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Show & Joe Spear Insurance practices keep FCIG running in the red Washington The federal agency that insures farmers' crops was so destitute around the first of April that it had to transfer $50 million of its administrative funds to the claims section to meet demands from policyholders. Yet the program's manager intends to encourage the very practices that critics claim shoved the agency toward bankruptcy. The Federal Crop Insurance Corp. was created in 1938 to spread the risks of an industry reeling from the impact of dust bowl, droughts and deluges during , i the...: Great Depression. For more than 40 years, through lean years and fat, the FCIC operated in the black. But starting in 1980, the agency suddenly began running in the red and in a big way." From an initial loss of $199 million that year, the FCIC has now accumulated a debt of.4851 million: A series of bailouts has rescued the agency each year, but the early April transfer of funds was about as close as the FCIC has yet come to actual default. Although the agency manager, Merritt Sprague, insists that they never stopped paying claims, another official told us that they were "very selective, on our payments" until the $50 million was transferred to the claims section. When the FCIC first ran into trouble, it turned for help to another Agriculture Department agency, the Commodity Credit Corp., which lent it $250 million. That's long gone, and Commodity Credit has written the amount off as a bad debt. The deadbeat agency next turned to Congress, which obligingly authorized the FCIC to sell stock in . itself to a reluctant Treasury, up to a total of $500 million. Only $50 million of the worthless stock is left, and the FCIC is now trying to force the Treasury to take that one last plunge so the early April transfer can be replaced and the agency stay in business. How did thekFCIC get in such a deplorable plight? Sprague maintains it was Mother Nature's fault, with an assist from Congress. Droughts and other crop destroyers took a heavy toll, and as part of the stock-sale bailout, Congress ordered the FCIC to broaden its coverage to many more crops and insure them for a greater proportion of the loss : 75 percent. The FCIC dutifully broadened its coverage. But Congress also ordered the agency to make its insurance premiums "actuarially sound." This the FCIC failed to do. Some critics see a cause-and-effect relationship between the FCIC's financial disaster and its rapid conversion to a "reinsurance" agency, which guarantees policies sold to farmers by private insurance companies. From 3 percent of its operation in 1981, reinsurance policies now comprise nearly 80 percent of the FCIC's business. Like the premium rates it charges, the reinsurance agreements are favorable to the customer, not the government. The private insurance companies have an enhanced potential for profit at little risk to themselves. Not surprisingly, they have gone looking for crops to" 'insure (with FCIC reinsurance protection) with great enthusiasm. . To the astonishment and dismay of FCIC critics, Sprague recently warned agency employees that some of them would be losing their jobs because the FCIC is to be converted "to strictly a reinsurance operation," which requires fewer personnel. ' f To some, it seems as if Sprague is fighting fire with gasoline. DOUBLE STANDARD: The parade of apartheid protesters in front of the South African Embassy in Washington has put local and federal authorities in an absurd legal position. While police dutifully haul away the demonstrators for picketing within 500 feet of an embassy, the U.S. attorney's office refuses to press charges. Yet 15 blocks away, individuals who demonstrate in front of the Soviet Embassy are prosecuted for breaking the same local law. When asked to explain the double standard of prosecution, the U.S. attorney had no comment. The State Department justifies such strict enforcement with 'the cJaim that it must be done to protect U.S. diplomats abroad. This consideration has become sadly outdated, if indeed it ever was operative in the case of the Soviet Union. The American Embassy in Moscow is regularly subjected to officially encouraged mass demonstrations. TEMPERAMENT SURVEY: A management seminar organized by the Office of Personnel Management for the Defense Mapping Agency caused some disgruntlement among mid-level officials scheduled to attend. What riled them was a "temperament survey" the personnel management experts instructed the seminarians to fill out before the confab. The survey had 300 questions, which required the respondents to evaluate such provocative statements as f hftsft- "You daydream a great deal." "You take the lead in putting life into a dull party." "Most people are stupid." "Odors of perspiration disgust you." Defense officials insisted the questionnaire was strictly voluntary. Copyright, 1985, United Feature Syndicate, Inc. |