SUBJECT: Crop Revenue Coverage, Income Protection and Revenue Assurance Pilot Programs of Insurance

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1 BULLETIN NO.: MGR TO: FROM: All Reinsured Companies All Risk Management Field Offices All Other Interested Parties Kenneth D. Ackerman Acting Administrator SUBJECT: Crop Revenue Coverage, Income Protection and Revenue Assurance Pilot Programs of Insurance The Federal Crop Insurance Corporation's (FCIC) Board of Directors (Board) has recently approved expansion of Crop Revenue Coverage (CRC) for corn and soybeans, new CRC programs for cotton, grain sorghum and spring wheat, and expansion of Income Protection (IP)for grain sorghum and soybeans. The Board also approved a new alternative product known as Revenue Assurance, a revenue based insurance plan. Both crop programs, CRC and Revenue Assurance, have been approved for reinsurance and premium subsidy, including subsidy for administrative and operating expenses. Both insurance plans are designed as alternatives for a standard multiple peril crop insurance policy. The products are now approved and will be available to all reinsured companies to write for the 1997 crop year. However, sales of CRC will begin upon timely receipt from American Agrisurance, Inc. of the appropriate premium rates, review of those rates by FCIC and publication of the rates and policies. Sales of IP and Revenue Assurance will begin upon pbulication of the rates and policies. All of the approved insurance programs' policy language, forms and rate factor tables will be available through the Reporting Organization Server in the very near future. Beginning this spring, new CRC programs will be available on: Cotton Arizona - all counties, Georgia - all counties, Oklahoma - all counties, Texas - (Armstrong, Briscoe, Castro, Deaf Smith, Floyd, Gray, Hale, Hartley, Parmer, Randall, Swisher, Andrews, Bailey, Cochran, Crosby, Dawson, Gaines, Glasscock, Hockley, Howard, Lamb, Lubbock, Lynn, Martin, Midland, Terry, Yoakum, Borden,

2 United States Department of Agriculture Risk Management Agency Office of the Administrator Washington, D.C Childress, Collingsworth, Cottle, Dickens, Donley, Foard, Garza, Hall, Hardeman, Kent, King, Motley, Wheeler, Wichita, Wilbarger, Baylor, Coleman, Fisher, Haskell, Jones, Knox, Mitchell, Nolan, Runnels, Scurry, Stonewall, Taylor)

3 Grain Sorghum Colorado - all counties, Nebraska - all counties, Oklahoma - all counties, Kansas (Gove, Greeley, Lane, Logan, Ness, Scott, Trego, Wallace, Wichita, Clark, Finney, Ford, Grant, Gray, Hamilton, Haskell, Hodgeman, Kearny, Meade, Morton, Seward, Stanton, Stevens, Barton, Dickinson, Ellis, Ellsworth, Lincoln, McPherson, Marion, Rice, Rush, Russell, Saline, Atchison, Brown, Doniphan, Jackson, Jefferson, Leavenworth, Marshall, Nemaha, Pottawatomie, Riley, Wyandotte), Missouri (Bates, Cass, Cedar, Henry, Jackson, Johnson, LaFayette, St. Clair, Vernon), South Dakota (Aurora, Beadle, Brule, Buffalo, Hand, Hughes, Hyde, Jerauld, Sully, Gregory, Jones, Lyman, Mellette, Todd, Tripp) Spring Wheat Minnesota - all counties, Montana (Daniels, Roosevelt, Sheridan, Valley), North Dakota (Dunn, McKenzie, McLean, Mercer, Oliver, Eddy, Foster, Kidder, Sheridan, Stutsman, Wells, Barnes, Cass, Griggs, Steele, Traill, Dickey, LaMoure, Logan, McIntosh, Ransom, Richland, Sargent), ** CRC wheat coverage was available last fall in Kansas, Michigan, Nebraska, South Dakota, Texas, Washington and designated counties in Montana. Beginning this spring, expansion of Crop Revenue Coverage (CRC) for corn and soybeans will be available in: Corn Colorado - all counties, Illinois - all counties, Indiana - all counties, Kansas - all counties, Michigan - all counties, Minnesota - all counties, Missouri - all counties, Ohio - all counties, Oklahoma - all counties, South Dakota - all counties, Texas - all counties Soybeans Illinois - all counties, Indiana - all counties, Kansas - all counties, Michigan - all counties, Minnesota - all counties, Missouri - all counties, Ohio - all counties, Oklahoma - all counties, South Dakota - all counties, Texas - all counties ** CRC corn and soybean coverage was available beginning with the 1996 crop year in all counties in Iowa and Nebraska.

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5 Revenue Assurance is designed to protect a producer's loss of revenue resulting from low prices, low yields, or a combination of both. The Revenue Assurance policy provides coverage on basic units, optional units, enterprise units, or whole-farm units as selected by the producer. Beginning this spring, Revenue Assurance will be available on: Corn Soybeans Iowa - all counties Iowa - all counties CRC and Revenue Assurance plans of insurance will only be available in these counties if an existing multiple peril crop insurance program is also available for the crop. IP policies protect producers against reductions in gross income when a crop's price or yield declines from early-season expectations. Beginning this spring, expansion of IP for grain sorghum and soybeans will be available in: Grain Sorghum Texas (Armstrong, Bailey, Carson, Castro, Cochran, Dallam, Deaf Smith, Gray, Hale, Hansford, Hartley, Hockley, Hutchinson, Lamb, Moore, Ochiltree, Oldham, Parmer, Potter, Randall, Sherman, Swisher, Terry, Yoakum) Soybeans Illinois (Champaign, Ford, Iroquois, Livingston, McLean), Indiana (Benton, Fountain, Warren), Iowa (Adair, Audubon, Cass, Dallas, Guthrie, Shelby) Arkansas (Arkansas, Ahley, Chicot, Clay, Conway, Craighead, Crawford, Crittenden, Cross, Desha, Drew, Faulkner, Franklin, Greene, Hempstead, Independence, Jackson, Jefferson, Johnson, LaFayette, Lawrence, Lee, Lincoln, Little River, Logan, Lonoke, Miller, Mississippi, Monroe, Perry, Phillips, Poinsett, Pope, Prairie, Pulaski, Randolph, Sebastian, Sevier, St. Francis, White, Woodruff, Yell) IP crop insurance policies will continue to be reinsured under the current terms of the 1995/97 Standard Reinsurance Agreement. Companies who wish to market CRC and/or Revenue Assurance programs under the terms and conditions set forth in the Memorandum(s) of Understanding must complete and submit the attached Optional Amendment No. 3 for CRC crop insurance policies, and/or Optional Amendment No. 4 for Revenue Assurance crop insurance policies.

6 The Amendments are to the current 1995/1997 Standard Reinsurance Agreement. Section II.B. applies to the aggregate crop insurance premium including CRC and Revenue Assurance premiums written under the Amendments. Maximum cession limitations outlined in Exhibit 15 of the Plan of Operations apply to the aggregate premiums for all plans of insurance. The applicable administrative and operating expense reimbursement and the company's share of underwriting gain or loss will be calculated on the basis of the CRC and/or Revenue Assurance premium associated with the policies written under the Amendments. Attached are two copies of each Amendment and the applicable Memorandum(s) of Understanding between the Federal Crop Insurance Corporation and the submitting companies for the CRC and Revenue Assurance programs. Each of the four documents must be signed as an original and returned via overnight mail by the date stated below. The Amendments should be signed by a duly authorized person empowered with signature authority by the primary insurance company reinsured under the Standard Reinsurance Agreement. Signed amendments must be sent, via overnight mail, to the following address by C.O.B. February 10, 1997: OVERNIGHT MAIL:: USDA/Risk Management Agency Insurance Services/Reinsurance Services Division E. Heyward Baker, Acting Director 1400 Independence Avenue, SW Stop Code: 0530 Room 6727-South Building Washington, DC Phone: (202) ; Companies may also fax signed copies of each amendment to facilitate the marketing and sales of CRC and Revenue Assurance crop insurance policies. Signed copies may be faxed as soon as possible to (202) However, all signed originals must be received by February 10, Questions regarding this bulletin may be addressed to E. Heyward Baker, Acting Director, Reinsurance Services Division, Insurance Services at (202) Attachments: (Will be sent via overnite mail)