ESSENTIAL FACTS: RMA'S ROLE IN THE FEDERAL CROP INSURANCE PROGRAM
Key Issues Questions 1-5
| Key Issues Questions 6-10
Apr 28, 2004 - USDA's Risk Management Agency (RMA) carries out the functions of the Federal Crop Insurance Corporation (FCIC) Board of Directors (Board) and in so doing, has diverse responsibilities, including:
- Ensuring a safe, fair, effective and actuarially sound delivery system
- Providing widely available and effective risk management solutions
- Providing information to customers and stakeholders
- Preserving program integrity
- Providing and ensuring excellent service to our nation's farmers
- Achieving cost efficiencies for taxpayers
Congress gave FCIC the authority to regulate the Federal crop insurance program through sections 506(e), (l), and (p) of the Federal Crop Insurance Act (Act), which state:
- "The Corporation may adopt, amend, and repeal bylaws, rules, and regulations governing the manner in which its business may be conducted and the powers granted to it by law may be exercised and enjoyed." (Sec. 506(e))
- "The Corporation may enter into and carry out contracts or agreements, and issue regulations, necessary in the conduct of its business, as determined by the Board." (Sec. 506(l))
- "The Secretary and the Corporation are each authorized to issue such regulations as are necessary to carry out this title [Act]." (Sec. 506(p))
FCIC was founded in 1938 to provide farmers with a stable, viable crop insurance program. Due to the expanding development of other risk management tools, RMA was created in 1996 through the Federal Agricultural Improvement and Reform Act of 1996 to implement the functions of the FCIC. Therefore, RMA's role is to perform the authorities delegated to the FCIC by the Board, and to carry out the day-to-day management of the crop insurance program. The Board retains oversight authority over the program.
Some of RMA's functions on behalf of the FCIC include 1) contracting for the development of new crop insurance policies and plans of insurance, 2) maintaining existing plans of insurance, 3) reviewing private submissions of policies or plans of insurance, and 4) regulating the conduct of program participants. In addition, the Board delegated its authority to negotiate the terms of the Standard Reinsurance Agreement (SRA) to RMA.