provision	??
Office of Private Sector Partnership	Establishes the Office of Private Sector Partnership, reporting directly to the FCIC board. The OPSP will have the authority to review and make recommendations on both privately and RMA-developed policies. It will also have the authority to approve reinsurance and review and make recommendations concerning subsidy for new crop policies and, with board concurrence, approve new rating structures. (Sec. 203)	Same provision	No provision.
New Product Development	See next two subject headings.	No provision	Remove USDA authority to develop new products. Authorize RMA to enter into contract for the development of products for under-served commodities. List Congressional priorities for policies such as forestry, forage in report language.
Consultation with state committees of farm service agency	Requires FCIC to consult with state FSA committees on the feasibility of policies of insurance being offered in their state. (Sec. 209)	No provision.	See above.
Product Development - Fees for plans of insurance.	Establishes a system of payment for the sale of policies developed by other companies. (Sec. 211)	Similar language (Sec. 205)	$50 million for RMA to reimburse applicants for research, development and maintenance costs for policies approved by the Board. This includes reimbursement on new policies and for rating projects on current policies.
Product Approval	No provision, but see APA exemption below.	No provision.	Requires RMA to promulgate standards and guidance relating to product approval within 180 days of enactment of the legislation. RMA must approve or disapprove with complete explanation after 2 FCIC Board meetings but within no longer than 120 days. Authorize an accelerated 30-day approval process on pilot programs limited in scope and with reduced risk in reinsurance.
Penalties for false information	Allows anyone convicted of providing false information in connection with any crop insurance claim to be disbarred from all USDA programs. (Sec. 204)	No provision.	Clarify that the definition of person includes producer, agents, loss adjusters and companies. Increase civil penalties for false information to a fine not to exceed the value of the claim or $10,000, whichever is higher. For claims of less than $10,000, the maximum fine is $10,000. Producers violating statute may be disqualified from receiving all USDA benefits for 5 years. Agents, loss adjusters and companies violating the statute may be prohibited from participating in the Federal Crop Insurance Program for 5 years. Producer premium may be forfeited if the producer is found to provide false information. Inform producers by including clause in contract outlining penalties for providing false information to FCIC or to an insurer.
Regulations	Allows certain RMA rulemaking activities to be exempted from the Administrative Procedures Act and other federal statutes. (Sec. 205)	No provision.	No provision.
Program Compliance	The bill enhances the compliance authority of FCIC by 1) requiring FCIC to develop and implement an effective program for monitoring program compliance by all crop insurance participants; and 2) requiring regular oversight of loss adjusters. (Sec. 206)	No provision.	Require the Secretary to direct FSA and RMA to reconcile available farmer data including acreage and production to identify reporting discrepancies and to enhance enforcement capability no later than the 2000 crop year. Data reconciliation shall occur on an annual basis at a minimum. FSA to conduct field and paper audits of suspect cases and a random sample of claims to assist RMA in auditing and compliance. Require FSA staff training.
Records and reporting.	The bill strengthens requirements for accurate recordkeeping and reporting of crop production by participants and non-participants in crop insurance. (Sec. 210)	No provision.	Provisions to afford producers additional protection of information submitted to USDA.
Premium Price Transparency	No provision.	No provision.	Adjust premium assistance information on the producer contract to more clearly highlight the federal contribution to the producer’s premium.
Payment of rebates to cooperative associations.	Allows the payment of rebates to cooperatives who engage in the sale of crop insurance. (Sec. 207)	No provision.	Allow cooperatives and nonprofit trade associations to pay the fees for catastrophic risk protection on behalf of its members. Payments or licensing fees made by an insurance company to the cooperative shall not be considered a rebate.
Limitation on Double Insurance	Prohibits purchasing insurance for two crops for the same acreage in a year, except where there is an established practice of double-cropping, (Sec. 208)	No provision.	Except in a double-cropping area, a producer who receives an indemnity can only receive catastrophic coverage on the planting of a second crop. In double-cropping areas, to receive a second buy-up policy, the producer must demonstrate they can plant and harvest both of the covered crops within a twelve-month period.
Flexible subsidy pilot program	Allows for the creation of a flexible subsidy pilot program for the 2000-2002 crop years. (Sec. 212)	Similar language (Sec. 206)	Authorizes FCIC to offer pilot programs on a national basis.
Reinsurance Agreements	Provides tougher sanctions for agents and reinsured companies that have recurring compliance difficulties, and requires a regular review of the Standard Reinsurance Agreement. (Sec. 213)	No provision.	Potential impact on the Standard Reinsurance Agreement. ???
Funding	Makes necessary adjustments in funding provisions to take into account the establishment of the Office of Private Sector Partnership. (Sec. 214)	Similar language for private sector partnership office (Sec. 205)	May be necessary to delay FY 2000 payments for crop year 2000 until October of 2000. ???
Non-Insured Assistance Program	No provision.	No provision.	Modify $2 million adjusted gross sales cap to $2 million adjusted gross income. Allow area trigger or Secretarial disaster designation to determine eligibility.