Washington–The U.S. Department of Agriculture has called for theelimination of a portion of the crop insurance program thatinsurance agents opposed because it could limit their fees.

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The USDA's move came in its appropriations report to theCongressional Conference, which called for defunding crop insurancepremium reduction plans, signaling a victory for an agents' groupthat sought to eliminate the programs.

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Agents groups have consistently opposed the PRP plan, sayingthat by allowing insurers to offer rebates it would potentiallyreduce agent involvement. They have argued the plans areanti-competitive and would ultimately hurt farmers.

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The Independent insurance Agents and Brokers of America notedthat runs counter to laws in 48 states and would move away from thetraditional crop insurance regulations prohibiting rebates.

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"If rebating is allowed under premium reduction plans, insuranceproviders would be forced to focus on cutting corners rather thanproviding quality service and better risk-management products forfarmers," said Norm Nielsen, IIABA crop insurance task forcechairman and president of Associated Insurance Counselors Inc. inPreston, Iowa.

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Mr. Nielsen said: "This fundamental shift away fromservice-based competition for the crop insurance business offarmers, unheard of in the Federal Crop Insurance Program, wouldforce insurance providers into a race to the bottom, cutting backon service for America's farmers. That is why lawmakers in 48states have enacted laws against the practice of rebating. Theirwisdom should be respected."

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The provision will not take effect until July of 2006, meaningthat current coverages that use the PRP system won't beaffected.

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Additionally, the IIABA noted that the PRP rules allowed forrebates to be offered to farmers in some states but not others,which also runs against current crop insurance regulations barringdiscrimination in favor of one state over another.

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"The PRP proposal is a dangerous shell game under which farmersin some states stand to be short-changed in order to pay rebateselsewhere," said Patrick O'Brien, director of federal governmentaffairs for the IIABA. "This opportunity for discrimination mustnot be allowed."

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Mr. O'Brien added the IIABA was "very pleased" that theamendment was included in the conference report, and that "we lookforward to its enactment as part of the government's fiscal-year2006 budget."

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