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PIA Lobbying Prompts USDA to Issue Crop Anti-Rebating Bulletin

Action by PIA prompted the U.S. Department of Agriculture to issue a memo reaffirming the federal prohibition on the practice of rebating in the sale of crop insurance...
February 27, 2014

Action by PIA prompted the U.S. Department of Agriculture (USDA) to issue a memo reaffirming the federal prohibition on the practice of rebating in the sale of crop insurance. The memo issued on February 18, 2014 by USDA Risk Management Agency (RMA) Acting Deputy Administrator for Insurance Services Heather Manzano noted “No person shall pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, either as an inducement to procure insurance or after insurance has been procured, any rebate, discount, abatement, credit, or reduction of the premium named in an insurance policy or any other valuable consideration or inducement not specified in the policy.”

PIA raised the issue of prohibited rebating with RMA regarding entities that have ancillary services and products. “This is a big victory for PIA agents who sell crop insurance because it provides some clarification on an area that has been very vague,” said Steve Becher, a member of the PIA National Crop Insurance Working Group and executive director of PIA of North Dakota, who along with other PIA leaders met with USDA/RMA officials during last month’s meeting of the National Association of Insurance Commissioners (NAIC) in Washington, D.C.

“The independent agents who are members of PIA respect both the letter and the spirit of anti-rebating laws both at the state and federal levels, and encourage their enforcement to ensure a level playing field in the sale of crop insurance,” Becher said. “RMA is basically reinforcing what we have been saying all along. Our concern is not about pens and lunches. The memo makes it clear that items of ‘minimum’ value are not a problem; the focus is on major enticements that are prohibited.”

“PIA greatly appreciates the quick action by RMA after we brought this to their attention, but more needs to be done to ensure that entities do not use ancillary discounts to illegally entice producers,” said PIA National Executive Vice President & CEO Mike Becker. “It needs to be emphasized that, in addition to federal laws, states may enforce their own anti-rebating laws and turn over cases to the federal government for additional action.” Becker also noted that items of “minimal” value, like pens and calendars, are exempted and not of concern. “Anti-rebating laws are meant to prohibit unethical practices that inhibit competition and distort the free functioning of the insurance marketplace,” Becker said.

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