I 108th CONGRESS 2d Session H. R. 4702 IN THE HOUSE OF REPRESENTATIVES June 24, 2004 Mr. Neugebauer introduced the following bill; which was referred to the Committee on Agriculture A BILL To require farmers to be offered supplemental crop insurance based on an area yield and loss plan of insurance.

1.

Requirement to offer farmers supplemental crop insurance based on an area yield and loss plan of insurance

(a)

In general

Section 508(c)(3) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)(3)) is amended to read as follows: (3)

Yield and loss basis

(A)

Availability of coverage on individual or area yield and loss basis

A producer shall have the option of purchasing additional coverage based on an individual yield and loss basis or on an area yield and loss basis, if both options are offered by the Corporation. (B)

Supplemental area coverage

(i)

Authority to offer coverage

(I)

In general

Notwithstanding section 508(c)(4), if area coverage is available in the area (as determined by the Corporation), the Corporation may provide producers in that area that purchase an additional level of coverage for an insurable commodity based either on an individual yield and loss plan of insurance or a revenue plan of insurance that includes coverage for a loss in yield, as applicable, the option to purchase supplemental insurance coverage based on an area yield and loss plan of insurance. (II)

Limitation

The sum of (a) the coverage level expressed in percentage terms for the individual yield and loss plan of insurance or a revenue plan of insurance that includes coverage for a loss in yield, as applicable, and (b) the share expressed in percentage terms of the area yield and loss plan of insurance (at whatever coverage level is selected) that is used to determine the level of supplemental insurance coverage shall not exceed 100 percent. (ii)

Individual yield and loss plan required

To be eligible for supplemental coverage under this subparagraph, a producer must also purchase an individual yield and loss plan of insurance or a revenue plan of insurance that includes coverage for a loss in yield, as applicable, at an additional coverage level for the same crop covered by the supplemental coverage. (iii)

Payment of portion of premium

The Corporation shall pay a portion of the premium under a supplemental area yield and loss plan of insurance and the associated individual area yield and loss plan of insurance or revenue plan of insurance that includes coverage for a loss in yield, as applicable, in an amount described in subsection (e). (iv)

Indemnity paid under supplemental coverage

(I)

Amount of indemnity

The indemnity payable under supplemental coverage shall be calculated as— (aa)the total indemnity for an area yield and loss plan of insurance at the coverage level chosen by the producer; multiplied by (bb)the share of the coverage of the area yield and loss plan of insurance selected by the producer. (II)

Special rule relating to qualifying losses

In the case of a qualifying loss in an area (as determined by the Corporation) under a supplemental area yield and loss plan of insurance, subject to the applicable coverage limits, the total amount of the indemnity shall be available to the producer regardless of the loss incurred under the individual yield and loss plan of insurance or revenue plan of insurance that includes coverage for a loss in yield, as applicable, of the producer. (v)

Reinsurance year

Subject to availability of area coverage for the insurable crop in the area (as determined by the Corporation), the supplemental plan of insurance described in this subparagraph shall be made available by the Corporation not later than the 2005 reinsurance year.. (b)

Conforming amendment

Section 508(d)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)(2)) is amended— (1)by striking “additional coverage” the first place it occurs and inserting “additional and supplemental coverages”; and (2)by adding at the end the following: (C)In the case of supplemental area coverage that, in combination with either the individual yield and loss coverage, or a comparable coverage for a policy or plan of insurance that is not based on individual yield and does not insure more than 100 percent of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, the amount of the premium shall— (i)be sufficient to cover anticipated losses and a reasonable reserve; and (ii)include an amount for operating and administrative expenses, as determined by the Corporation, on an industry-wide basis as a percentage of the amount of the premium used to define loss ratio..