The Iowa crop insurance company that left hundreds of Nebraska farmers in the lurch last year after canceling their supplemental hail insurance policies has agreed to pay a $50,000 fine.
Crop Pro Insurance Service of Johnston, Iowa, signed a consent order last month with the Nebraska Department of Insurance.
In addition to the fine, the order requires the company to voluntarily surrender its insurance producer and managing general agent licenses in Nebraska after they expire on April 30 and to not reapply for a license in the state for at least five years.
According to the consent order, Crop Pro oversold a hail-only insurance product without having sufficient reinsurance agreements in place to cover the policies. When it could not secure enough reinsurance, it canceled the policies of 367 Nebraska farmers. The company also canceled a handful of policies in Colorado.
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The Crop Pro cancellations led the U.S. Department of Agriculture's Risk Management Agency in May to take the unprecedented step of allowing farmers who purchased a supplemental hail policy from Crop Pro Insurance to switch their federally subsidized multi-peril crop insurance to their previous provider.
The USDA later dropped Crop Pro from its list of approved crop insurance providers for 2019.
Crop Pro, a startup company launched in 2017, worked as a managing general agent for GuideOne Insurance, which also was an investor in the company.
GuideOne, also based in Iowa, agreed to pay a $10,000 fine as part of the consent agreement.