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