RMA RELEASES FIRST DRAFT OF NEW STANDARD REINSURANCE AGREEMENT
News Date December 08, 2009
Last week, USDA’s Risk Management Agency (RMA) released a first draft of a new Standard Reinsurance Agreement. This proposed agreement between the Federal Crop Insurance Corporation and the nation’s crop insurance companies was authorized by Congress in the 2008 Farm Bill. The current agreement was most recently negotiated in 2005.
In a USDA release, Agriculture Secretary Tom Vilsack remarked, "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. 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."
The proposed new Standard Reinsurance Agreement presented today includes six primary objectives which RMA hopes to obtain in renegotiation of the agreement:
- Maintains producer access to critical risk management tools;
- Align Administrative and Operating (A&O) 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.
RMA anticipates canceling the current agreement as of Jun 30, 2010. (Contact: David Hickey)