BULLETIN NO: MGR-99-002
TO: All Reinsured Companies
All Risk Management Field Offices
All Other Interested Parties
FROM: Kenneth D. Ackerman /s/ Ken Ackerman 1-15-99
Administrator
SUBJECT: Emergency Financial Assistance to Farmers
BACKGROUND:
The Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Appropriations Act, 1999 (Public Law 105-277), authorized $2.375 billion to assist farmers
suffering from crop and economic losses. Secretary Dan Glickman approved a portion of these
funds for the Federal Crop Insurance Corporation (FCIC) to offer an incentive to purchase crop
insurance or to increase coverage. This incentive is expected to pay approximately 30 percent of
the producer-paid premium. The exact percentage cannot be determined at this time because it
depends upon the number of producers who eventually sign-up for this benefit.
The Secretary also authorized an additional crop insurance premium discount for producers who
suffered multiple occurrences of scab and/or vomitoxin damage. This premium discount will be
paid on any eligible 1999 crop year policy. The amount of the additional discount will also be
announced after sign-up is completed.
The balance of the $2.375 billion will provide disaster assistance for producers who had losses in
1998 and prior years. A producer who did not purchase crop insurance for the 1998 crop year is
required to do so for the 1999 and 2000 (2000 and 2001 for citrus fruit, Avocados in California,
and Macadamia Nuts in Hawaii) crop years as a condition for receiving a disaster payment.
This Bulletin outlines the implementation of the these relief initiatives.
ACTION:
A. Crop Insurance Premium Incentive Discount (Premium Discount)
The premium discount is for 1999 crop year (2000 for citrus fruit, Avocados in
California, and Macadamia Nuts in Hawaii) policies at the limited or additional coverage
levels (buy-up). The exact amount of premium discount cannot be specified in advance,
but is estimated to be 30 percent of the producer-paid premium. The premium discount
depends upon a proration based on the total amount of eligible producer-paid premium.
The actual premium discount percentage will not be known until most acreage reports
have been processed.
1. Reinsured companies must advise agents to inform producers of the availability of
the premium discount.
2. RMA will provide specific guidance regarding submission of data via updates to
Manual-13 following consultation with the industry.
B. Premium Discount for Producers with Multiple Losses Due to Scab and/or Vomitoxin
Producers who insured wheat, barley, oats, or rye in any state during at least two of the
crop years during 1994 through 1998 may be eligible to receive an additional premium
discount on the producer-paid premium for any 1999 crop policy. The 1999 insured crop
or crops need not be wheat, barley, oats, or rye to qualify for an additional discount due to
Scab and/or Vomitoxin. The producer must demonstrate that the wheat, barley, oats, or
rye was subject to a discounted price due to scab and/or vomitoxin damage. The two
years of insurance and the two years of discounted prices due to scab and/or vomitoxin
need not be the same.
1. Reinsured companies must:
a. Advise agents to inform producers of the availability of a premium
discount for scab. An estimate of the percentage discount will be
announced not later than February 15, 1999. The scab premium discount
depends upon a proration based on the total amount of eligible producer-
paid premium. The actual premium discount percentage will not be
known until most acreage reports have been processed.
b. Verify the eligibility documentation;
c. Maintain the hard copy evidence of eligibility for the scab premium
discount;
d. Apply the appropriate scab premium discount to each eligible policy.
2. Producers must:
a. Certify that they insured their wheat, barley, oats, or rye for at least two of
the crop years during 1994 through 1998;
b. Provide evidence of such insurance if a record cannot be found in the files
of the reinsured company with which they will insure for 1999;
c. Provide hard copy evidence (elevator settlement sheets or similar) that the
wheat, barley, oats, or rye they produced was subject to a discount in price
due to scab and/or vomitoxin damage during the years 1994 through 1998.
3. RMA will:
a. Determine the final percentage of discount to apply for scab and/or
vomitoxin after qualifying acreage reports have been received from the
reinsured companies;
b. Provide specific guidance regarding submission of data via updates to
Manual-13 following consultation with the industry.
C. Limitations on the Premium Discounts
The total premium discount and scab premium discount made available to any Taxpayer
Identification Number cannot exceed $80,000.
NOTE: The $2.5 million dollar gross income limitation will NOT apply to the premium
discounts.
Uninsured producers may obtain Catastrophic Risk Protection (CAT) during the extended
application period to facilitate the linkage requirement, etc. Producers should be
reminded that the premium discount incentives do not apply to CAT policies.
D. Application Period to Facilitate the Premium Discounts
1. To provide ample time for producers to take advantage of the premium discount,
companies may accept applications for new or changed coverage for 1999 crop
year (2000 for citrus fruit, Avocados in California, and Macadamia Nuts in
Hawaii) for those crops whose original sales closing dates fell on or after July 31,
1998 and on or before February 15, 1999, as follows:
Application Production/Acreage
State Deadline Reporting Date
AZ, FL, GA, HI, LA, MS, SC 2/28/99 4/15/99*
All other States 3/15/99 4/30/99*
* Exception: For crops with a final planting date on or after December 31, 1998,
but before August 15, 1999, the acreage reporting date will be the later of the date
shown above or the date specified in the Special Provisions in accordance with
Section 6(a)(2) and (3) of the Basic Provisions.
2. Current insureds may not lower their insurance coverage levels or transfer to
another insurance provider for crops with an extended application date. Existing
insurance policies may not be canceled if the cancellation date has already passed
unless changing insurance plans at the same or a higher coverage level (e.g., from
APH to CRC, GRIP, or RA etc.).
3. Producers who are presently ineligible for crop insurance coverage due to a
delinquent debt will be allowed to satisfy such debt and obtain coverage during
the extended application period.
E. Reinsurance Fund Designation
Reinsured companies may designate new policies and policies with changes to coverage,
as defined in section D of this bulletin as follows:
1. Original application - A policy written on or before the original sales closing date
that did not have a change in coverage level or insurance plan before the revised
application deadline, may not be changed.
2. Revised application - A policy written on or before the original sales closing date
with an increase in coverage level or a change in the insurance plan occurring
before the extended application deadline may be designated to the same fund as
the original policy or to a fund with less company risk exposure (i.e., a
Commercial fund policy may be designated to the Developmental or Assigned
Risk fund or a Developmental fund policy may be designated to the Assigned
Risk fund).
3. New application - A new policy written after the original sales closing date and
before the extended application deadline may be designated to any fund.
Companies must make fund designations no later than the transaction cutoff date for the
week including the 30th calendar day after the revised application deadline. The Assigned
Risk fund state allocation limits are waived for the 1999 reinsurance year.
F. Disaster Payment Crop Insurance Requirement
Producers who receive a disaster payment on uninsured crops must purchase a crop
insurance policy for their 1999 and 2000 crops of economic significance (2000 and 2001
for citrus, Avocados in California, and Macadamia Nuts in Hawaii). A producer who
does not meet this requirement by the original sales closing date or the extended
application deadline, may make an application for a Catastrophic Risk Protection (CAT)
policy until April 28, 1999. Provisions of Subpart T relating to availability of CAT
coverage whenever the producer plants a crop he or she did not intend to plant remain in
effect. Companies may designate these CAT policies into any fund. Fund designations,
for such policies, must be made no later than May 29th.
G. Insurance Records
There is no need for any producer to request loss records from insurance companies to be
eligible for multi-year or single year disaster assistance payments. RMA will
automatically provide appropriate data to the Farm Service Agency which will be used in
making these determinations. Producers must apply for disaster assistance at their local
Farm Service Agency office.
DISPOSAL:
This bulletin is effective until December 31, 1999.
CC: RMA COMPLIANCE OFFICES
RMA REGIONAL SERVICE OFFICES
NATIONAL CROP INSURANCE SERVICES
AMERICAN ASSOCIATION OF CROP INSURERS
CROP INSURANCE RESEARCH BUREAU
NATIONAL ASSOCIATION OF CROP INSURANCE AGENTS
NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS
LINDA VICKERS
CNA
ATTENTION: CINDY ANDERSON
COMPLIANCE MANAGER
FAX # (913) 661-7667
HAWKINS, HAWKINS, AND BURT
ATTN: DAVID BURT - FAX 904-258-1311
501 SOUTH RIDGEWOOD AVENUE
DAYTONA BEACH, FL 32114
CC: K. ACKERMAN IS - PLEASE ROUTE
MGR/CHRON DAM-RSO
JHARWOOD DIRECTOR/FUS - PLEASE ROUTE
MMULUGETA DIRECTOR/CS - PLEASE ROUTE
HBAKER/RSD - PLEASE ROUTE
GWESTMORELAND/COMPLIANCE--PLEASE ROUTE
LDITTUS/ENAP - PLEASE ROUTE
DMOSLAK/REGULATORY
CC: KANSAS CITY OFFICES:
TWITT/R&D--PLEASE ROUTE
TIM HOFFMANN - PRODUCT DEVELOPMENT DIVISION
VONDIE O'CONNER, RESEARCH AND EVALUATION DIVISION
DENISE HOFFMANN - ACTUARIAL DIVISION
FRED OXLEY - FISCAL OPERATIONS AND SYSTEMS DIVISION
AGILMORE/AMC-PLEASE ROUTE