BULLETIN NO.: MGR-96-022

TO:       All Reinsured Companies
          All Risk Management Field Offices
          FSA Headquarters, Program Delivery and Field Operations
          
FROM:     Kenneth D. Ackerman
          Deputy Administrator
          
SUBJECT:  1996 Loss Adjustment Advisory

BACKGROUND:

As a result of the recently announced crop insurance program changes to 
implement the Federal Agriculture Improvement and Reform Act of 1996 (FAIR), 
Risk Management has received reports of potential problems and inconsistent 
application of crop insurance policy and procedures.  This bulletin is 
intended to alert insurance providers of these potential problems and to 
reinforce approved policy and procedure.

ISSUE 1 - EXTENDED SALES REQUIREMENTS:

Manager's Bulletins MGR-96-014 and MGR-96-014.1 allowed producers to obtain
catastrophic crop insurance coverage on their spring planted crops through 
May 2, 1996.  The bulletins stipulated that the producer must be able to 
certify that planted crops would produce at least 90 percent of the guarantee 
and that insurance would not attach for 10 days after the date of application.  
There have been reports of policies being written during the extended sales 
period in areas where losses are already general to the area.  Any cause of 
loss which occurred prior to the date insurance attached is not insurable.  
Policies found to have been written outside the applicable guidelines and any 
losses paid on those policies will not be eligible for reinsurance.  Risk 
Management Compliance as well as the Office of Inspector General have been 
apprised of reported problems and will be conducting reviews to ensure 
adherence to approved procedures.

ISSUE 2 - TENANTS AND LANDLORDS:

The current Common Crop Insurance Policy Basic Provisions allow a tenant (or 
landlord) to insure a landlord's (or tenant's) share under certain conditions.  
Although this provision is to be removed from the policy, it is in effect for 
the 1996 crop year.  Reports have been received from areas with pending 
losses that some policyholders have been encouraged to report their 
landlord's (or tenant's) share under their additional coverage policy and the 
landlord (or tenant) encouraged to cancel their existing catastrophic 
coverage policy, thus ensuring a larger crop insurance indemnity for the 
crop.

The Common Crop Insurance Policy Basic Provisions require that policyholders 
who intended to use this provision of the policy to indicate their intention 
by the applicable sales closing date.  Insurance providers should verify 
timely execution and reporting of such share arrangements when suspect 
conditions or changes in the policyholder's operation indicate a need for 
additional review.  Risk Management Compliance, as well as the Office of 
Inspector General, have been apprised of reported abuses of this provision 
and will be conducting reviews to ensure adherence to approved procedure for 
the 1996 crop year.