Big I Defends Crop Agents

To The Editor:

We are duty bound to our members to respond to Crop 1s retort tothe Independent Insurance Agents & Brokers of Americas chargesagainst its Premium Discount Plan crop insurance pilot program. Thediscounts available through this program were sold to the FederalCrop Insurance Corp. as efficiencies gained by selling cropinsurance through the Internet. If that claim were true, IIABA andits members would not object to this experiment.

However, Crop 1s assertion does not appear to be true. AlthoughCrop 1 had set up a Web site with information on crop insuranceproducts, as recently as a few weeks ago it was not possible toactually process a transaction online, making any purported“efficiencies” a fallacy.

Instead, it appears the truth is that the primary vehicle forachieving the “efficiencies” upon which the FCIC relied to approvethe pilot is the dramatic cuts in the commissions agents receive tosell and service crop insurance products. It also appears that Crop1 is brow-beating independent agents to accept these reducedcommissions since the perception is that its discounted premiumsare now essentially “the only game in town.”

As Congress repeatedly has recognized, independent agents havebeen the backbone of the federal crop insurance program since itsdelivery was handed over to the private sector in the early 1980s.Independent agents have educated farmers about the benefits of cropinsurance, and work with their farmer clients to ensure risks areprotected.

Independent agents deserve to be paid a fair wage for providingthese services and federal law dictates that they receive justcompensation. Crop 1s aggressive commission policies threaten thecontinued participation of independent agents in the crop program,and thus threaten the continuing contributions IIABA members makeboth to the program at large and to farmers who rely on the cropinsurance program to protect their livelihood.

It is important to note that the complaint IIABA has lodged withthe U.S. Department of Agriculture challenging the PDP plan doesnot raise any of these issues directly. It instead challenges theprocess used to approve the pilot program becausealthough it maytechnically be accurate to say the FCIC “signed off” on the PDPtheFCIC failed to consider many factors it is required to evaluateprior to approval.

Case in point: Federal law dictates that the FCIC is required toensure that a proposed program adequately protects the interests offarmers, will not have a negative effect on the delivery system, isactuarially sound and, most importantly, will not reduce theintegrity of the overall crop insurance program.

To date, the FCIC has failed to evaluate these importantfactors. All IIABA is seeking is a halt in the program until a fullevaluation is completed as required under federal law–an evaluationone would expect Crop 1 to welcome as an opportunity to demonstratethe truth of its assertions.

Robert A. Rusbuldt
CEO

Maria L. Berthoud
Senior V.P.
Federal Government Affairs
Independent Insurance
Agents & Brokers of America
Alexandria, Va.

Reproduced from National Underwriter Edition, May 12, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.