FEDERAL CROP INSURANCE.

SEC. 1403. FEDERAL CROP INSURANCE. (a) Actuarial Soundness.— Section 506 of the Federal Crop Insurance Act (7 U.S.C. 1506) is amended by adding at the end the following new subsection: “(n) Actuarial Soundness.— The Corporation shall take such actions as are necessary to improve the actuarial soundness of Federal multiperil crop insurance coverage made available under this title to achieve, on and after October 1, 1995, an overall projected loss ratio of not greater than 1.1, including— “(1) instituting appropriate requirements for documentation of the actual production history of insured producers to establish recorded or appraised yields for Federal crop insurance coverage that more accurately reflect the associated actuarial risk, except that the Corporation may not carry out this paragraph in a manner that would prevent beginning farmers from obtaining adequate Federal crop insurance, as determined by the Corporation; “(2) establishing in counties, to the extent practicable, a crop insurance option based on area yields in a manner that allows an insured producer to qualify for an indemnity if a loss has occurred in a specified area in which the farm of the insured producer is located; “(3) establishing a database that contains the social security account and employee identification numbers of participating producers and using the numbers to identify insured producers who are high risk for actuarial purposes and insured producers who have not documented at least 4 years of production history, to assess the performance of insurance providers, and for other purposes permitted by law; and “(4) taking any other measures authorized by law to improve the actuarial soundness of the Federal crop insurance program while maintaining fairness and effective coverage for agricultural producers.”. (b) Conforming Amendments.— (1) Reinsurance.— Section 508(h) of such Act (7 U.S.C. 1508(h)) is amended by striking the fifth sentence and inserting the following new sentence: “The Corporation shall also pay operating and administrative costs to insurers of policies on which the Corporation provides reinsurance in an amount determined by the Corporation.”. 107 STAT. 334 (2) Area yield plan.— Section 508 of such Act (7 U.S.C. 1508) is amended by adding at the end the following new subsection: “(n) Area Yield Plan.— “(1) In general.— Notwithstanding any other provision of this title, the Corporation may offer, only as an option to individual crop insurance coverage available under this Act, a crop insurance plan based on an area yield that allows an insured producer to qualify for an indemnity if a loss has occurred in an area, as specified by the Corporation, in which the farm of the producer is located. “(2) Level of coverage.— Under a plan offered under paragraph (1), an insured producer shall be allowed to select the level of production at which an indemnity will be paid consistent with terms and conditions established by the Corporation.”. (3) Yield coverage.— Section 508A of such Act (7 U.S.C. 1508a) is amended— (A) in subsection (a)(1), by striking “may” and inserting “shall”; and (B) in subsection (b)— (i) in paragraph (1)(A)— (I) by striking “A crop insurance contract” and all that follows through “producer—” and inserting “Under regulations issued by the Corporation, a crop insurance contract offered under this title to an eligible insured producer of a commodity with respect to which the Corporation provides crop insurance coverage shall make available to the producer either—”; (II) by striking “or” at the end of clause (i); (III) in clause (ii)— (aa) by striking “5” and inserting “4 building to 10”; and (bb) by striking the period at the end and inserting “; or”; and (IV) by adding at the end the following new clause: “(iii) yield coverage based on— “(I) not less than 65 percent of the transitional yield of the producer (adjusted to reflect actual experience), as specified in regulations issued by the Corporation based on production history requirements; or “(II) the area yield under section 508(n) for the crop established under the program for the commodity involved.”; (ii) in paragraph (1)(B)— (I) by striking “two” and inserting “3”; and (II) by inserting after “subparagraph (A)” the following: “, where available (as determined by the Corporation),”; (iii) in paragraph (2)— (I) by striking “5” and inserting “4 building to 10”; and (II) by inserting after “previous crops,” the following: “not less than 65 percent of the transi-107 STAT. 335tional yield of the producer (adjusted to reflect actual experience), or the area yield,”; and (iv) in paragraph (3)(A)(i), by inserting after “farm program yield” the following: “, not less than 65 percent of the transitional yield of the producer (adjusted to reflect actual experience), as specified in regulations issued by the Corporation based on production history requirements, or the area yield under section 508(n), whichever is applicable,”. (c) Effective Date.— (1) In general.— Except as provided in paragraph (2), this section and the amendments made by this section shall become effective on October 1, 1993. (2) Regulations.— Not later than 30 days after the date of enactment of this Act, the Secretary of Agriculture shall publish, for public comment, proposed regulations to implement the amendments made by this section.