Crop insurance premium reduction plans were available with the passage of the Agricultural Risk Protection Act of 2000. This legislation allowed the Risk Management Agency of the United States Department of Agriculture to offer a Premium Reduction Plan on crop policies in 2006. However, the Premium Reduction Plan that was introduced in 2006 led to many concerns and was eliminated by the Risk Management Agency in 2007.
The Agricultural Risk Protection Act of 2000 required the Risk Management Agency to develop pilot programs to reduce the premiums that were paid for crop insurance. As a result the Risk Management Agency began to look at providing Premium Reduction Plans which led to a plan that was introduced for the 2006 crop year. However, the plan has many problems which led to the elimination of these plans in subsequent Farm Bills.
The Risk Management Agency provided a two step procedure for determining the premium reduction amount that applied to a crop insurance policy. The first step required crop insurance companies to request the opportunity to provide a Premium Reduction Plan to clients. The second step involved having the Risk Management Agency approve the Premium Reduction Plan that was submitted by a crop insurance company.
Letter from Insurance Agents
Individuals with a crop insurance policy may have received a letter from their crop insurance agents about crop premium reductions. These letters indicated that the agent currently wrote policies for a company or companies that have been approved to offer a premium reduction. Some letters that were received did not apply to the policyholder because their particular policy was not eligible to receive a premium reduction.
The Crop Premium Reduction Plan that was offered by the Risk Management Agency in 2006 had a range of issues that caused concern. One issue was that the paperwork to conform to requirements for the premium reduction were too complicated and time consuming. Another issue was that companies that offered premium reductions could see a decline in profits. This could have led to a decline in the number of companies offering the premium reduction.
Due to the many concerns that resulted from the Crop Premium Reduction Plan that was offered in 2006 the plan was eliminated by the Risk Management Agency in 2007. The elimination of the Premium Reduction Plan was a result of the Federal agricultural appropriations bill that prevented certain funding methods being used for Premium Reduction Plans. When Congress passed the Farm Bill in 2008 the availability of the Risk Management Agency to provide Premium Reduction Plans was repealed.