Analysis of Crop Insurance Proposals H.R. 4360 and H.R. 4592

T-RCED-90-76: Published: May 1, 1990. Publicly Released: May 1, 1990.

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GAO discussed two legislative proposals to reform the federal crop insurance program. GAO noted that both disaster relief program proposals: (1) strongly relied on federal resources for premium subsidies and the payment of excess losses, but relied on private companies to deliver services; (2) would require a strong federal regulatory, oversight, and audit function to ensure program integrity and to protect the government's financial interests; (3) determined disaster compensation on the amount of loss, not on disaster severity; (4) provided similar amounts of assistance to farmers suffering similar amounts of losses; (5) made relief programs consistently available over time to allow for long-range planning; and (6) helped farmers withstand and recover from the effects of natural disasters. GAO also noted that neither proposal: (1) ensured the limitation of assistance to the amount of farmers' losses; (2) ensured that programs would not create incentives to encourage farming practices that increased the likelihood and extent of losses; (3) had predictable annual costs; and (4) ensured that programs would meet their objectives at the lowest possible cost.

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