BULLETIN NO.:  MGR-095-012

TO:       All Reinsured Companies
          CFSA Headquarters, Program Delivery and Field Operations
          All Risk Management Field Offices
          Other Interested Parties in Multiple Peril Crop Insurance

FROM:     Kenneth D. Ackerman
          Acting Deputy Administrator   

SUBJECT:  Request for Suggestions to Simplify the Federal Crop Insurance 
          Program

The Federal Crop Insurance Corporation (FCIC) is charged with implementing 
the Federal Crop Insurance Reform Act of 1994 (the Act) by developing 
insurance products and delivering them to agricultural producers.  Basic 
level, "catastrophic" policies are delivered through both private insurance 
companies reinsured by FCIC and local offices of the Consolidated Farm 
Service Agency.  The administrative costs of these catastrophic policies are 
offset by farmer-paid fees.  Delivery of higher coverage levels is primarily 
through reinsured companies.  FCIC pays an administrative expense 
reimbursement to these companies.

The Act requires a gradual and continual reduction in the administrative 
expense reimbursement paid to reinsured companies.  Many observers have 
suggested that simplifying the administrative requirements of the insurance 
policies and the program offers the best chance of reducing costs to 
accommodate the legislatively mandated reduction.  Furthermore, the Act 
requires such simplification, as in Section 508 (a) (10), when it states:

     "(A) Catastrophic Risk Protection Plans.--In developing and carrying out 
     the policies and procedures for a catastrophic risk protection plan 
     under this title, the Corporation shall, to the maximum extent 
     practicable, minimize the paperwork required and the complexity and 
     costs of procedures governing applications for, processing, and 
     servicing of the plan for all parties involved.

     "(B) Other Plans.--To the extent that all policies and procedures 
     developed under subparagraph (A) may be applied to other plans of 
     insurance offered under this title without jeopardizing the actuarial 
     soundness or integrity of the crop insurance program, the Corporation 
     shall apply the policies and procedures to the other plans of insurance
     within a reasonable period of time (as determined by the Corporation) 
     after the effective date of this paragraph."


Therefore, FCIC is soliciting suggestions from all interested parties as to 
how it can further simplify the delivery of the crop insurance program, 
minimize paperwork, and reduce complexity.

Suggestions should be submitted in writing to the Research and Development 
Division, Attention Nelson Maurice, Senior Underwriter, Federal Crop 
Insurance Corporation, P. O. Box 419293, Kansas City, Missouri  64141.  For 
further information, Mr. Maurice can be contacted at (816) 926-3636.  
Suggestions should be submitted in writing by April 30, 1995.

Suggestions may deal with any aspect of the FCIC program.  However, 
suggestions regarding changes in the coverage offered under individual crop 
insurance programs are not requested at this time unless such suggestions 
will also lead to administrative simplification.

Suggestions should be detailed as to what specific change is recommended. 
Note that FCIC's underwriting operations must be carried out in a sound 
manner; the Act requires that it have 

   " . . . an overall projected loss ratio of not greater than 1.1 by October 
   1, 1995."  The projected overall loss ratio must be further reduced to 
   1.075 by October 1, 1998.  Therefore, it may not be feasible to accept 
   simplification suggestions that reduce delivery expenses at the cost of 
   increasing underwriting losses. 

For each suggestion, please estimate or provide:

     1.   The costs associated with the current procedure for which a change 
          is proposed;

     2.   The basis (e.g., hours of clerical time, administrative, or field 
          work required) by which the cost is measured;

     3.   The  savings that would result from adopting the proposed change;

     4.   The degree to which the current procedure and the proposed change 
          assure that the correct liability is established,  premium 
          collected, and loss paid;

     5.   The basis by which these estimates are made; and

     6.   The degree to which affected policies would be more or less likely 
          to be designated to the commercial fund under the Standard 
          Reinsurance Agreement.

FCIC will preliminarily evaluate all suggestions and then seek the technical 
opinions of entities involved in the delivery systems as to the practicality 
and feasibility of each proposal.  Those suggestions most likely to simplify 
operations, reduce administrative burdens, and that enhance program delivery 
to farmers will be implemented in an orderly fashion for the coming crop 
years.