The Independent Insurance Agents & Brokers of America’s (IIABA) Crop Insurance Task Force met last week with new Risk Management Agency (RMA) Administrator Ross J. Davidson Jr. to discuss concerns with association-selling programs and other crop insurance issues.
The meeting coincided with the IIABA’s 26th Annual National Legislative Conference held last week in Washington, D.C. Davidson was appointed RMA administrator by the Bush Administration and assumed his duties in early February. “The meeting was productive and a good exchange of ideas,” said IIABA Government Affairs Committee Chairman Robert E. Fulwider, who also is chairman of the Crop Insurance Task Force. “We are extremely grateful to Administrator Davidson for taking the time to meet with us and giving his undivided attention to our concerns, particularly those dealing with association selling.”
In the meeting, Fulwider and other members of the task force told Davidson that IIABA member agents remain concerned about the increasing development of association-selling programs and called on the U.S. Department of Agriculture (USDA) to subject these arrangements to closer scrutiny.
Under association-selling arrangements, cooperatives, growing groups and associations enter into exclusive contracts with companies to offer crop insurance to farmers with the promise of a “patronage refund” to those who join the cooperative and purchase their coverage. The Agricultural Risk Protection Act of 2000 (Public Law 106-224) reaffirmed that states’ insurance statutes, especially those prohibiting rebating arrangements, apply to the sale and delivery of crop insurance.
“Many of these cooperatives are marketing crop insurance to farmers with an implied, and in some cases express, promise that cooperative members will be paid a patronage refund at the end of the year,” described Fulwider. “These types of arrangements often run afoul of states’ insurance statutes addressing anti-rebating and cooperative arrangements.”
After IIABA’s discussion of the association selling issue, the RMA and Federal Crop Insurance Corp. (FCIC) officials attending the meeting acknowledged that improved communication among state regulators, companies and agents would help to alleviate the problem. Specifically, all players in the crop insurance arena need to more fully understand that the 2000 farm bill reaffirmed the primacy of state regulation as it applies to crop insurance, most notably state anti-rebating statutes.
“The meeting was very valuable in establishing a direct line of communication between IIABA and RMA,” added Fulwider following the meeting. “Administrator Davidson and his staff pledged to work with IIABA on association-selling and other crop insurance issues. We look forward to a cooperative relationship over the coming years.”
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