STATEMENT OF DR. KEITH COLLINS
Chair, Board of Directors
Federal Crop Insurance Corporation
regarding Premium Reduction Plans
Oct 28, 2004
"Section 508(e)(3) of the Federal Crop Insurance Act provides the opportunity for an approved insurance provider to offer a premium reduction plan (PRP) subject to the approval of the Federal Crop Insurance Corporation Board (Board) . The provision, introduced into law in 1994, has been incorporated into the last two Standard Reinsurance Agreements. With authority delegated by the Board, the Manager of the FCIC approved a PRP for the 2003 crop year. The approval was based on criteria established by a Board resolution and procedures issued as a Manager's Bulletin which was reviewed by the Board. Recently, a number of new PRPs have been submitted for approval. The new applications have raised a series of such complex issues that the Board has determined that more information and analysis are needed. There are legal issues related to the application of the current procedures, implementation issues related to the specific proposals, and possibly significant intended and unintended consequences if the plans are approved. The Board has carefully reviewed these issues, and many others, and also paid close attention to the concerns communicated to the Board by the public. Given the complexity of the issues, the Board has requested a legal briefing from the Office of the General Counsel and a further assessment of the submissions from the Risk Management Agency (RMA). In addition, the Board approved a resolution to have the Federal Crop Insurance Corporation issue an Advanced Notice of Proposed Rulemaking to solicit public comment on PRP issues. No actions will be taken on the pending submissions until the Board again meets to receive the legal briefing and the further assessments of the submissions from RMA. The next course of action will be determined at that time."