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To Rain and Hail Insurance Society Members: Thank you for your support.
URGENT! URGENT! URGENT!
TUESDAY TELEPHONE CALLS NEEDED
Monday, January 18, 2010
Dear AACI Member, a second round of congressional calls urgently needed on Tuesday, January 19!
Negotiations are continuing for a good 2011 SRA. Thank you for joining the negotiations and contributing to the process of building a good outcome by responding to the AACI “call for action” that we sent on December 14, 2009.
Your calls at that time were heard by Congress. Both the House of Representatives and the Senate are sending the administration a bipartisan letter. (To view the Senate letter, visit http://www.cropinsurers.com/CropInsuranceLetterSenate.pdf. To view the House letter, visit http://www.cropinsurers.com/CropInsuranceLetterHouse.pdf.)
The larger the number of congressional cosponsors the greater the letters’ impact on the administration. Call your senators and representative today! The purpose of the second round of calls is simple. Ask your senators to call 202-224-2035 and cosponsor the Lincoln / Chambliss SRA letter. Ask your representative to call 202-225-2801 and cosponsor the Sandlin / Conaway SRA letter.
To find contact information for your senators and representative, click on the following web address:
http://www.contactingthecongress.org/
While all representatives need to be called, the following senators have already agreed to cosponsor the Lincoln / Chambliss letter and, thus, do not need to be called: Baucus (MT), Brownback (KS), Crapo (ID), Chambliss (GA), Cochran (MS), Grassley (IA), Harkin (IA), Inhofe (OK), Isakson (GA), Johnson (SD), Leahy (VTA), Lincoln (AR), Nelson (NE), Pryor (AR), Roberts (KS), Vitter (LA), and Wicker (MS).
It is urgent that you call on Tuesday, January 19! The Senate letter will be sent on Wednesday. The House letter will be sent on Friday.
Lastly, and equally important, ask everyone you know in the industry to make these calls. We need the phones ringing all day Tuesday.
TALKING POINTS
The size of the proposed cuts is so wildly excessive that they are unhinged from reality, and they would come on top of 2008 farm bill cuts not yet digested. Congress has rejected cuts of this magnitude after over a year of careful deliberation and an attempt to wring the maximum possible savings out of the program.
1. Tell your Member of Congress exactly what impact these cuts would have on your business. If they would put you out of business, tell them how many jobs would be eliminated. If it would make it impossible to serve farmers, tell them how many farmers would be affected.
2. Administrative and Operating (A&O) payments are dramatically reduced. RMA's argument is that they want to take A&O payments back to the average of 1999-2008 because payments then were considered adequate to cover costs per policy. However, costs exceeded payments in those years, current and imminent program delivery requirements are more extensive and complex, and even RMA indicates that they do not know what it costs to delivery the program.
3. RMA is making a reckless gamble on the future of American Agriculture without knowing what the impact will be. They are going to do a study which will not be available for years. Yet they are asserting that the average of A&O payments from years ago, insufficient then, will be adequate to cover delivery costs from 2011 to whenever the SRA is next negotiated--likely many years to come. For 2009, after the farm bill cuts, A&O is expected to be 17.9% of gross premium, and with the SRA draft imposed, it would drop to 12.2% of premium as a national average.
4. RMA proposes changing reinsurance provisions to achieve a target based on the "reasonable rate" analysis by Milliman. However, the Milliman approach is totally unprecedented, flies in the face of the long-standing rate-of-return targets, and is fundamentally flawed. Regarding the fundamental flaws, the National Crop Insurance Service has issued a critique of Milliman that shows that this approach is invalid for calculating an appropriate return on equity.
5. Farmers in many states and areas would suffer disruptions in the delivery of the crop insurance program. RMA argues that its proposals are about improving incentives to serve the underserved areas rather than saving dollars. Yet, their proposals would reduce the incentive to serve underserved areas. The large cut in A&O in underserved states is a huge disincentive. In addition, the changes in the reinsurance provisions would not increase the incentive to write business in these states. Combined, the A&O cut and the changes in reinsurance provisions are a large disincentive to do business in these states compared with the current SRA.
Best regards,
Your AACI Leadership
