An eligible state is one where losses run above 120 percent of premium
What the document says“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.”
The section defines an eligible State as one where the loss ratio for eligible contracts in an insurance year runs above 120 percent of the total net book premium written by all approved insurance providers. An eligible contract is a crop insurance contract entered into by an approved insurance provider in an eligible State, and does not include catastrophic risk protection under subsection (b), an area-based or similar plan as the Corporation determines, or a policy on which the provider incurs no loss adjustment expenses.
What the document actually says“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.”
A state counts if claims there run high. Claims must top 120 percent of the premium taken in. That is measured across all insurers.
A loss ratio compares claims paid to premium taken. Above 120 percent means claims beat premium by a fifth. Three kinds of contract are left out.
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