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Crop Insurance Update: RMA Managers Bulletin To Be Released

On September 2, a special meeting of the USDA Risk Management Agency (RMA), industry leaders and crop agent representatives was held in Kansas City to...
September 21, 2010

On September 2, a special meeting of the USDA Risk Management Agency (RMA), industry leaders and crop agent representatives was held in Kansas City to discuss the definitions of "agent compensation" in the new five-year Standard Reinsurance Agreement (SRA). PIA crop lobbyist Kent Olson of North Dakota along with other members of the PIA National Crop Insurance Working Group from Nebraska and Kansas attended.

The purpose of the meeting was to categorize the elements of agent compensation within the SRA so there can be no dispute regarding the categories and practices for paying agents for the sale and service of crop insurance. The final version of the USDA Risk Management Agency's (RMA) Manager's Bulletin defining "agent compensation" within the A&O section of the Standard Reinusrance Agreement (SRA) will be released shortly. The September 2 meeting of agents from around the country with the RMA proposed draft changes, which were then discussed, adopted or revised followed by a meeting with the AIPs last Tuesday in Kansas City.

Several improvements and clarifications were made in the compromises. The most important issue for agents to recognize is the 80 percent "soft cap" on the A&O commission and the 100% cap on "underwriting profit."  In addition, there is a "dollar cap" of $1.22 billion for A&O next year which, if the industry and RMA surpass that amount, it will be pro-rated back into the 80% and 100% caps.  For example if the total A&O were to be $1.5 billion, the $1.22 billion cap would be 81% of 80% or 100% caps.  The caps [both agent and industry dollar caps] are in the 5 year SRA contract.  There is a small adjustment for inflation in the $1.22 billion industry dollar cap. A full analysis of the Bulletin will be forthcoming when released.

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