Federal Crop Ins. Stance Riles Agents

By Steven Brostoff, Washington Editor

NU Online News Service, Feb.5 , 4:21 p.m. EST, Washington?The Independent Insurance Agents & Brokers of America is urging agents to contact members of Congress and press them to challenge a decision by the government agency overseeing the Federal Crop Insurance Program to refuse to negotiate terms of the Standard Reinsurance Agreement with trade associations.[@@]

The Risk Management Agency “has always negotiated the SRA with the industry as a group rather than with individual companies,” the Alexandria, Va.-based IIABA said in an “Action Alert” to its members. “As a result of RMA’s refusal to negotiate, we now must call on Congress to intervene on our behalf.”

RMA, which is an agency of the Department of Agriculture, announced recently that it will renegotiate the standard agreement that defines the terms of reinsurance between it and insurers under the Federal Crop Insurance Program.

RMA says the goals of the renegotiation are to create a dynamic agreement capable of adapting to future needs, increase simplicity and efficiency, strengthen program integrity, ensure long-term viability and secure meaningful cost savings throughout the system.

RMA released a first draft of the proposed new contract to insurers and requested feedback. “We look forward to working together with the insurance providers and other stakeholders to develop an improved SRA,” said RMA Administrator Ross J. Davidson Jr.

In its Action Alert, IIABA said the draft SRA places additional burdens and penalties on the private sector, reducing the opportunity for companies to earn a profit by allowing RMA to take 25 percent of every company’s cumulative underwriting gain. In addition, IIABA says, the draft increases regulatory burdens on agents and provides no incentives for companies to operate in high-risk areas.

Finally, IIABA said, the draft creates a Premium Discount Plan, that, in effect, could cut agents out of the market for larger policies.

“We must target the entire Congress in order to send a strong message to our legislators that we will not sit back and let the government commandeer what has become a very successful public-private partnership to provide important risk management to America’s farmers,” IIABA says in its alert.