Crop Insurance Equity Act of 1999
S 1108 IS
106th CONGRESS
1st Session
S. 1108
To amend the Federal Crop Insurance Act to improve crop insurance coverage
and administration, and for other purposes.
IN THE SENATE OF THE UNITED STATES
May 24, 1999
Mr. COCHRAN (for himself, Mrs. LINCOLN, Mr. COVERDELL, Mr. SESSIONS, Mr.
CLELAND, Mr. HOLLINGS, Mr. SHELBY, Mr. ROBB, and Mr. HUTCHINSON) introduced
the following bill; which was read twice and referred to the Committee
on Agriculture, Nutrition, and Forestry
A BILL
To amend the Federal Crop Insurance Act to improve crop insurance coverage
and administration, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE- This Act may be cited as the `Crop Insurance Equity
Act of 1999'.
(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--CROP INSURANCE COVERAGE
Sec. 101. Prevented planting.
Sec. 102. Alternative rating methodologies.
Sec. 103. Quality adjustment.
Sec. 104. Low-risk producer pilot program.
Sec. 105. Catastrophic risk protection.
Sec. 106. Loss adjustment.
Sec. 107. Cost of production plans of insurance.
Sec. 109. Adjustments to subsidy levels.
Sec. 110. Sales closing dates.
Sec. 111. Assigned yields.
Sec. 112. Actual production history adjustment for disasters.
Sec. 113. Payment of portion of premium.
Sec. 114. Limitation on premiums included in underwriting gains.
TITLE II--ADMINISTRATION
Sec. 201. Board of Directors of Corporation.
Sec. 202. Office of Risk Management.
Sec. 203. Office of Private Sector Partnership.
Sec. 204. Penalties for false information.
Sec. 206. Program compliance.
Sec. 207. Payments by cooperative associations.
Sec. 208. Limitation on double insurance.
Sec. 209. Consultation with State committees of Farm Service Agency.
Sec. 210. Records and reporting.
Sec. 211. Fees for plans of insurance.
Sec. 212. Flexible subsidy pilot program.
Sec. 213. Reinsurance agreements.
TITLE I--CROP INSURANCE COVERAGE
SEC. 101. PREVENTED PLANTING.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
is amended by adding at the end the following:
`(A) IN GENERAL- The Corporation shall offer coverage for prevented
planting of an agricultural commodity only as an endorsement to a policy.
`(B) EQUAL COVERAGE- For each agricultural commodity for which prevented
planting coverage is available, the Corporation shall offer an equal level
of prevented planting coverage.
`(C) PLANTING OF SUBSTITUTE AGRICULTURAL COMMODITIES- In the case of
prevented planting coverage that is offered under this paragraph, the Corporation
shall allow producers that have the coverage, and that are eligible to
receive a prevented planting indemnity, to plant an agricultural commodity,
other than the commodity covered by the prevented planting coverage, on
the acreage that the producer has been prevented from planting to the original
agricultural commodity.
`(D) INELIGIBILITY FOR COVERAGE- A substitute agricultural commodity
described in subparagraph (C) shall not be eligible for coverage under
a plan of insurance under this title.'.
SEC. 102. ALTERNATIVE RATING METHODOLOGIES.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 101) is amended by adding at the end the following:
`(8) ALTERNATIVE RATING METHODOLOGIES-
`(A) IN GENERAL- Not later than September 30, 2000, the Corporation
shall develop and implement alternative methodologies for rating plans
of insurance under subsections (b) and (c), and rates for the plans of
insurance, that take into account--
`(i) producers that elect not to participate in the Federal crop insurance
program established under this title; and
`(ii) producers that elect only to obtain catastrophic risk protection
under subsection (b).
`(B) REVIEW AND ADJUSTMENT- Effective for the 2001 and subsequent crop
years, the Corporation shall review and make any necessary adjustments
to methodologies and rates established under this paragraph, based on (as
determined by the Corporation)--
`(i) expected future losses, with appropriate adjustment of any historical
data used in rating to remove--
`(I) the impact of adverse selection; and
`(II) data that no longer reflects the productive capacity of the area;
`(ii) program errors; and
`(iii) any other factor that can cause errors in methodologies and
rates.
`(C) IMPLEMENTATION- In developing, implementing, and adjusting rating
methodologies and rates under this paragraph, the Corporation shall--
`(i) use methodologies for rating plans of insurance under subsections
(b) and (c) that result in the lowest premiums payable by producers of
an agricultural commodity in a geographic area, as determined by the Corporation;
and
`(ii) update the manner in which rates are applied at the individual
producer level, as determined by the Corporation.
`(D) PRIORITY- In developing, implementing, and adjusting alternative
methodologies for rating plans of insurance under subsections (b) and (c)
for agricultural commodities, the Corporation shall provide the highest
priority to agricultural commodities with (as determined by the Corporation)--
`(i) the largest average acreage; and
`(ii) the lowest percentage of producers that purchased coverage under
subsection (c).'.
SEC. 103. QUALITY ADJUSTMENT.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 102) is amended by adding at the end the following:
`(9) QUALITY ADJUSTMENT POLICIES- The Corporation shall offer, only
as an endorsement to a policy, coverage that permits a reduction in the
quantity of production of an agricultural commodity produced during a crop
year, or any similar adjustment, that results from the agricultural commodity
not meeting the quality standards established in the policy.'.
SEC. 104. LOW-RISK PRODUCER PILOT PROGRAM.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 103) is amended by adding at the end the following:
`(10) LOW-RISK PRODUCER PILOT PROGRAM-
`(A) IN GENERAL- For each of the 2000 through 2003 crop years, the
Corporation shall carry out a pilot program that is designed to encourage
participation in the Federal crop insurance program established under this
title by producers who rarely suffer insurable losses.
`(B) SCOPE- The Corporation shall carry out the pilot program in at
least 40 counties that are determined by the Corporation to be adequate
to provide a comprehensive evaluation of the feasibility, effectiveness,
and demand among producers for a low-risk producer program.
`(C) PREMIUM REFUND- Notwithstanding section 506(o) and subsection
(d)(1), if a producer participating in the pilot program incurs a yield
loss in any crop year that is more than 10 percent but not more than 35
percent of the yield determined under subsection (g), the Corporation shall--
`(i) refund all or part, as determined by the Corporation, of the premium
that was paid by the producer for a plan of insurance for the crop that
incurred the qualifying loss; or
`(ii) apply the amount to be refunded under clause (i) against the
premium payable by the producer for equivalent coverage for the subsequent
crop year.
`(D) REGULATIONS- The Corporation shall promulgate such regulations
as are necessary to carry out the pilot program.'.
SEC. 105. CATASTROPHIC RISK PROTECTION.
Section 508(b)(2)(A) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)(2)(A))
is amended--
(1) in clause (i), by striking `and' at the end;
(A) by striking `each of the 1999 and subsequent crop years' and inserting
`the 1999 crop year'; and
(B) by striking the period at the end and inserting `; and'; and
(3) by adding at the end the following:
`(iii) in the case of each of the 2000 and subsequent crop years, catastrophic
risk protection shall offer a producer coverage for a 60 percent loss in
yield, on an individual yield or area yield basis, indemnified at 70 percent
of the expected market price, or a comparable coverage (as determined by
the Corporation).'.
SEC. 106. LOSS ADJUSTMENT.
Section 508(b)(11) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)(11))
is amended by striking `11 percent' and all that follows through the end
of the paragraph and inserting `$50 for each claim that is adjusted under
this subsection.'.
SEC. 107. COST OF PRODUCTION PLANS OF INSURANCE.
(a) IN GENERAL- Section 508(c) of the Federal Crop Insurance Act (7
U.S.C. 1508(c)) is amended by striking paragraph (5) and inserting the
following:
`(5) EXPECTED MARKET PRICE-
`(A) IN GENERAL- For the purposes of this title, the Corporation shall
establish or approve the price level (referred to in this title as the
`expected market price') of each agricultural commodity for which insurance
is offered.
`(B) AMOUNT- The expected market price of an agricultural commodity--
`(i) except as otherwise provided in this subparagraph, shall be not
less than the projected market price of the agricultural commodity, as
determined by the Corporation;
`(ii) may be based on the actual market price of the agricultural commodity
at the time of harvest, as determined by the Corporation; or
`(iii) in the case of cost of production or similar plans of insurance,
shall be the projected cost of producing the agricultural commodity, as
determined by the Corporation.'.
(b) CONFORMING AMENDMENTS- Section 508(h) of the Federal Crop Insurance
Act (7 U.S.C. 1508(h)) is amended--
(1) by striking paragraph (9); and
(2) by redesignating paragraph (10) as paragraph (9).
SEC. 108. DISCOUNTS.
Section 508(d) of the Federal Crop Insurance Act (7 U.S.C. 1508(d))
is amended by adding at the end the following:
`(A) IN GENERAL- Notwithstanding section 506(o) and paragraph (1),
the Corporation shall provide a discount in the premium payable by the
producer for a plan of insurance under subsections (b) and (c) for an agricultural
commodity in a county if the producer--
`(i) during each of the preceding 5 consecutive crop years--
`(I) has obtained insurance under this title for the agricultural commodity;
and
`(II) has not filed any claim under the insurance;
`(ii) if offered by the Corporation, elects to have unit coverage that
reduces the risk of loss below the risk of loss that is expected for a
unit comprised of all insurable acreage of the agricultural commodity in
the county; or
`(iii) implements innovative farming management practices that reduce
the risk of insurable loss, as determined by the Corporation.
`(i) IN GENERAL- Subject to clause (ii), the amount of the discount
provided to a producer for a crop year under subparagraph (A) shall be
determined by the Corporation.
`(ii) NO CLAIM DISCOUNT- The amount of the discount provided to a producer
for a crop year under subparagraph (A)(i) shall increase for each additional
consecutive crop year for which the producer is eligible for a discount
under subparagraph (A)(i).'.
SEC. 109. ADJUSTMENTS TO SUBSIDY LEVELS.
(a) IN GENERAL- Section 508(e)(2) of the Federal Crop Insurance Act
(7 U.S.C. 1508(e)(2)) is amended by striking subparagraphs (B) and (C)
and inserting the following:
`(B) In the case of additional coverage below 65 percent of the recorded
or appraised average yield indemnified at 100 percent of the expected market
price, or an equivalent coverage, the amount shall be equal to the sum
of--
`(i) 50 percent of the amount of the premium established under subsection
(d)(2)(B)(i); and
`(ii) the amount of operating and administrative expenses determined
under subsection (d)(2)(B)(ii).
`(C) In the case of additional coverage equal to or greater than 65
percent of the recorded or appraised average yield indemnified at 100 percent
of the expected market price, or an equivalent coverage, the amount shall
be equal to the sum of--
`(i) 50 percent of the amount of the premium established under subsection
(d)(2)(C)(i); and
`(ii) the amount of operating and administrative expenses determined
under subsection (d)(2)(C)(ii).'.
(b) APPLICATION- The amendment made by subsection (a) applies beginning
with the 2000 crop year.
SEC. 110. SALES CLOSING DATES.
Section 508(f)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(f)(2))
is amended by striking the last sentence.
SEC. 111. ASSIGNED YIELDS.
Section 508(g)(2)(B) of the Federal Crop Insurance Act (7 U.S.C. 1508(g)(2)(B))
is amended--
(1) by striking `assigned a yield' and inserting `assigned--
(2) by striking the period at the end and inserting `; or'; and
(3) by adding at the end the following:
`(ii) a yield determined by the Corporation, in the case of--
`(I) a person that has not been actively engaged in farming for a share
of the production of the insured crop for more than 2 crop years, as determined
by the Secretary;
`(II) a producer that produces an agricultural commodity on land that
has not been farmed by the producer; and
`(III) a producer that rotates a crop produced on a farm to a crop
that has not been produced on the farm.'.
SEC. 112. ACTUAL PRODUCTION HISTORY ADJUSTMENT FOR DISASTERS.
Section 508(g)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(g)(2))
is amended by adding at the end the following:
`(E) SUBSTITUTION OF TRANSITIONAL YIELD- Effective beginning with the
2000 crop year, if the producer's yield of an agricultural commodity in
any crop year is less than 85 percent of the transitional yield established
by the Corporation for the agricultural commodity, the Corporation shall,
at the option of the producer,
consider the producer's yield for the crop year to be 85 percent of the
transitional yield for the purpose of calculating the actual production
history for a crop of an agricultural commodity under subparagraph (A).
`(F) CORPORATION'S SHARE OF COSTS- In the case of any yield substitution
under subparagraph (E), in addition to any other authority to pay any portion
of the premium and indemnity, the Corporation shall pay--
`(i) the portion of the premium or indemnity that represents the increase
in premium associated with the substitution of the transitional yield under
subparagraph (E);
`(ii) all additional indemnities associated with the substitution;
and
`(iii) any amounts that result from the difference in the administrative
and operating expenses owed to an approved insurance provider as the result
of the substitution.'.
SEC. 113. PAYMENT OF PORTION OF PREMIUM.
Section 508(h)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(2))
is amended in the second sentence by inserting before the period at the
end the following: `, except that the Corporation shall not pay any portion
of the premium for any plan of insurance that offers coverage for losses
associated with a change in price'.
SEC. 114. LIMITATION ON PREMIUMS INCLUDED IN UNDERWRITING GAINS.
Section 508(k) of the Federal Crop Insurance Act (7 U.S.C. 1508(k))
is amended by adding at the end the following:
`(8) LIMITATION ON PREMIUMS INCLUDED IN UNDERWRITING GAINS- Notwithstanding
any other provision of law, the reinsurance agreements of the Corporation
shall require that not more than 50 percent of any premium for catastrophic
risk protection under subsection (b) be included in the calculation of
gains or losses of an approved insurance provider unless the loss ratio
for catastrophic risk protection exceeds 1.0.'.
TITLE II--ADMINISTRATION
SEC. 201. BOARD OF DIRECTORS OF CORPORATION.
Section 505 of the Federal Crop Insurance Act (7 U.S.C. 1505) is amended
by striking subsection (a) and inserting the following:
`(1) IN GENERAL- The management of the Corporation shall be vested
in a Board subject to the general supervision of the Secretary.
`(2) COMPOSITION- The Board shall consist of--
`(A) 4 members who are active agricultural producers with or without
crop insurance, with 1 member appointed from each of the 4 regions of the
United States (as determined by the Secretary);
`(B) 1 member who is active in the crop insurance business;
`(C) 1 member who is active in the reinsurance business;
`(D) the Under Secretary for Farm and Foreign Agricultural Services;
`(E) the Under Secretary for Rural Development; and
`(F) the Chief Economist of the Department of Agriculture.
`(3) APPOINTMENT AND TERMS OF PRIVATE SECTOR MEMBERS- The members of
the Board described in subparagraphs (A), (B), and (C) of paragraph (2)--
`(A) shall be appointed by, and hold office at the pleasure of, the
Secretary;
`(B) shall not be otherwise employed by the Federal Government;
`(C) shall be appointed to staggered 4-year terms, as determined by
the Secretary; and
`(D) shall serve not more than 2 consecutive terms.
`(4) CHAIRPERSON- The Board shall select a member of the Board described
in subparagraph (A), (B), or (C) of paragraph (2) to serve as Chairperson
of the Board.
`(5) STAFF- The Board shall employ or contract with 1 or more individuals
who are knowledgeable and experienced in quantitative mathematics and actuarial
rating to assist the Board in reviewing and approving policies and materials
with respect to plans of insurance authorized or submitted under section
508.'.
SEC. 202. OFFICE OF RISK MANAGEMENT.
(a) ESTABLISHMENT- Section 226A(a) of the Department of Agriculture
Reorganization Act of 1994 (7 U.S.C. 6933(a)) is amended by striking `independent
Office of Risk Management' and inserting `Office of Risk Management, which
shall be under the direction of the
Board of Directors of the Federal Crop Insurance Corporation'.
(b) FUNCTIONS- Section 226A(b) of the Department of Agriculture Reorganization
Act of 1994 (7 U.S.C. 6933(b)) is amended by striking paragraph (1) and
inserting the following:
`(1) Assistance to the Board in developing, reviewing, and recommending
plans of insurance under section 508(a)(7) of the Federal Crop Insurance
Act (7 U.S.C. 1508(a)(7)) to ensure that each agricultural commodity (including
each new or speciality crop) is adequately served by plans of insurance.'.
SEC. 203. OFFICE OF PRIVATE SECTOR PARTNERSHIP.
The Federal Crop Insurance Act is amended by inserting after section
507 (7 U.S.C. 1507) the following:
`SEC. 507A. OFFICE OF PRIVATE SECTOR PARTNERSHIP.
`(a) ESTABLISHMENT- The Secretary shall establish and maintain in the
Department an Office of Private Sector Partnership, which shall be under
the direction of the Board.
`(b) FUNCTIONS- The Office shall--
`(1) provide at least monthly reports to the Board on crop insurance
issues, which shall be based on comments received from producers, approved
insurance providers, and other sources that the Office considers appropriate;
`(2)(A) review policies and materials with respect to--
`(i) subsidized plans of insurance authorized under section 508; and
`(ii) unsubsidized plans of insurance submitted to the Board under
section 508(h); and
`(B) make recommendations to the Board with respect to approval of
the policies and materials;
`(3) administer the reinsurance functions described in section 508(k)
on behalf of the Corporation;
`(4) review and make recommendations to the Board with respect to methodologies
for rating plans of insurance under this title; and
`(5) perform such other functions as the Board considers appropriate.
`(c) ADMINISTRATOR- The Office shall be headed by an Administrator
who shall be appointed by the Secretary.
`(d) STAFF- The Administrator shall appoint such employees pursuant
to title 5, United States Code, as are necessary for the administration
of the Office, including employees who have commercial reinsurance and
actuarial experience.'.
SEC. 204. PENALTIES FOR FALSE INFORMATION.
Section 506(n)(1) of the Federal Crop Insurance Act (7 U.S.C. 1506(n)(1))
is amended--
(1) in subparagraph (A), by inserting `for each claim' after `$10,000';
and
(2) in subparagraph (B), by striking `noninsured assistance' and inserting
`any loan, payment, or benefit described in section 1211 of the Food Security
Act of 1985 (16 U.S.C. 3811)'.
SEC. 205. REGULATIONS.
Section 506(p) of the Federal Crop Insurance Act (7 U.S.C. 1506(p))
is amended--
(1) by striking `The Secretary' and inserting the following:
`(1) IN GENERAL- The Secretary'; and
(2) by adding at the end the following:
`(A) IN GENERAL- Regulations issued by the Secretary and the Corporation
specifying the terms of insurance under section 508 shall be issued without
regard to--
`(i) the notice and comment provisions of section 553 of title 5, United
States Code;
`(ii) the Statement of Policy of the Secretary of Agriculture effective
July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking
and public participation in rulemaking; and
`(iii) chapter 35 of title 44, United States Code (commonly known as
the `Paperwork Reduction Act').
`(B) CONGRESSIONAL REVIEW OF AGENCY RULEMAKING- In carrying out this
paragraph, the Secretary shall use the authority provided under section
808 of title 5, United States Code.'.
SEC. 206. PROGRAM COMPLIANCE.
Section 506(q) of the Federal Crop Insurance Act (7 U.S.C. 1506(q))
is amended--
(1) by redesignating paragraph (2) as paragraph (6); and
(2) by striking paragraph (1) and inserting the following:
`(1) IN GENERAL- Not later than 180 days after the date of enactment
of the Crop Insurance Equity Act of 1999, the Corporation shall establish
a program for monitoring compliance with this title by all Federal crop
insurance participants, including producers, agents, adjusters, and approved
insurance providers.
`(2) CONSULTATION- The Corporation shall consult with approved insurance
providers in developing the compliance program.
`(3) OVERSIGHT OF LOSS ADJUSTMENT- As part of the compliance program,
the Corporation shall provide for a mechanism to independently review the
performance of loss adjusters.
`(4) PROGRAM REVIEW- Not later than 90 days after the date of enactment
of the Crop Insurance Equity Act of 1999, the Corporation shall submit
to the Board and the Office of Private Sector Partnership for their review
the proposed compliance program under this subsection.
`(5) ANNUAL REPORTS- Beginning with fiscal year 2001, the Corporation
shall submit an annual report to the Committee on Agriculture of the House
of Representatives, the Committee on Agriculture, Nutrition, and Forestry
of the Senate, the Board, and the Office of Private Sector Partnership
concerning the compliance program established under
this subsection, including any recommendations for legislative or administrative
changes that could further improve program compliance.'.
SEC. 207. PAYMENTS BY COOPERATIVE ASSOCIATIONS.
Section 507(e) of the Federal Crop Insurance Act (7 U.S.C. 1507(e))
is amended--
(1) by striking `(e) In' and inserting the following:
`(e) COOPERATIVE ASSOCIATIONS-
`(1) IN GENERAL- In'; and
(2) by adding at the end the following:
`(2) PAYMENTS- A cooperative association described in paragraph (1)
that is licensed and acts as an agent or approved insurance provider with
respect to any plan of insurance offered under this title may provide to
the members of the association all or part of any funds received from the
Corporation under this title.'.
SEC. 208. LIMITATION ON DOUBLE INSURANCE.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 104) is amended by adding at the end the following:
`(11) LIMITATION ON DOUBLE INSURANCE- The Corporation may offer plans
of insurance or reinsurance for only 1 agricultural commodity on specific
acreage during a crop year, unless--
`(A) there is an established practice of double-cropping in an area,
as determined by the Corporation;
`(B) the additional plan of insurance is offered with respect to an
agricultural commodity that is customarily double-cropped in the area;
and
`(C) the producer has a history of double cropping or the acreage has
historically been double-cropped.'.
SEC. 209. CONSULTATION WITH STATE COMMITTEES OF FARM SERVICE AGENCY.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 208) is amended by adding at the end the following:
`(12) CONSULTATION WITH STATE COMMITTEES OF FARM SERVICE AGENCY- The
Corporation shall establish a mechanism under which State committees of
the Farm Service Agency are consulted concerning policies of insurance
offered in a State under this title.'.
SEC. 210. RECORDS AND REPORTING.
(a) CATASTROPHIC RISK PROTECTION- Section 508(f)(3)(A) of the Federal
Crop Insurance Act (7 U.S.C. 1508(f)(3)(A)) is amended by striking `provide,
to the extent required by the Corporation,' and inserting `to the extent
required by the Corporation, provide to the Secretary, acting through the
Farm Service Agency,'.
(b) NONINSURED CROP DISASTER ASSISTANCE PROGRAM- Section 196(b) of
the Agricultural Market Transition Act (7 U.S.C. 7333(b)) is amended--
(1) by striking paragraph (2) and inserting the following:
`(2) RECORDS- To be eligible for assistance under this section, a producer
shall provide annually to the Secretary, acting through the Farm Service
Agency, records of crop acreage, acreage yields, and production for each
eligible crop.'; and
(2) in paragraph (3), by inserting `annual' after `shall provide'.
SEC. 211. FEES FOR PLANS OF INSURANCE.
Section 508(h)(5) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(5)))
is amended--
(1) by striking `Any policy' and inserting the following:
`(A) IN GENERAL- Any policy'; and
(2) by adding at the end the following:
`(B) FEES FOR NEW PLANS OF INSURANCE-
`(i) IN GENERAL- If an approved insurance provider elects to sell a
plan of insurance that was developed by another approved insurance provider
after the date of enactment of this subparagraph and the plan of insurance
offered coverage that was not available for any crop at the time the plan
of insurance was approved by the Board (as determined by the Corporation),
the approved insurance provider that developed the plan of insurance shall
have the right to receive a fee from the approved insurance provider that
elects to sell the plan of insurance.
`(I) IN GENERAL- Subject to subclause (II), the amount of the fee that
is payable by an approved insurance provider for a plan of insurance under
clause (i) shall be an amount that is--
`(aa) determined by the approved insurance provider that developed
the plan; and
`(bb) approved by the Board.
`(II) APPROVAL- The Board shall not approve the amount of a fee under
clause (i) if the amount of the fee unnecessarily inhibits the use of the
plan of insurance, as determined by the Board.
`(C) PAYMENTS- The Corporation shall annually--
`(i) collect from an approved insurance provider the amount of any
fees that are payable by the approved insurance provider under subparagraph
(B); and
`(ii) credit any fees that are payable to an approved insurance provider
under subparagraph (B).'.
SEC. 212. FLEXIBLE SUBSIDY PILOT PROGRAM.
Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h))
is amended by adding at the end the following:
`(11) FLEXIBLE SUBSIDY PILOT PROGRAM- For each of the 2000 through
2002 crop years, the Corporation shall carry out a pilot program under
which flexible subsidies are provided under this title to encourage private
sector innovation through exclusive marketing rights and premium rate competition.'.
SEC. 213. REINSURANCE AGREEMENTS.
Section 508(k) of the Federal Crop Insurance Act (7 U.S.C. 1508(k))
is amended by striking paragraph (3) and inserting the following:
`(3) REINSURANCE AGREEMENTS-
`(A) SHARE OF RISK- Each reinsurance agreement of the Corporation with
a reinsured company shall require the reinsured company to bear a sufficient
share of any potential loss under the agreement so as to ensure that the
reinsured company will sell and service policies of insurance in a sound
and prudent manner, taking into consideration the financial condition of
the reinsured company and the availability of private reinsurance.
`(B) COMPLIANCE- To promote program compliance and integrity, the Corporation,
after notice and an opportunity for a hearing on the record--
`(i)(I) shall assess civil fines in an amount not to exceed $10,000
per violation against agents, loss adjusters, and approved insurance providers
that are determined by the Corporation to have recurring compliance problems;
and
`(II) may deposit any civil fines collected under subclause (I) in
the insurance fund established under section 516(c); and
`(ii) shall disqualify the agents, loss adjusters, and approved insurance
providers described in clause (i)(I) from participation in the Federal
crop insurance program for a period not to exceed 5 years.
`(C) REVIEW OF AGREEMENTS- As soon as practicable after the date of
enactment of this subparagraph and regularly thereafter, in consultation
with the Office of Private Sector Partnership, the Corporation shall review
the Standard Reinsurance Agreement issued by the Corporation to ensure
that the allocation of risk between the Corporation and the reinsured companies
is equitable, as determined by the Corporation.'.
SEC. 214. FUNDING.
Section 516 of the Federal Crop Insurance Act (7 U.S.C. 1516) is amended--
(1) in subsection (a)(2)--
(A) in subparagraph (A), by striking `and' at the end;
(B) in subparagraph (B), by striking the period at the end and inserting
`; and'; and
(C) by adding at the end the following:
`(C) salaries and expenses of the Office of Private Sector Partnership.';
(2) in subsection (b)(1)--
(A) in subparagraph (B), by striking `; and' and inserting a semicolon;
(B) in subparagraph (C), by striking the period at the end and inserting
a semicolon; and
(C) by adding at the end the following:
`(D) salaries and expenses of the Office of Private Sector Partnership,
but not to exceed $5,000,000 for each fiscal year;
`(E) administrative expenses of collecting information under section
508(f)(3); and
`(F) payment of fees in accordance with section 508(h)(5)(B).'; and
(3) in subsection (c)(1), by inserting `, fees under section 508(h)(5)(B),
civil fines under section 508(k)(3)(B)(i)(II),' after `premium income'.
END