A proposed new Standard Reinsurance Agreement between the Federal Crop Insurance Corporation and the crop insurance companies which deliver the program nationally has been released by the Risk Management Agency. This follows several months of discussion between RMA and the companies. The current deal is expected to be canceled on June 30, 2010 and the newly negotiated agreement be signed.
"The Federal crop insurance program is an important part of the safety net for producers and the changes we are proposing will help protect farmers from higher costs, rein in costs for taxpayers, improve access to crop insurance and provide greater protection from crop losses," said Agriculture Secretary Tom Vilsack. "When negotiations are complete, we expect to have in place a stronger Federal crop insurance program that helps producers better manage their risk and that serves farmers in every region of the country."
Six primary objectives that RMA wanted in the new agreement include maintaining producer access to critical risk management tools; aligning Administrative and Operating subsidy to insurance companies closer to actual delivery costs; provide a reasonable rate of return to insurance companies; protect producers from higher costs while equalizing reinsurance performance across states to more effectively reach under-served producers, commodities and areas; simplify provisions to make the SRA more understandable and transparent; and enhance program integrity.
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