Specialty Crop Insurance Payment Program
Summary
The Risk Management Agency (RMA), on behalf of the Federal Crop Insurance Corporation (FCIC), is issuing this rule to announce the availability of funding under the Additional Payment II Program (ADD PAY II). ADD PAY II is a one-time additional payment to Approved Insurance Providers (AIPs) administering eligible crop insurance contracts for 2022 and 2023 reinsurance year specialty crops. The total funding available for ADD PAY II is $30 million. Funding for ADD PAY II will be distributed to AIPs proportionally based on their respective liabilities for eligible crop insurance contracts for 2022 and 2023 reinsurance year specialty crops.
Compliance Requirements
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AIPs administering eligible crop insurance contracts for 2022 and 2023 reinsurance year specialty crops are eligible for a one-time additional payment under ADD PAY II.; The total funding available for ADD PAY II is $30 million, to be distributed proportionally based on AIPs' respective liabilities for eligible crop insurance contracts.; Each AIP will receive a payment equal to 17.5% of the net book premium on specialty crop contracts subject to the A&O cap, less any A&O subsidy already paid.; If total eligible payments reach or may reach $30 million, the RMA Administrator will prorate the payments so that a total of $30 million is paid.; ADD PAY II payments will be final upon receipt and will not be altered based on any subsequent updates to premium or liability of qualifying crop insurance contracts made after the October 2024 transaction cutoff date.
Market Impacts
The Additional Payment II Program (ADD PAY II) provides a one-time additional payment to Approved Insurance Providers (AIPs) administering eligible crop insurance contracts for 2022 and 2023 reinsurance year specialty crops, with a total funding of $30 million. This creates an opportunity for AIPs to receive additional payments based on their liabilities for eligible contracts.; AIPs must administer eligible crop insurance contracts for specialty crops for the 2022 or 2023 reinsurance years to be eligible for ADD PAY II payments. Payments are calculated based on a specific formula involving net book premium and A&O subsidy adjustments.
Validated Company Impacts
Palomar Holdings, Inc.
Palomar Holdings operates a Crop insurance segment that offers multi-peril crop insurance in connection with the USDA's Risk Management Agency, which administers the ADD PAY II program. However, the rule specifically targets Approved Insurance Providers (AIPs) administering specialty crop insurance, and while Palomar offers crop insurance, it is unclear if they qualify as an AIP under this specific program. The rule provides a one-time payment opportunity to Approved Insurance Providers (AIPs) for specialty crop insurance, which does not align with the company's disclosed financial and regulatory risks focused on dividend restrictions, capital requirements, and regulatory approvals. The company's risk profile shows no indication of involvement in crop insurance or specialty agriculture markets.