Section 10503: Administrative and Operating Expense Adjustment
🧾 Section 10503: Help for Insurance Companies That Help Farmers
Farmers buy crop insurance to protect themselves if their crops are damaged by things like bad weather, pests, or disease. This law is about making sure the insurance companies that provide this protection get extra help too.
🪙 1. Extra Money for Doing More Work
• Starting in 2026, insurance companies will get extra money (6% of the cost of the policy) to help pay for the people who check crop damage and figure out payments to farmers.
📍 2. Only Certain States and Policies
This extra help only applies to:
• States where lots of farmers lost crops (over 120% loss).
• Normal insurance plans (not cheap emergency ones or group-based ones).
• Policies where the company actually does work to check losses.
🍓 3. Support for Specialty Crops
• Farmers who grow fruits, vegetables, and other special crops (not just big row crops like corn or wheat) also get better insurance help.
• The insurance companies and agents helping these farmers get at least 17% of the insurance cost paid back to help cover their work.
📈 4. Keeping Up with Inflation
• Every year starting in 2026, the government will increase the money given to insurance companies to keep up with rising costs (inflation), just like they did from 2011 to 2015.
• But in 2026, they will limit the increase so it doesn’t go too high all at once.
🚫 Not a Renegotiation
• These changes don’t mean they’re rewriting the whole insurance agreement—they’re just giving some extra support.
Here's the original document:
SEC. 10503. ADMINISTRATIVE AND OPERATING EXPENSE ADJUSTMENTS.
Section 508(k) of the Federal Crop Insurance Act (7 U.S.C. 1508(k))
is amended by adding at the end the following:
``(10) Additional expenses.--
``(A) In general.--Beginning with the 2026 reinsurance
year, and for each reinsurance year thereafter, in addition to
the terms and conditions of the Standard Reinsurance Agreement,
to cover additional expenses for loss adjustment procedures,
the Corporation shall pay an additional administrative and
operating expense subsidy to approved insurance providers for
eligible contracts.
``(B) Payment amount.--In the case of an eligible contract,
the payment to an approved insurance provider required under
subparagraph (A) shall be the amount equal to 6 percent of the
net book premium.
``(C) Definitions.--In this paragraph:
``(i) Eligible contract.--The term `eligible
contract'--
``(I) means a crop insurance contract entered into
by an approved insurance provider in an eligible State;
and
``(II) does not include a contract for--
``(aa) catastrophic risk protection under
subsection (b);
``(bb) an area-based plan of insurance or
similar plan of insurance, as determined by the
Corporation; or
``(cc) a policy under which an approved
insurance provider does not incur loss adjustment
expenses, as determined by the Corporation.
``(ii) Eligible state.--The term `eligible State' means
a State in which, with respect to an insurance year, the
loss ratio for eligible contracts is greater than 120
percent of the total net book premium written by all
approved insurance providers.
``(11) Specialty crops.--
``(A) Minimum reimbursement.--Beginning with the 2026
reinsurance year, and for each reinsurance year thereafter, the
rate of reimbursement to approved insurance providers and
agents for administrative and operating expenses with respect
to crop insurance contracts covering agricultural commodities
described in section 101 of the Specialty Crops Competitiveness
Act of 2004 (7 U.S.C. 1621 note; Public Law 108-465) shall be
equal to or greater than the percentage that is the greater of
the following:
``(i) 17 percent of the premium used to define loss
ratio.
``(ii) The percent of the premium used to define loss
ratio that is otherwise applicable for the reinsurance year
under the terms of the Standard Reinsurance Agreement in
effect for the reinsurance year.
``(B) Other contracts.--In carrying out subparagraph (A),
the Corporation shall not reduce, with respect to any
reinsurance year, the amount or the rate of reimbursement to
approved insurance providers and agents under the Standard
Reinsurance Agreement described in clause (ii) of such
subparagraph for administrative and operating expenses with
respect to contracts covering agricultural commodities that are
not subject to such subparagraph.
``(C) Administration.--The requirements of this paragraph
and the adjustments made pursuant to this paragraph shall not
be considered a renegotiation under paragraph (8)(A).
``(12) A&O inflation adjustment.--
``(A) In general.--Subject to subparagraph (B), beginning
with the 2026 reinsurance year, and for each reinsurance year
thereafter, the Corporation shall increase the total
administrative and operating expense reimbursements otherwise
required under the Standard Reinsurance Agreement in effect for
the reinsurance year in order to account for inflation, in a
manner consistent with the increases provided with respect to
the 2011 through 2015 reinsurance years under the enclosure
included in Risk Management Agency Bulletin numbered MGR-10-007
and dated June 30, 2010.
``(B) Special rule for 2026 reinsurance year.--The increase
under subparagraph (A) for the 2026 reinsurance year shall not
exceed the percentage change for the preceding reinsurance year
included in the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the Department
of Labor.
``(C) Administration.--An increase under subparagraph (A)--
``(i) shall apply with respect to all contracts
covering agricultural commodities that were subject to an
increase during the period of the 2011 through 2015
reinsurance years under the enclosure referred to in that
subparagraph; and
``(ii) shall not be considered a renegotiation under
paragraph (8)(A).''.
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