BIG “I” OPPOSES PREMIUM REDUCTION PLAN
Testifies on crop insurance issues before House subcommittee
WASHINGTON, D.C., May 4, 2005—The Independent Insurance Agents & Brokers of America (the Big “I”) testified Wednesday before a House subcommittee on the ongoing question of the Premium Reduction Plan (PRP), which potentially opens the door for unqualified and poorly-trained individuals to sell crop insurance.
Norman Nielsen, president of Preston, Iowa-based Associated Insurance Counselors Inc., testified on behalf of the Big “I” before the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management on the overall issue of the Federal Crop Insurance Program (FCIP) and the effect PRPs will have on it.
Nielsen noted the association’s staunch opposition to the PRP and also questioned why the federal Risk Management Agency (RMA) is allowing one company to continue offering a PRP after the Federal Crop Insurance Corporation (FCIC) board suspended PRPs until completion of the rule-making process.
“If this is RMA’s idea of promoting competition in the industry, then the future looks very bleak for anyone involved in the delivery of this important risk management program, and I shudder to think of the impact it will have on America’s agriculture producers,” Nielsen said.
The Big “I” opposes PRPs because they potentially promote a reduction of the role of agents in the delivery of crop insurance, despite the years of training and expertise agents have with this line of coverage. There are concerns that PRP salespeople will not be qualified or able to offer the same quality of service, as well as the likelihood that companies offering PRPs will “cherry-pick” larger, more profitable farms. If PRPs proliferate, the likelihood of consolidation in the industry becomes greater, which means smaller farms and farmers could be out in the cold for crop coverage.
“Certainly this is a matter of vital importance to independent agents who sell crop insurance, as well as to farmers, but its ramifications go beyond just those segments,” says Patrick O’Brien, Big “I” director of federal government affairs. “The larger question here, which is of interest to all independent agents and brokers, is whether individuals without the expertise and the statutory requirements of insurance agents will be allowed to sell insurance plans. This is potentially a very slippery slope, and it is crucial that Congress nip it in the bud.”
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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