He said, after a Senate Agriculture Committee hearing, that RMA has sent the National Crop Insurance Services (NCIS), the trade association for the crop insurers in Overland Park, Kans., a revised final contract of the standard reinsurance agreement with a July 12 deadline for the company to sign.

Mr. Murphy told reporters he had made concessions to the companies on the structure of the agreement, and that he expects them accept it.

But he said there were no changes in the
proposal to cut $6 billion in the program and impose restrictions on commissions paid to agents.

At the hearing, Tom Vilsack, Secretary of the Department of Agriculture, said that he believes the new agreement is fair and that the new commission structure will give agents "a fair return for their work."

A spokesman for NCIS said last night that the group was holding a meeting of directors and that it would not be in a position to comment until this afternoon.

However, Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, blasted the agreement in the strongest terms. He said "the destructive effects that the SRA agreement will have on rural America should not be underestimated."

He called the cuts, which limit agents' commissions to a maximum of 15 percent, "misguided and potentially dangerous to the farm safety net."

He said that the IIABA has "repeatedly" communicated to the Obama administration "the harmful impact that the commission cap would have on small businesses and are astounded that in this final document they have chosen to side with insurance companies over small business."

An IIABA official explained that Mr. Symington was saying that by imposing a maximum on the commissions crop insurance companies can pay agents the USDA was ultimately protecting the companies' bottom line and hurting small business.

The companies, for their part, acknowledge that the new contract "singles out agents." But, they note that the new cuts are in addition to the 12 percent cut imposed on the program through the 2008 farm bill that is just going to effect now.

In comments last week to reporters, NCIS president Bob Parkerson warned that at least two of the 16 insurers in the program have said that they may be unable to live with the cuts.

According to Mr. Parkerson, agent commissions were cut more substantially in the Corn Belt areas, specifically the Midwest, than in other areas. "They said they are rebalancing the program by making it less profitable in [the] Corn Belt, and more profitable in other areas," he said.

Specifically, Mr. Parkerson said that 18 to 20 percent of premiums are the average commission for agents, but some agents' commissions go as high as the low 20 percent range.

This will drop to 14 to 15 percent nationally, he said, observing, "This is a very sharp drop as a percentage of premium and imposes by a soft and a hard cap, both designed to impose a true ceiling on commissions within a state."