IIABA OPPOSES RMA’S APPROVAL OF OCCIDENTAL-CROP 1 PREMIUM DISCOUNT PROGRAM
Plan has hidden risks; jeopardizes crop insurance delivery
WASHINGTON, D.C. February 25 - Independent agents are strongly opposing the U.S. Department of Agriculture’s (USDA) approval of a “Premium Discount Plan” (PDP) submitted by Occidental Fire & Casualty Company of North Carolina, announces the Independent Insurance Agents & Brokers of America (IIABA) today.
Under the plan, Occidental Fire & Casualty will offer Crop 1 Insurance Direct crop insurance policies to farmers at a discount and bypass traditional providers of crop insurance—independent insurance agents.
IIABA believes this program, which allows the selling and servicing of crop policies primarily through the company’s Internet Web site, creates an uneven playing field and severely undermines the crop insurance delivery system, says IIABA CEO Robert A. Rusbuldt.
“A total compromise of service and expertise is not worth the price tag,” says Rusbuldt. “Agents who work hand-in-hand with farmers to fashion their crop insurance protection can count on a wealth of expertise to determine the proper level of coverage. Farmers can’t get that expertise from a computer screen.”
If farmers opt for the Occidental-Crop 1 PDP, they would effectively give up the expertise of independent agents, who can provide valuable assistance to growers with deadlines for reporting, quality control and screening information sent from companies.
“This program creates an unlevel playing field because it promotes the rebating and tying of products, which are illegal under state laws,” says Patrick O’Brien, IIABA Washington representative and grassroots coordinator. “Forty-eight states outlaw rebating, and every state outlaws tying arrangements. This program will ultimately prove counterproductive to the interests of farmers. We do not understand why the Administration is intent on forging ahead with a new delivery system that will prove to be counterproductive to the interests of America's farmers.
“There are many questions left unanswered,” O’Brien continues. “Who is going to advise the farmer on appropriate revenue coverages to select at sales closing? Who will point out possible yield guarantee weaknesses at production time? Who will assist farmers with unit structures and determining yields on added land?
“I find it hard to imagine that our nation’s farmers will be comfortable relying on a Web site to explain these issues to them and that a Web site can deliver this farm-specific information to each farmer. This sort of transaction leaves open much greater possibilities of misunderstandings that person-to-person communication can catch,” asserts O’Brien.
IIABA strongly believes that this is the wrong program at the wrong time, continues O’Brien.
“America's farmers deserve a better quality of insurance provider and services, providing intangible services such as interpersonal relationships and decades of technical experience found only from independent agents. We have a delivery system that works for farmers, but the Risk Management Agency seems intent on trying to fix something that isn’t broken,” says O’Brien.
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.