BULLETIN NO.: MGR-96-063

TO:      All Reinsured Companies
         All Risk Management Field Offices
         FSA Headquarters, Program Delivery and Field Operations
         
FROM:    Kenneth D. Ackerman
         Acting Administrator

SUBJECT: Crop Revenue Coverage (CRC) and Income Protection (IP) Loss 
         Adjustment When the Harvest Price is Less than the Spring Price


BACKGROUND:

The Actual Production History (APH) plan of coverage provides crop insurance 
coverage for production losses.  The CRC and IP policies are new insurance 
concepts that provide coverage for production losses and losses caused by 
fluctuations in crop prices.  Under the CRC and IP plans of insurance, when 
the Harvest Price is less than Spring Price (Projected Price for IP),  
policyholders may be eligible for an indemnity even though they did not 
experience a production loss.

Risk Management Agency (RMA) is advising companies to become familiar with 
policy provisions contained in the Settlement of Claim section of the CRC 
and IP Crop Provisions.  There may be more than one method to implement these 
provisions when the Harvest Price is less than the Spring Price.  For 
example:  1) One method may be to determine a yield factor by dividing the 
Spring  Price by the Harvest Price then multiplying the policyholders CRC or 
IP approved yield by the factor to get a "trigger yield".  If the 
policyholder's yield is less than the trigger yield, the policyholder would 
be eligible for a revenue loss payment.  2) Another method may be to multiply 
the Harvest Price by the harvested production.  If that amount is less than 
the revenue guarantee the insured is eligible for a revenue loss.  
In either case the insured should then be advised to provide a notice of 
loss and the loss would be determined in accordance with policy provisions 
and approved loss adjustment procedures.

ACTION:

This aspect of the CRC and IP policies, will be discussed during the National 
Crop Insurance Service's, National Training Conference, on Tuesday afternoon 
October 8, 1996.  RMA encourages companies to be prepared for this 
discussion.  Subsequent to this meeting, all companies selling and servicing 
CRC and IP must submit their procedural plans for implementing this aspect of 
the CRC and IP policies to the attention of E. Heyward Baker, Director, 
Reinsurance Services Liaison Branch, by close of business November 1, 1996.