In testimony before the Senate Agriculture Committee Secretary of Agriculture, Bob Bergland declared that, "disaster programs are themselves a disaster."
Crop insurance companies that would later form AACI were instrumental in developing Congressional support for the crop insurance bill that ultimately became law passed in 1980.
The Federal Crop Insurance Act of 1980 (FCIA) was enacted (P.L. 96-365), providing the basis for the modern crop insurance program by calling for a public/private partnership. The crop insurance companies that would formally approve the organization of AACI the following year were industry leaders in the development of this document policy/law.
AACI members were instrumental in encouraging FCIC to develop a short term marketing agreement. This agreement utilized the marketing and servicing expertise of the private industry to deliver the expanded crop insurance program to farmers in the interim before private risk bearing reinsurance was developed. As a result of AACI members’ efforts, FCIC provided training to private industry crop hail underwriters and loss adjusters on the necessary skills required for federal crop insurance delivery, sales, and service.
AACI was formed as the primary trade association of insurance providers who had interest in private insurance delivery and catastrophic reinsurance for private risk bearers.
The first four years of the new crop insurance program were difficult ones for AACI’s members. The officials in the Department of Agriculture were accustomed to administering a program of supply management and subsidies for farmers. They were skeptical of the role of private insurance companies and agents in the total scheme of farm programs. Many farm organizations also shared this skepticism. Insurance companies were not accustomed to dealing with the Department of Agriculture.
AACI provided the leadership for the crop insurance industry to persuade USDA to end the dual delivery system, ending Master Marketing. USDA was persuaded to discontinue issuing government (FCIC) insurance of policies. From that point forward, the private sector delivered the program to producers.
AACI was instrumental in working with Secretary of Agriculture Mike Espy and Congress to pass the Federal Crop Insurance Reform Act of 1994. With the support of OMB Director Leon Panetta, an additional $1 billion per year was made available for the crop insurance program. It was estimated that there would be $1 billion annual savings in ad hoc disaster payments if crop insurance was made more universally available. In addition, the legislation added the Noninsured crop Assistance Program (NAP), allowing producers growing uninsured crops to receive assistance. This legislation put the crop insurance program on the road to being the success it is today.
In the Department of Agriculture Reorganization Act of 1994, The RMA was placed under the jurisdiction of the Farm Services Agency. This was stifling the ability of the RMA to operate the crop insurance program. AACI worked with Chairman Pat Roberts of the House Agriculture Committee to remove RMA from the jurisdiction of the Farm Services Agency and re-establish it as a separate agency. This was included in the 1996 Farm Bill.
In the Agricultural Research Act of 1998, AACI successfully pushed for enactment of mandatory funding of the crop insurance program. Chairman of the House Agriculture Committee Bob Smith included it in the Act. In an era of increasing budgetary constraints, it would not have been possible to operate a successful crop insurance program that was dependent on discretionary funding of annual appropriations bills.
AACI worked with Congress to pass the 2000 Agricultural Risk Protection Act of 2000, legislation that greatly enhanced crop insurance protection for farmers. This act made crop insurance more affordable for farmers at higher levels of coverage, even in higher risk areas. The passage of this legislation was led in the House by Agriculture Committee Chairman Larry Combest. This legislation, as implemented by RMA and delivered to farmers by AACI members, made it possible for the crop insurance program to enjoy the popularity with American farmers it enjoys today.
After suffering program budget cuts of $6 billion in the 2008 Farm Bill and another $6 billion in the 2010 SRA, AACI and the crop insurance industry entered the 2014 Farm Bill debate with the goal of avoiding further budget reductions, especially in SRA negotiations. AACI believed the goal could best be accomplished by supporting program changes that would lead to greater risk management effectiveness for a broader array of farming enterprises across the nation and, at the same time, diversify the constituency base and supporting coalition. Toward this goal, the 2014 Farm Bill authorized nine new policies, including a whole-farm policy championed by Chairwoman Stabenow targeting the needs of small and specialty crop farmers and margin insurance for all crops, as well as nineteen regulatory changes, including re-establishment of a conservation compliance provision in consultation with many wildlife and conservation organizations. To prevent SRA negotiations from resulting in reduced program funding, a provision was included requiring budget neutrality.
With ample knowledge of agriculture and the utility of the crop insurance program, especially the critical function of private sector delivery, Chairman Conaway lead a successful campaign, with the assistance of Majority Leader McCarthy, to remove from a short-lived budget law a provision that would have cut $3 billion in funds supporting private sector delivery. The budget agreement had been developed by key leaders of the administration, the Senate and the House and was wired for passage before being made public. The situation did not allow time for “getting up to speed” on the crippling effect of the $3 billion cut to the private sector delivery industry. Chairman Conaway immediately understood the problem. Hard-nosed negotiating was required, but Chairman Conway had a plan and it worked. In a matter of only a few days, a provision of law was reversed, making it look as though the change had never happened. This $3 billion budget incident demonstrates the value proposition for an on-going, ever-present, high-level political outreach effort as conducted by AACI.