AMENDMENT DEFUNDING CROP INSURANCE PLAN INCLUDED IN AG BILL
Agriculture appropriations legislation will deny PRP funding beginning July 1, 2006
WASHINGTON, D.C., Oct. 26, 2005—The Independent Insurance Agents & Brokers of America (the Big “I”) today won an important victory when an amendment defunding Premium Reduction Plans (PRPs) was included in the agriculture appropriations conference report.
The Kingston-Boyd provision would go into effect on July 1, 2006, the start of the 2007 reinsurance year. The provision will not interfere with the 2006 reinsurance year, which ends June 30, 2006, thus guaranteeing that no farmers will have to worry about previously purchased coverage.
The Big “I” has sought the defunding of this program because of various issues with PRPs that are contrary to the best interest of consumers. The United States Department of Agriculture’s Risk Management Agency (RMA) has published an interim rule allowing providers to give rebates to their customers, a provision at odds with the laws of 48 states, an unprecedented departure from longstanding Federal Crop Insurance Program (FCIP) regulations prohibiting rebating.
“If rebating is allowed under Premium Reduction Plans, insurance providers would be forced to focus on cutting corners rather than providing quality service and better risk-management products for farmers,” says Norm Nielsen, Big “I” Crop Insurance Taskforce chairman and president of Associated Insurance Counselors Inc. in Preston, Iowa. “This fundamental shift away from service-based competition for the crop insurance business of farmers, unheard of in the Federal Crop Insurance Program, would force insurance providers into a race to the bottom, cutting back on service for America’s farmers. That is why lawmakers in 48 states have enacted laws against the practice of rebating. Their wisdom should be respected.”
In addition to the inherent problem of cutting service, there is also the problem that the PRP rebating scheme allows for rebates to be offered to farmers in some states but not in others. The existing FCIP does not allow discrimination in favor of farmers in one state over farmers in another state, but the PRP scheme would violate that principle.
“The PRP proposal is a dangerous shell game under which farmers in some states stand to be short-changed in order to pay rebates elsewhere,” says Patrick O’Brien, Big “I” director of federal government affairs. “This opportunity for discrimination must not be allowed. We are very pleased that the Kingston-Boyd amendment has been included in the final agriculture spending package, and we look forward to its enactment as part of the government’s fiscal year 2006 budget.”
Founded in 1896, IIABA (the Big “I”) 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.
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