The agricultural economy has experienced extraordinary volatility over the past few years, and it has been worsened by the pandemic, which caused additional instability across economic sectors. During this time of unprecedented upheaval for producers, independent insurance agents have helped guide producers through the process of purchasing crop insurance to ensure they have the protection they need.
Unfortunately, the role of agents in delivering this highly technical program to farmers has been increasingly undervalued over the past several years.
- Specifically, the 2011 Standard Reinsurance Agreement (SRA), which is the contract between the Federal Crop Insurance Corporation (FCIC) and crop insurers, or Approved Insurance Providers (AIPs), established a cap on the administrative and operating (A&O) expense subsidy in most instances.
- From 2011 through 2015, the Risk Management Agency (RMA) annually adjusted the total A&O subsidy cap to keep pace with inflation.
- However, beginning in 2016, RMA stopped making inflation adjustments, leaving its value fixed in 2015 dollars, where it remains today.
These actions have resulted in effective cuts to agent commissions, during a historically challenging time for crop insurance agents.
PIA is working with allies to support an initiative this year to secure two provisions to begin to address the inflation adjustment issue through the appropriations process.
- The House Agriculture Appropriations Bill includes some equitable relief for specialty crops.
- The Senate Agriculture Appropriations Bill includes report language confirming that the U.S. Department of Agriculture has the legal authority to reinstate the inflation adjustment and provide equitable relief for specialty crops.
PIA is urging Congress to include both provisions in the final FY 2023 appropriations package. If the two provisions are adopted in the end of the year appropriations package it will make clear that Congress believes the RMA has the legal authority to move forward with A&O relief for all agents through an annual inflation adjustment. It will also provide some immediate relief in the case of specialty crop A&O because the circumstances are severe and urgent. Click here and take action!