1.1                          A bill for an act 
  1.2             relating to agriculture; providing for crop insurance; 
  1.3             appropriating money. 
  1.4   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.5      Section 1.  [CROP INSURANCE TRUST FUND.] 
  1.6      Subdivision 1.  [CROP DISASTER INSURANCE PROGRAM; CREATION; 
  1.7   DESIGN.] The commissioner of agriculture shall develop and 
  1.8   implement a crop insurance program to supplement the federal 
  1.9   crop insurance program and encourage the development of private 
  1.10  insurance capacity.  The program must include the features in 
  1.11  paragraphs (a) to (f). 
  1.12     (a) The commissioner shall create a nonprofit captive 
  1.13  insurance company to issue insurance coverage to farm operators, 
  1.14  to be sold through independent insurance agents. 
  1.15     (b) Insurance provided by the program must be primarily 
  1.16  designed to cover losses in excess of losses covered by the 
  1.17  federal crop insurance program.  However, the program must 
  1.18  provide first-dollar coverage for farm operators who do not 
  1.19  qualify for the federal program, such as dairy farmers; risks, 
  1.20  including circumstances in which farmers are unable to plant 
  1.21  crops, which may not be covered by the federal program; and, at 
  1.22  the commissioner's discretion, other types of losses. 
  1.23     (c) If feasible, the state captive insurance company shall 
  1.24  market policies for three-year periods in order to build a 
  2.1   surplus from which claims may be paid.  Insurance or reinsurance 
  2.2   premiums charged by the company must be designed to cover the 
  2.3   expected cost of its share of claim payments, although any 
  2.4   profits, after payment of administrative expenses, must be 
  2.5   allocated for the purpose of subsidizing the coverage. 
  2.6      (d) The state captive insurance company may issue coverage 
  2.7   as an insurer or reinsurer but may in no event retain more than 
  2.8   20 percent of the aggregate risk assumed under this program. 
  2.9      (e) Participating private insurers or reinsurers must be 
  2.10  allowed to invest assets, not to exceed the premiums received 
  2.11  under this program, in grain commodity options and cash grain, 
  2.12  and these assets must be considered admitted assets for purposes 
  2.13  of state insurance regulation. 
  2.14     (f) To the extent allowed by appropriations or accrued 
  2.15  earnings of the state captive insurance company, the 
  2.16  commissioner shall subsidize this insurance mechanism for crop 
  2.17  disaster assistance in Minnesota in crop years 1996 and 
  2.18  thereafter. 
  2.19     Sec. 2.  [APPROPRIATION FOR CROP INSURANCE TRUST FUND.] 
  2.20     $250,000 is appropriated from the general fund to the 
  2.21  commissioner of agriculture for the purposes of section 1.  This 
  2.22  appropriation must be spent in fiscal year 1995 for the 
  2.23  establishment of the following divisions: 
  2.24     (1) captive management and administration, including the 
  2.25  start-up of the state entity as well as financial management, 
  2.26  relations with other participating insurers, the creation of 
  2.27  efficient information systems, the creation of billing and 
  2.28  accounting systems, and the maintenance of relations with other 
  2.29  state departments of insurance; 
  2.30     (2) acturial and technical, including recommendations on 
  2.31  pricing, reserving, and the regulation of investments including 
  2.32  commodity options investments; 
  2.33     (3) marketing, including market studies, training and 
  2.34  administration of the agent sales force, coordination of 
  2.35  marketing efforts with other participating insurers, and the 
  2.36  creation of marketing, advertising, and promotional materials; 
  3.1   and 
  3.2      (4) claims, including the design and development of 
  3.3   effective claim manuals and procedures and the training and 
  3.4   administration of professional claim adjusters. 
  3.5      The commissioner of agriculture shall use private 
  3.6   contractors to perform the functions in this section and shall 
  3.7   enter into all contracts necessary to implement this act.  The 
  3.8   commissioner shall report to the house and senate agriculture 
  3.9   committees on the progress made toward implementation of this 
  3.10  act no later than December 1, 1995. 
  3.11     Sec. 3.  [EFFECTIVE DATE.] 
  3.12     This act is effective the day following final enactment.