Crop 1, an MGA based in Des Moines, Iowa, offers Premium Discount Plan coverage for crops in 13 states and recently received approval from the Risk Management Agency, an arm of the U.S. Department of Agriculture, to market a discount plan from Occidental Fire & Casualty Company of North Carolina, based in Raleigh, N.C.

In a statement issued yesterday, the IIABA said: "Independent agents are strongly opposing" the approval of the premium discount plan. The association said the plan ?bypasses the traditional providers of crop insurance?independent agents."

The plan, which allows for the sale and service of crop policies over the Internet, "creates an uneven playing field and severely undermines the crop insurance delivery system," according to IIABA.

"A total compromise of service and expertise is not worth the price tag," said Robert A. Rusbuldt, IIABA chief executive officer, adding that the work agents do with farmers in fashioning the insurance protection can't be obtained from a computer screen. Farmers purchasing the Occidental plan give up the "valuable assistance" agents give farmers, he said.

Patrick O'Brien, IIABA Washington representative and grassroots coordinator, added that the program creates an "un-level playing field" and promotes a rebate program that is illegal.

"We do not understand why the Administration is intent on forging ahead with a new delivery system that will prove to be counterproductive to the interests of America's farmers," he said.

Mr. Rose said the association's comments were "off base."

"It is very disappointing to me that they would use these tactics when they could be embracing this and they know that this program is good for the industry and for their customers," Mr. Rose said. "What they have outlined here is a complete misrepresentation and not true."

The program, Mr. Rose said, works only through licensed independent agents and drives all the business through them. Because everything is done over the Internet, the program sees its savings in efficiency, the Crop 1 executive said.

The intent is that once an agent sets up a farmers policy and account, the day-to-day management of the policy can be done by the farmer, with the agent making regular inspections to ensure the account is being handled properly, he explained.

The savings translate into lower premium costs averaging 7-to-8 percent, said Mr. Rose. The agents handling the accounts also see lower commissions than the traditional insurers offer. Mr. Rose did not say how much less the commission schedule is, except that it varies from state to state.

In theory, the program is designed for smaller agencies without the resources to take on a number of agricultural accounts. What the agent loses in commission, he or she can make up in the aggregation of accounts?that was not possible without technology.

The controversy over PDP goes back to 2002 when the Federal Crop Insurance Corporation Board approved a plan to be underwritten by Converium Insurance North America Inc., to be sold through Crop 1.

Back then, it was a trial program in Iowa, Illinois, Indiana, North Dakota, Nebraska, Minnesota and Kansas, with the primary aim of reducing costs while still offering the same coverage as other crop insurers (see NU Online April 21, 2003 and June 20, 1993).

The plan was to be expanded, but that ended when Converium pulled out as the underwriter. Mr. Rose said the company made the move as part of a realignment of its risk appetite.

Shirley Pugh, a spokeswoman for Risk Management Agency, said that the program will be closely monitored by the department and that there will be weekly monitoring of the program.

"This has been in the application process for the last year, and we have made sure it has met all the obligations under the law," she said, adding that in the 13 states the program will be offered there is state licensing approval.

In addition to the trial program states, the PDP program is also available in Michigan, Missouri, Ohio, South Dakota, Wisconsin and Texas.