The Risk Management Agency (RMA), responsible for supervising the federal crop insurance program, has issued a Managers bulletin to Approved Insurance Providers (AIPs), instructing them to immediately stop any cancellation of agent/agency contracts.
Recently, some AIPs have been scaling back their federal crop insurance operations in specific crops, insurance plans, and geographic regions. Steps to transition the business to other AIPs include terminating agent/agency contracts and reducing their compensation. Termination notices have been issued with insufficient time for agents/agencies to act before the policy sales closing date, stating that no new business will be accepted for the current reinsurance year and policies will be cancelled if not transferred. Consequently, this has caused confusion in the marketplace, prompting action from the RMA to ensure farmers and ranchers retain coverage, their policies are managed effectively, and they maintain trust in and access to this critical service.
Section II.a.3 of both the Standard Reinsurance Agreement (SRA) and the Livestock Price Reinsurance Agreement (LPRA) specifies that “the Company shall offer and market all plans of insurance for all crops in any State where actuarial documents are available in which it writes an eligible crop insurance contract and shall accept and approve applications from all eligible producers.” This means that while a policy can be transferred, it cannot be cancelled if the producer remains eligible. If an AIP terminates an agent/agency contract and the policy is not transferred, it remains with the current AIP, which is bound to service the policy as per the terms outlined in the SRA and LRPA, unless it is reassigned and accepted by another agent/agency for the current and subsequent reinsurance years.
According to the bulletin, all AIPs are directed to immediately cease any termination of agent contracts until the RMA has had the opportunity to review the information requested below in accordance with Section II.a.3 of the SRA and LPRA:
1) A list of agent/agencies whose contract was terminated for the 2024 reinsurance year, including location.
2) A list of agent/agencies whose compensation was decreased for the 2024 reinsurance year, including location and revised compensation terms.
To increase transparency and protect continuity of coverage, RMA has also added new reporting requirements to the 2025 SRA and LPRA, which requires AIPs to report any intended business decreases, including lists of agent/agency contracts that will be terminated, and agent/agencies whose compensation will be reduced in the 2025 reinsurance year.
Crop insurance agents can find the bulletin here. PIA will continue to monitor this issue.