04-23-2020
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04-23-2020
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Use or disclosure of information or data 6 Proprietary Property of Watts & Associates, Inc. <br />contained on this sheet is subject to the <br />restrictions on the title page of this proposal. Copyright © 2020 Watts & Associates, Inc. All Rights Reserved. <br />In the development effort, W&A will specifically consider the potential scale of these future <br />coverage losses and the appetite for the Authority to offer compensation in this form (which <br />would directly translate into the premiums that would presumably be paid by the Authority). <br />Benefits of the Phase II component include but are not limited to the following: <br />Growers understand crop insurance, and thus education for a supplemental insurance <br />product offering would be easy to implement. <br />The value of losses and process of indemnification would occur under a structured, <br />familiar, and predictable process, minimizing the need for arbitration of potential <br />disputes. <br />Growers would continue to purchase crop insurance as part of their normal farming <br />operations, and eligible growers in the affected area would be offered the additional <br />supplemental coverage at no cost to them. <br />The insurance premium for the supplemental product would be paid for by the Authority, <br />thus providing a mechanism to secure support from farmers. <br />The outlay on the part of the Authority would be consistent and predictable year after <br />year. <br />Constraints of the Phase II component include but are not limited to the following: <br />The premium rate for the supplemental product would be substantial, commiserate to the <br />increased probability of flooding and subsequent loss of crop in the staging area. <br />The Authority would make annual payments for the premium into perpetuity, which <br />would be subject to fluctuations from year to year based on changing crop values. <br />Private products are offered through individual private insurance companies at their <br />option. Growers may purchase supplemental coverage only through participating <br />insurance companies and the number of companies that choose to offer this supplemental <br />coverage may vary by year. As each private company has the right to make <br />modifications to private programs each year, the coverage offered may potentially <br />diverge by company and through time, making administration and premiums unwieldy to <br />manage. <br />No Federal subsidies apply to private products. <br />V. BUDGET AND DELIVERABLES <br />Phase I and Phase II can be developed simultaneously or in a stepwise manner (i.e., Phase I can <br />be developed and implemented independently of Phase II). Phase II can be a future <br />consideration depending upon the initial success of Phase I. The deliverables and budget (costs) <br />for each phase are outlined in the following sections. <br />V.A. Phase I – Administrative Framework Based on Existing Crop Insurance <br />Infrastructure <br />As previously outlined, Phase I will focus on developing an administrative framework that is <br />based upon the existing crop insurance system.
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