BULLETIN NO.:  MGR-97-023

TO:       All Reinsured Companies
          All Risk Management Field Offices
          FSA Headquarters, Program Delivery and Field Operations

FROM:     Kenneth D. Ackerman
          Administrator

SUBJECT:  1997 Insurance Coverage for Limited Resource Farmers


ISSUE: 

Risk Management Agency (RMA) and private insurance providers intend to ensure 
the availability of Catastrophic risk protection (CAT) for 1996 limited 
resource farmers. 

BACKGROUND:

When the Federal Crop Insurance Reform Act of 1994 eliminated disaster 
assistance and the Federal Agricultural Improvement and Reform Act of 1996 
eliminated many farm programs, subsidized crop insurance became the primary 
safety net for most American farmers.  To ensure that all producers would be 
able to afford at least CAT coverage, the 1994 Act provided that the 
administrative fee would be waived for limited resource farmers.  A limited 
resource farmer is generally defined as a producer or operator with an annual 
gross income of $20,000 or less from all sources.  (Exact definition may be 
found in the Catastrophic Risk Protection Endorsement Section 1.)  Producers 
must annually certify eligibility for this benefit. 

The Office of the Inspector General recently alerted RMA that some insureds 
who certified their status as limited resource farmers with the Farm Service 
Agency (FSA) in 1996, and whose policies were transferred from FSA to private 
insurance providers for 1997, were not contacted or did not understand that 
the administrative fee associated with CAT policies could be waived
with private insurance providers.

RMA and private insurance providers have agreed that efforts will be made to 
ensure that all limited resource producers are contacted, and those who 
decide to continue their CAT coverage are able to do so.  MGR-96-041, 
Exhibit 1.L., provides the authority to offer those producers a 1997 policy.

ACTION:

In consultation with private insurance providers, RMA has determined the 
following actions should be taken as soon as possible by all companies 
receiving transferred 1996 FSA policies:

1.   Insurance providers shall ensure that all agents are informed about 
     procedures regarding limited resource farmers and the availability of 
     the form to certify status as a limited resource producer.  (The CAT 
     Endorsement and Section 4C(1) of the CAT Handbook provides procedure for 
     waiving the administrative fee for limited resource farmers.  The
     Certification Form can be found in Exhibit 24 of the CAT Handbook.)

2.   Insurance providers shall identify all 1996 limited resource farmers who 
     do not have a 1997 policy.  Policies where the waiver of the 
     administrative fee for limited resource farmers has been approved can be 
     identified on the 14 Record where the administrative fee flag is equal 
     to "W."

3.   Insurance providers shall ensure that an agent contacts any limited 
     resource farmer who has not continued his/her policy for 1997, and that 
     procedures for certifying status as a limited resource farmer are 
     explained.  If those producers certify their status as limited resource 
     farmers in 1997, the company can accept a late filed application for CAT
     coverage.

4.   The company must submit the policy with a late processed flag of "7" on 
     the 14 Record and the policy can be designated into the assigned risk 
     fund with an assigned risk flag of "4".  This action must be completed 
     by August 1, 1997.

5.   Insurance providers shall provide to RMA the number of agents informed 
     about procedures on limited resource farmers, number of producers 
     contacted, and number of policies written.  Documentation should be 
     Faxed to (202) 690-2095, attention:  Marian Jenkins, Insurance Services 
     Division, not later than October 1, 1997.