Controlled Business Compliance Certification To cover the 2012 reinsurance year, beginning July 1, 2011 and ended June 30, 2012.
On May 22, 2008, the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) became law. Section 12005, "Controlled Business Insurance," of the 2008 Farm Bill amends the Federal Crop Insurance Act by adding a new section 508(a)(10), which states:
PROHIBITION - No individual (including a subagent) may receive directly, or indirectly through an entity, any compensation (including any commission, profit sharing, bonus, or any other direct or indirect benefit) for the sale or service of a policy or plan or plan of insurance offered under this title if ?
the individual has a substantial beneficial interest, or a member of the individual's immediate family has a substantial beneficial interest, in the policy or plan of insurance; and
the total compensation to be paid to the individual with respect to the sale or service of the policies or plans of insurance that meet the condition described in clause (i) exceeds 30 percent or the percentage specified in State law, whichever is less, of the total of all compensation received directly or indirectly by the individual for the sale or service of all policies and plans of insurance offered under this title for the reinsurance year.
REPORTING.- Not later than 90 days after the annual settlement date of the reinsurance year, any individual that received directly or indirectly any compensation for the service or sale of any policy or plan of insurance offered under this title in the prior reinsurance year shall certify to applicable approved insurance providers that the compensation that the individual received was in compliance with this paragraph.
SANCTIONS.- The procedural requirements and sanctions prescribed in section 515(h) shall apply to the prosecution of a violation of this paragraph.
IN GENERAL.- Sanctions for violations under this paragraph shall only apply to the individuals or entities directly responsible for the certification required under subparagraph (C) or the failure to comply with the requirements of this paragraph.
PROHIBITION.- No sanctions shall apply with respect to the policy or plans of insurance upon which compensation is received, including the reinsurance for those policies or plans.
*DEFINITION OF IMMEDIATE FAMILY - In this paragraph, the term 'immediate family' means an individual's father, mother, stepfather, stepmother, brother, sister, stepbrother, stepsister, son, daughter, stepson, stepdaughter, grandparent, grandson, granddaughter, father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, the spouse of the foregoing, and the individual's spouse.
Please Note: All MPCI writing agents are required to complete and submit the Controlled Business Compliance Certification form.
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