Crop Insurance Premium Discounts Threatened
House Appropriations Committee debates measure to block premium discounts for 2007 and potentially 2008 season.
Compiled by staff
Published: May 9, 2006
Farmers may not be able to buy discounted crop insurance in the next growing season.
Today the House Agriculture Appropriations Subcommittee debates a provision that would stop the sale of premium-discounted crop insurance for the 2007 and 2008 growing seasons.
The Federal crop-insurance program contracts with about 16 companies to provide coverage and shares in about $3.94 billion in annual premiums. In the mid-1990s Congress allowed any insurance company to offer a discount plan and return a share to farmers if operating costs were lower than other crop insurance companies.
Des Moines, Iowa-based Crop1 was the first taker in 2003. Farm Bureau Mutual Insurance Co. purchased Crop1 earlier this year and estimates it is on track to pay out $4.9 million to its customers for the 2006 crop-insurance year ending in June.
Larger competitors and thousands of independent agents see the move as a threat to their commissions and want the premiums to end. They argue if commissions are cut, agents will only target larger successful farms and do less to help farmers in need.
"The House Appropriations Committee debates the issue today as part of a $93.6 billion measure to fund the Agriculture Department for the new fiscal year beginning Oct. 1. The same bill was used last November to deny funds to administer premium discounts for the coming 2007 crop year; the bill's manager, Rep. Henry Bonill, R-Texas, would extend this ban to the 2008 crop year," the Wall Street Journal reports.
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Tagged: insurance, farm, Farm Bureau
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