Availability of supplemental crop insurance based on area yield and loss plan of insurance or area revenue plan of insurance

(a)

In general

Section 508(c) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)) is amended by adding at the end the following new paragraph:

(11)

Supplemental area coverage

(A)

Availability of coverage

Notwithstanding paragraph (4), if area coverage is available in an area (as determined by the Corporation under paragraph (3)), the Corporation shall provide eligible producers in that area with the option to purchase supplemental insurance coverage based on— (i)an area yield and loss plan of insurance; or (ii)an area revenue plan of insurance that includes coverage for a loss in yield. (B)

Eligible producers

To be eligible to obtain supplemental coverage under this paragraph, a producer must purchase either an individual yield and loss plan of insurance or a revenue plan of insurance that includes coverage for a loss in yield at an additional coverage level for the same crop to be covered by the supplemental coverage. (C)

Limitation

In providing supplemental coverage to a producer under this paragraph, the sum of the following shall not exceed 100 percent: (i)The coverage level expressed in percentage terms for the individual yield and loss plan of insurance or the revenue plan of insurance that includes coverage for a loss in yield that is purchased by the producer for the same crop covered by the supplemental coverage, as required by subparagraph (B). (ii)The share expressed in percentage terms of the area yield and loss plan of insurance or the area revenue plan of insurance (at whatever coverage level is selected) that is used to determine the level of supplemental insurance coverage provided the producer under this paragraph. (D)

Payment of portion of premium

As provided in subsection (e), the Corporation shall pay a portion of the premium for supplemental coverage under this paragraph and the associated individual area yield and loss plan of insurance or revenue plan of insurance that includes coverage for a loss in yield. (E)

Amount of indemnity paid under supplemental coverage

The indemnity payable under supplemental coverage provided under this paragraph shall be calculated as— (i)the total indemnity for the area yield and loss plan of insurance or area revenue plan of insurance, at the coverage level chosen by the producer; multiplied by (ii)the share of the coverage of the area yield and loss plan of insurance or area revenue plan of insurance selected by the producer. (F)

Special rule relating to qualifying losses

In the case of a qualifying loss in an area (as determined by the Corporation) under supplemental coverage provided under this paragraph, 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 the revenue plan of insurance that includes coverage for a loss in yield of the producer. (G)

Reinsurance year

Subject to the availability of area yield and loss or revenue coverage for an insurable crop in an area (as determined by the Corporation), the Corporation shall provide supplemental coverage under this paragraph not later than the 2008 reinsurance year.

(b)

Conforming amendments

Section 508(d)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)(2)) is amended— (1)by striking additional coverage in the matter preceding subparagraph (A) and inserting additional and supplemental coverages; and (2)by adding at the end the following new subparagraph:

(C)In the case of supplemental coverage provided under subsection (c)(11) 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.