PLEASE CALL THE MEMBERS BELOW AND TELL THEM TO VOICE THEIR OPPOSITION TO THE 3RD DRAFT OF THE SRA!
THESE PROPOSALS WILL HAVE A DEVASATING AFFECT ON THE MINNESOTA AGRICULTURAL COMMUNITY Background: The Risk Management Agency (RMA) has released the 3rd draft of the Standard Reinsurance Agreement (SRA) which determines the terms and conditions for the Administrative and Operating (A&O) reimbursements and underwriting gains for crop insurance companies. As a reminder, agent commissions are part of the A&O reimbursement, and the 3rd draft makes significant cuts to this A&O. In an unprecedented move, this also represents the first time that RMA has attempted to directly regulate agent crop insurance commissions rather than allow the marketplace to determine the appropriate commission rate.
Agent Concerns:The current SRA draft proposes to cut the federal crop insurance program by $6 billion over ten years and puts a cap on agent commissions. The SRA will cap company expenditures on agent commissions at 80% of the A&O subsidy (calculated at the state level), and the SRA will cap total agent compensation, including profit sharing or similar plans, at 100% of the total A&O reimbursement. The destructive impact these proposals will have on the economy of rural America should not be underestimated. Crop insurance agents are small business owners that employ tens of thousands of hard working citizens in small towns across the country. These proposals will certainly lead to lost jobs in an already struggling economy.
The reinsurance terms for State Group 1 (Minnesota is a group 1 state) appear to also reduce the potential underwriting gain of companies by nearly 30%, while increasing overall risk on the loss side. Clearly, this type of risk/reward scheme will force companies to consider changes to their participation in the crop program in Minnesota. These proposed changes to the compensation of the delivery system are particularly damaging to Minnesota because of the disproportionate impact they will have on our state.
Action Needed: Please call ALL of the Members listed below and urge them to contact USDA expressing their strong opposition to the draconian cuts and commission cap proposals in the 3rd draft of the SRA.
*Please note that your call will likely be answered by a staff assistant in the Congressman's office. Please make your message brief, and note the following:
