Farm Bureau Mutual Insurance Co. can no longer give free Farm Bureau memberships to customers who agree to buy insurance, state insurance regulators said.
Susan Voss, commissioner of the the Iowa insurance division, said a new state mandate went into effect Sept. 1.
“We’ve told Farm Bureau that they couldn’t offer free membership and that we consider it valuable consideration,” Voss said. “It’s not part of the contract and therefore they couldn’t offer it as a freebie anymore. You can’t give it away if it’s not part of the contract.”
Attorney David McNeill, vice president and assistant general counsel for Farm Bureau Mutual Insurance, said the agency voluntarily discontinued the practice several months ago.
Farm Bureau insurance, which sells Wellmark group policies, didn’t do anything wrong and the state never said it did, McNeill said.
“Prior to the May 26, 2006, meeting at the insurance department, which is discussed in the letter from Commissioner Voss, Farm Bureau Mutual Insurance Co. voluntarily discontinued offering Farm Bureau memberships with the sale of the Wellmark group policy,” McNeill said.
The issue came to light after several insurance industry people questioned the practice.
The matter, however, doesn’t appear to be completely settled.
Farm Bureau still will offer free memberships to employees of a company that is an existing Farm Bureau member if the company buys insurance from Farm Bureau Mutual.
“After consultation with the department, and effective July 1, 2006, it was determined that when an employer who was already a Farm Bureau member purchased a Wellmark group policy from a Farm Bureau agent, it would not be inappropriate for memberships to be offered to employees of that Farm Bureau member at no additional cost,” McNeill said.
Voss’ office is reviewing that issue and has not made any determination yet on whether it will be allowed, said Tom Alger, spokesman for the state insurance division.
The Iowa Farm Bureau says it has about 153,000 member families. Members receive discounts for a variety of services including travel, entertainment, clothing, banking and health care services.
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