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Pilot PDP Crop Programs Not Dead Yet

Ross Davidson, head of the RMA, confirmed last week Converium, one of the world's top 10 reinsurance companies, "has recently discontinued its relationship with...
June 24, 2003

Questions have been raised as to the status of pilot Premium Discount Programs (PDPs) for crop insurance under the USDA Risk Management Agency (RMA).

Ross Davidson, head of the RMA, confirmed last week Converium, one of the world's top 10 reinsurance companies, "has recently discontinued its relationship with Crop1" for the 2004 crop year. He promised that the RMA would make sure that Crop1 services continue for growers this year. Gene Grimsley, senior vice president of administration at Crop1, told the National Underwriter that the arrangement Crop 1 has with Converium is "very much in place" for the 2003 crop year. "We will service these policies--we will pay the losses," Grimsley said. "This is a change in direction, if you will, for the 2004 crop year. It does not have any impact at all on the 2003 crop year. That's very important to note."

Crop1 was the first crop insurance company to get RMA's approval to offer premium discounts of up to 10 percent, selling through co-ops and farm supply businesses as well as independent agents, and cutting commissions to about 8 percent to 12 percent. Other companies typically pay between 15 percent and 18 percent and have paid as much as 25 percent.

Davidson added Crop1 and Converium could apply again to offer their own versions of discounted coverage for 2004 crops, but so far they have not. Grimsley added Crop1 plans to re-file for 2004 crop year approval. Davidson also said that some other companies have told him they are interested in offering their own PDPs but none have yet applied to the Federal Crop Insurance Corporation (FCIC) board for approval.

More at cropinsurance.org 
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