NE Ins. Dept., USDA Risk Management Agency Conclude Agreement on American Growers

L. Tim Wagner, Director of the Nebraska Department of Insurance (NDI), and Ross J. Davidson, Jr., Administrator of USDA’s Risk Management Agency (RMA) announced the signing of a “Memorandum of Understanding” on Thursday, December 5, 2002 that established the responsibilities and understandings between the two organizations with respect to American Growers Insurance Company.

The NDI placed American growers under supervision, following the failure by the RMA to approve a sale of its operations by its parent Acceptance insurance to Rain & Hail LLC. At the time Wagner stated that his main goal was to assure that policyholders would receive payments for their claims. The arrangement with the RMA would seem to ensure this.

“RMA has been very helpful to us as we work to ensure that all policyholders receive timely and seamless service on their policies,” Wagner stated. “The agreement we signed establishes the framework to ensure that company personnel, loss adjusters and agents continue serving insured policyholders.” He indicated that “key employees at American Growers need to be retained to finish servicing of the 2002 book of business.”

From the agents’ viewpoint the agreement is welcome news, as it assures that “expenses related to loss adjustment, billing and agent commissions associated with policies reinsured by the Federal Crop Insurance Corporation (FCIC) will be paid to ensure the timely payment of crop insurance claims, adequate levels of service going forward, and the timely collection and transmission of premiums.”

The NDI’s announcement added that “maintaining a viable agent network is essential to making sure that policyholders are quickly transferred to other crop insurance companies and that no one is left behind.”

“We have the resources to protect policyholders, preserve the integrity of the federal crop insurance system, and do it in a cost-effective manner,” Davidson noted. “The agreement allows us to work cooperatively to achieve our mutual goals, consistent with our legal authorities.”

The news of the agreement was welcomed by The Independent Insurance Agents & Brokers of America (IIABA), which has been acting on behalf of the agents affected by the problems at American Growers. “We are pleased that our agents’ concerns and the needs of their clients have been properly addressed,” stated IIABA Executive Committee member Bob Fulwider. “We applaud RMA and the Nebraska DOI for working together to guarantee that the financial problems of these companies do not prevent crop insurance agents from receiving full, timely payment of their commissions for work already performed on behalf of their farm clients.”

“This agreement is great news for agents and producers. I tip my hat to Administrator Davidson and Commissioner Wagner for achieving the best result in an unfortunate and sensitive situation,” stated IIABA Senior Washington Representative Rob Houton. “We also are grateful to Sens. Harkin and Grassley for working with these officials to ensure an amenable and sufficient transition. This was an issue of extreme importance to independent agents associated with American Growers’ transactions.”

The NDI bulletin informed producers with questions or problems that they should contact their agent or American Growers at 1-800-999-7475. “If problems persist, producers can contact RMA at 1-800-205-9953,” it added.