NU Online News Service, March 1, 12:50 p.m.EST

WASHINGTON–Crop insurance carriers and independentagents say the U.S. Agriculture Department's latest proposed cutsin subsidies in the program as well as a "soft cap" on agents'commissions are both unwarranted and hurtful.

The concerns are arising despite a revised offer by the USDA'sRisk Management Agency to reduce the proposed cuts in the programfrom $8.4 billion to $6.9 billion, an 18 percent change from theearlier proposal.

Insurance industry representatives called it a disappointingeffort that would discourage participation in the program.

The latest RMA counterproposal is part of negotiations with theNational Crop Insurance Services (NCIS), which represents the 16crop insurance carriers in talks with the AgricultureDepartment.

The agency is proposing the cuts in part because of strongpolitical pressure to shift funds from the farm program to theAgriculture Department's child nutrition programs.

Bob Parkerson, president of the NCIS, voiced disappointment withthe latest RMA proposal. The RMA's Feb. 23 proposal was made inresponse a counteroffer by the NCIS in January to the RMA's firstproposal, made in December.

In response to the RMA's initial demands for an $800 millionannual cut over 10 years in the program, the NCIS submitted alengthy paper outlining ways the industry could reduce thesubsidies without threatening the solvency of the carriers.

Mr. Parkerson said RMA's latest offer is being met "withdissatisfaction and disappointment from the industry."

He said the $6.9 billion would reduce financial support to thecrop insurance companies by some 25 percent, and as was the casewith RMA's first proposal, "these cuts would continue to put atrisk the depth and scope of crop insurance services in manyagricultural areas of the country."

He added that NCIS "is disappointed that RMA didn't give muchcredence to our suggestions about ways to streamline and improvethe important tasks that we must undertake to implement the programand protect its integrity in compliance with the provisions of theSRA."

In fact, he added, "RMA went the other way, making these tasksmore cumbersome and expensive, while simultaneously calling forhuge funding cuts."

At the same time, the Independent Insurance Agents and Brokersof America sent a letter to the agency criticizing the decision toimpose "soft caps" on agents' commissions as part of thecutbacks.

Charles Symington, IIABA senior vice president of governmentaffairs, said in the letter that the "IIABA believes that limitingmarketplace competition for agents who provide high-qualitycustomer care to their clients will result in a decline in theefficient and effective delivery of services, as well as leadcompanies to set a standard commission rate."

Mr. Symington said the proposed changes on agents' commissionswould serve as a disincentive for agents to write policies in highrisk parts of the country.

Moreover, he said by placing arbitrary caps on agentcommissions, "RMA is contradicting Congress' intent of providingwidespread availability of crop insurance to farmers across thecountry."

Mr. Symington noted that approximately 18,000 agents across thecountry sell crop insurance.

"During a time of great economic strain and instability, itseems imprudent to slash a program which has helped rebuildAmerica's farmland," Mr. Symington said.

"The IIABA is greatly concerned that this cap would eliminatethe essential aspects of competition and service incentives thatare vital to the crop program," he said.