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Commerce and federal agency focus on illegal crop insurance rebating schemes

March 07, 2008

Commerce and federal agency focus on illegal crop insurance rebating schemes

For Immediate Release: March 7, 2008

Minnesota Department of Commerce and Federal Risk Management Agency Focus On Illegal Crop Insurance Rebating Schemes

(St. Paul, MN --) The Minnesota Department of Commerce joined 26 other states and the Risk Management Agency of the US Department of Agriculture in an effort to discover and stop the illegal and growing practice of crop insurance rebating. The state agencies have agreed to coordinate with each other and the RMA on rebating investigations and share information regarding rebate schemes in their states.

The Department of Commerce and the RMA recently sent a mailing to Minnesota crop insurance providers informing them of this new partnership and reminding them that the practice of crop insurance rebating is illegal.

Examples of rebating schemes include items of value being tied to crop insurance purchases, the creation of special investment entities and soliciting farmers as licensed sub-agents so they can share the commission on their own crop insurance policies.

"As these rebating schemes get more complicated and prevalent in Minnesota, it is a good time to get the word out to everyone that this practice violates state and federal laws," said Glenn Wilson, Commissioner of the Minnesota Department of Commerce. "In order to keep a level playing field in this market, everyone needs to follow the rules."

Specifically, the Department of Commerce has agreed to:

  • Notify RMA and other states when a federal crop insurance rebating complaint or allegation is received;

  • Provide RMA and other states background information on relevant past rebating investigations;

  • Coordinate with RMA and other states on all new rebating investigations, as appropriate;

  • Share with RMA and other states any specialized rebating analyses (such as information gathered from data mining);

  • Share state and federal legal expertise to review and analyze complex rebating schemes as well as other crop insurance issues;

  • Inform RMA and other states of any assessment of penalties or sanctions taken by a state involving a rebate violation, and

  • Take appropriate actions when violations of the respective laws are identified.

The goal of this cooperation is to enable the states and RMA to be better equipped to handle traditional illegal rebating schemes in order to maintain professional conduct and ethics in this insurance marketplace.