I 

108TH CONGRESS 

2D SESSION H. R. 4702 

To require farmers to be offered supplemental crop insurance based on an 

area yield and loss plan of insurance. 

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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. REQUIREMENT TO OFFER FARMERS SUPPLE4 MENTAL CROP INSURANCE BASED ON AN 

5 AREA YIELD AND LOSS PLAN OF INSURANCE. 

6 (a) IN GENERAL.—Section 508(c)(3) of the Federal 

7 Crop Insurance Act (7 U.S.C. 1508(c)(3)) is amended to 

8 read as follows: 

9 ‘‘(3) YIELD AND LOSS BASIS.— 
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1 ‘‘(A) AVAILABILITY OF COVERAGE ON IN2 DIVIDUAL OR AREA YIELD AND LOSS BASIS.— 

3 A producer shall have the option of purchasing 

4 additional coverage based on an individual yield 

5 and loss basis or on an area yield and loss 

6 basis, if both options are offered by the Cor7 poration. 

8 ‘‘(B) SUPPLEMENTAL AREA COVERAGE.— 

9 ‘‘(i) AUTHORITY TO OFFER COV10 ERAGE.— 

11 ‘‘(I) IN GENERAL.—Notwith12 standing section 508(c)(4), if area 

13 coverage is available in the area (as 

14 determined by the Corporation), the 

15 Corporation may provide producers in 

16 that area that purchase an additional 

17 level of coverage for an insurable com18 modity based either on an individual 

19 yield and loss plan of insurance or a 

20 revenue plan of insurance that in21 cludes coverage for a loss in yield, as 

22 applicable, the option to purchase sup23 plemental insurance coverage based on 

24 an area yield and loss plan of insur25 ance. 
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1 ‘‘(II) LIMITATION.— The sum of 

2 (a) the coverage level expressed in 

3 percentage terms for the individual 

4 yield and loss plan of insurance or a 

5 revenue plan of insurance that in6 cludes coverage for a loss in yield, as 

7 applicable, and (b) the share ex8 pressed in percentage terms of the 

9 area yield and loss plan of insurance 

10 (at whatever coverage level is selected) 

11 that is used to determine the level of 

12 supplemental insurance coverage shall 

13 not exceed 100 percent. 

14 ‘‘(ii) INDIVIDUAL YIELD AND LOSS

15 PLAN REQUIRED.—To be eligible for sup16 plemental coverage under this subpara17 graph, a producer must also purchase an 

18 individual yield and loss plan of insurance 

19 or a revenue plan of insurance that in20 cludes coverage for a loss in yield, as appli21 cable, at an additional coverage level for 

22 the same crop covered by the supplemental 

23 coverage. 

24 ‘‘(iii) PAYMENT OF PORTION OF PRE25 MIUM.—The Corporation shall pay a por-
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1 tion of the premium under a supplemental 

2 area yield and loss plan of insurance and 

3 the associated individual area yield and 

4 loss plan of insurance or revenue plan of 

5 insurance that includes coverage for a loss 

6 in yield, as applicable, in an amount de7 scribed in subsection (e). 

8 ‘‘(iv) INDEMNITY PAID UNDER SUP9 PLEMENTAL COVERAGE.— 

10 ‘‘(I) AMOUNT OF INDEMNITY.— 

11 The indemnity payable under supple12 mental coverage shall be calculated 

13 as— 

14 ‘‘(aa) the total indemnity for 

15 an area yield and loss plan of in16 surance at the coverage level cho17 sen by the producer; multiplied 

18 by 

19 ‘‘(bb) the share of the cov20 erage of the area yield and loss 

21 plan of insurance selected by the 

22 producer. 

23 ‘‘(II) SPECIAL RULE RELATING

24 TO QUALIFYING LOSSES.—In the case 

25 of a qualifying loss in an area (as de-
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1 termined by the Corporation) under a 

2 supplemental area yield and loss plan 

3 of insurance, subject to the applicable 

4 coverage limits, the total amount of 

5 the indemnity shall be available to the 

6 producer regardless of the loss in7 curred under the individual yield and 

8 loss plan of insurance or revenue plan 

9 of insurance that includes coverage 

10 for a loss in yield, as applicable, of the 

11 producer. 

12 ‘‘(v) REINSURANCE YEAR.—Subject to 

13 availability of area coverage for the insur14 able crop in the area (as determined by the 

15 Corporation), the supplemental plan of in16 surance described in this subparagraph 

17 shall be made available by the Corporation 

18 not later than the 2005 reinsurance year.’’. 

19 (b) CONFORMING AMENDMENT.—Section 508(d)(2) 

20 of the Federal Crop Insurance Act (7 U.S.C. 1508(d)(2)) 

21 is amended— 

22 (1) by striking ‘‘additional coverage’’ the first 

23 place it occurs and inserting ‘‘additional and supple24 mental coverages’’; and 

25 (2) by adding at the end the following: 
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1 ‘‘(C) In the case of supplemental area cov2 erage that, in combination with either the indi3 vidual yield and loss coverage, or a comparable 

4 coverage for a policy or plan of insurance that 

5 is not based on individual yield and does not in6 sure more than 100 percent of the recorded or 

7 appraised average yield indemnified at not 

8 greater than 100 percent of the expected mar9 ket price, the amount of the premium shall— 

10 ‘‘(i) be sufficient to cover anticipated 

11 losses and a reasonable reserve; and 

12 ‘‘(ii) include an amount for operating 

13 and administrative expenses, as determined 

14 by the Corporation, on an industry-wide 

15 basis as a percentage of the amount of the 

16 premium used to define loss ratio.’’. 

Æ