BULLETIN NO.:  MGR-97-035

TO:  All Reinsured Companies
All Risk Management Field Offices

FROM:Kenneth D. Ackerman   /s/09/04/97
Administrator

SUBJECT:  Raisin Reconditioning Payments

BACKGROUND:

Concerns have been raised regarding the application of the 1997
Raisin Crop Insurance Provisions as they pertain to
reconditioning payments for raisins damaged by insurable causes. 
 

If a reinsured company gives the insured consent to recondition
damaged raisins under Section 11. (c) (3) then payment in
accordance with Section 11 (e) states "The reconditioning payment
for raisins that meet RAC standards for marketable raisins . . ." 
The policy then goes on to state the basis for payment.  The
language "for raisins that meet RAC standards" has caused concern
that if 20 lots are reconditioned and 2 lots fail to meet the
Raisin Administrative Committee (RAC) standards that a strict
interpretation of the policy language would only allow for 18
lots to qualify for a reconditioning payment.  

Numerous consultations with impacted reinsured companies and the
Sacramento Regional Service Office (RSO) resulted in a consensus
that reconditioning payments should be allowed for all 20 lots in
accordance with the amounts allowed in the policy.  It was the
consensus of those involved that to reimburse policyholders for
gross tonnage of reconditioned raisins, irrespective of whether
all lot(s) pass RAC standards, will provide a greater incentive
for policyholders to mitigate potential raisin losses through the
reconditioning of rain damaged raisins.  

ACTION:

Once reconditioning of rain damaged raisins has been authorized or
is required by insurance providers, reconditioning payments will
be based on the actual number of tons of raisins (unadjusted
weight) that are wash-and-dry reconditioned.  All lot(s) of
reconditioned raisins are not required to meet RAC standards for
this payment to be made.  The Raisin Loss Adjustment Standards
Handbook (FCIC-25390) will reflect this clarification to these
policy provisions.