Crop Insurance Rebates Are Not Allowed

Incentives on crop insurance rates in any form or size are strictly not allowed. In the crop insurance business, such incentives are called "rebates" and offering rebates is illegal under the Federal Crop Insurance Act. This extends to any benefit (including money, goods or services for which payment is usually made), discount, abatement, credit or reduction of the premium named in the insurance policy and any other valuable consideration or inducement not specified in the policy. The Risk Management Agency (RMA) takes the rebating prohibition seriously and enforces it stringently.

The U.S. Department of Agriculture offers these examples of rebating violations:

EXAMPLE ONE
An agent is affiliated with another business and they provide other goods or services at a lower cost to producers that purchase their MPCI from them. The same lower cost is not provided to producers who do not purchase their MPCI from them.

Examples of these other goods and services include, but are not limited to: other insurance; loan rates; commodity bushel price; accounting, financial, grain marketing, or farm management services; land appraisal or loan origination services; seed and inputs sales; and equipment sales and maintenance.

EXAMPLE TWO
An agent also sells other insurance policies but you have to purchase their MPCI from them in order to buy the other policies.

Example: Another agent offers a crop hail policy that costs less than the coverage offered by your MPCI agent. In order to purchase the less expensive crop hail policy from the other agent you have to purchase your MPCI from them. Reference 3) "Private Product Sales" above is the RMA Managers Bulletin that addresses this prohibition.

EXAMPLE THREE
Providing gifts to a current or potential MPCI customer or their family.

Examples: trips (to anywhere); fishing, hunting, or sporting event outings; equipment or tools; vehicles; club memberships; contributions toward a customer's debt; customer appreciation dinners; basically anything exceeding a minimal value. An example of what would not be considered a gift would be promotional and marketing items or activities of minimal value that are provided to all persons in the normal course of business, including calendars, pens, and meals, are not regarded a valuable consideration or inducement to procure or retain insurance.

EXAMPLE FOUR
Purchasing items/services from a MPCI customer at a price above market value.

Examples: Paying $5000 for a car with a blue book value of $4000, or paying more than the current selling price for any goods or services.

Don't Risk a Violation

Buyers of MPCI policies should be aware of the Anti-Rebating Certification Statement included on the insurance forms. The applicant and the agent both certify that they are not receiving or providing any form of rebate.

SAMPLE STATEMENTS:

Applicant/Insured Statement

―I certify, for the crop year indicated, that I have not directly or indirectly received, accepted, or been paid, offered, promised, or given any benefit, including money, goods, or services for which payment is usually made, rebate, discount, abatement, credit, or reduction of premium, or any other valuable consideration, as an inducement to procure insurance or in exchange for purchasing this insurance policy after it has been procured. I understand that this prohibition does not include payment of administrative fees, performance based discounts, and any other payment approved by FCIC that are authorized under sections 508(a)(9)(B) and 508(d)(3) of the Federal Crop Insurance Act (Act) (7 U.S.C. §§ 1508(a)(9)(B) and 1508(d)(3)). I understand that a false certification or failure to completely and accurately report any information on this form may subject me, and any person with a substantial beneficial interest in me, to sanctions, including but not limited to, criminal and civil penalties and administrative sanctions in accordance with section 515(h) of the Act (7 U.S.C. §1515(h)) and all other applicable federal statutes.

Agent Statement

―I certify, for the crop year indicated, that I have neither offered nor promised, directly or indirectly, any benefit, including money, goods, or services for which payment is usually made, rebate, discount, credit, reduction of premium, or any other valuable consideration to this person either as an inducement to procure insurance or in exchange for obtaining insurance after it has been procured. I understand that this prohibition does not include payment of administrative fees, performance based discounts, and any other payment approved by FCIC that are authorized under sections 508(a)(9)(B) and 508(d)(3) of the Federal Crop Insurance Act (Act) (7 U.S.C. §§ 1508(a)(9)(B) and 1508(d)(3)). I understand that a false certification or failure to completely and accurately report any violation may subject me, and all agencies/companies I represent, to sanctions, including but not limited, to criminal and civil penalties and administrative sanctions in accordance with section 515(h) of the Act (7 USC §1515(h)) and all other applicable federal statutes.

 

*Source: https://www.rma.usda.gov/help/faq/rebating.html

 


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