Instead, it appears the truth is that the primary vehicle for achieving the “efficiencies” upon which the FCIC relied to approve the pilot is the dramatic cuts in the commissions agents receive to sell and service crop insurance products. It also appears that Crop 1 is brow-beating independent agents to accept these reduced commissions since the perception is that its discounted premiums are now essentially “the only game in town.”

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

Independent agents deserve to be paid a fair wage for providing these services and federal law dictates that they receive just compensation. Crop 1s aggressive commission policies threaten the continued participation of independent agents in the crop program, and thus threaten the continuing contributions IIABA members make both to the program at large and to farmers who rely on the crop insurance program to protect their livelihood.

It is important to note that the complaint IIABA has lodged with the U.S. Department of Agriculture challenging the PDP plan does not raise any of these issues directly. It instead challenges the process used to approve the pilot program becausealthough it may technically be accurate to say the FCIC “signed off” on the PDPthe FCIC failed to consider many factors it is required to evaluate prior to approval.

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

To date, the FCIC has failed to evaluate these important factors. All IIABA is seeking is a halt in the program until a full evaluation is completed as required under federal law–an evaluation one would expect Crop 1 to welcome as an opportunity to demonstrate the 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 serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.