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Professional Insurance Agents Decry Attack by Federal Employees Union

WASHINGTON — A federal employees union wants to expel private sector crop insurance agents – and possibly insurance companies – from a large swath of the federal crop insurance program, in an apparent attempt to protect union members from budget cuts.
February 24, 2012

Farm Service Agency Employees Want to Expel the Private Sector From the Delivery of Crop Insurance

WASHINGTON, February 24, 2012 — A federal employees union wants to expel private sector crop insurance agents – and possibly insurance companies – from a large swath of the federal crop insurance program, in an apparent attempt to protect union members from budget cuts.

The National Association of Farm Service Agency (FSA) County Office Employees (NASCOE) is actively lobbying Congress, urging that the private sector insurance agents who sell and service crop insurance policies be replaced by federal government employees who work for the FSA. A study paid for by the union also looks at federal government employees performing functions currently handled by private insurance companies.

“What we have here is a union representing federal workers saying that the federal government is more effective and efficient than the private sector. That’s absurd,” said PIA National Executive Vice President & CEO Leonard C. Brevik. “These government employees have declared war on the private sector. They are proposing that private sector crop insurance agents who are key to the success of the crop insurance program be thrown under the bus and replaced with federal bureaucrats.”

The current public/private partnership in crop insurance began in the early 1980s with a dual system of delivery in which farmers were given the choice of buying policies sold by private agents who contracted with the government for claims service, or from private companies that both sell policies and service claims. Because the private sector outperformed the government, especially in terms of the quality of services, all program delivery was assigned to the private sector by the end of the 1980s.

“Moving certain parts of the crop insurance program back to the FSA would set the program back 30 years, to a time when the program was inefficient, underutilized and administrative costs were significantly higher,” said Mike Becker, assistant vice president of federal affairs for PIA National. “The public/private partnership that has developed over the years has been critical to the overall success of the crop insurance program.”

Becker noted that NASCOE has commissioned a study that purports to show potential cost savings to the federal government if portions of the crop insurance program were to be de-privatized as the union is recommending. “Lawmakers must keep in mind that this study was paid for by a group that already determined the conclusions it wanted to reach,” Becker said.

“In addition, in all of NASCOE’s arguments, not one word is said about providing quality service to the farmer,” Becker said. “NASCOE presumes its members are at least on par with the private sector when it comes to performance. But they are no match for incentivized private sector agents when it comes to serving farmers, ranchers and growers well.”

“Over the last ten years, the Federal Crop Insurance Program (FCIP) has generated an unprecedented net underwriting gain of $3.9 billion that goes directly to the U.S. Treasury,” Brevik said. “The crop insurance program is a resounding success. The United States has the most productive agriculture sector in the world. Farmers, ranchers, growers, consumers, our rural economies and our entire national economy depend on the proven quality of our crop insurance program, which is effectively and efficiently delivered today by the private sector.”

“When America’s farmers need crop insurance, they turn to their PIA agents,” Brevik added. “On crop insurance, PIA agents have a clear message: Don’t mess with success.”

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America SM. PIA’s web address is www.pianet.com.