05 SRA Exhibit 17

Exhibit 17
Plan of Operation
Agreement Regarding Reinsurance Escrow Arrangement
The Federal Crop Insurance Corporation ("FCIC") and __________________________
("Company") hereby agree that an interest-bearing escrow account ("Escrow Account") may be
established at a bank selected by the Company ("Bank") for the purpose of facilitating the
payment of loss indemnities to insureds under a policy of insurance issued by the Company and
reinsured by FCIC under the Standard Reinsurance Agreement ("SRA").
The Bank must:
1.

enter into an Escrow Agreement with FCIC;

2.

post collateral as required by 31 C.F.R. ' 202 in the amount directed by FCIC; and

3.

be a member of the Fed Wire System.

The Company is responsible for the payment of all Bank charges and fees related to or
arising from the Escrow Account.
The Company hereby agrees that it will separately establish and maintain with the Bank
an operating account ("Loss Account") to be used exclusively for clearing the payment to
policyholders of loss indemnities subject to reinsurance under the SRA. The Company
specifically acknowledges and agrees that it is prohibited from paying any other amount from the
Loss Account. If the Company pays any amount other than as permitted hereunder from the
Loss Account, FCIC may, in its sole discretion, immediately terminate this Agreement and the
Escrow Account in addition to exercising any other remedy available at law or in equity. The
Company must otherwise maintain the Loss Account upon such terms and conditions as the
Bank and the Company may agree.
The Company will make indemnity payments as permitted hereunder from the Loss
Account in accordance with the SRA. As indemnity checks/drafts are issued to policyholders on
the Loss Account, the Company will submit to FCIC such information, documents and
certifications as FCIC may request as evidence of proper issuance. FCIC will, within three
business days of receipt of said evidence (if said evidence is in order) initiate the procedure to
cause to be deposited into the Escrow Account an amount not to exceed the net amount of the
indemnity payments reflected by the evidence submitted by the Company. Evidence submitted
by the Company will consist of at least a certified list of checks/drafts issued showing check
number, payee, amount, date, and policy number.

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Agreement Regarding Reinsurance Escrow Arrangement (Cont’d)
To the extent sufficient amounts have been deposited into the Escrow Account and are
not subsequently withheld by FCIC, upon presentation to the Bank for payment of permitted
indemnity payments, FCIC will, in accordance with the terms and conditions of the Escrow
Agreement, cause the Bank to affect a transfer of funds from the Escrow Account to the Loss
Account in an amount not to exceed the amount of such payments. The Bank will submit to the
Company, at least each month, a copy of the Escrow Account bank statement for the Company to
utilize in reconciliation of the Escrow Account. The cut off dates for the Escrow Account and
the Loss Account will be identical.
On a monthly basis, the Company agrees to furnish FCIC a certified accurate report of
reconciliation ("reconciliation") of the Loss Account and the Escrow Account. The
reconciliation must reflect an itemized listing of any outstanding payments, and a listing of any
items causing the Escrow Account to be overfunded or underfunded. Copies of the Loss
Account monthly check/draft register and other such documentation to support the reconciliation
will be maintained by the Company at all times at its financial headquarters for review and audit
by FCIC. The reconciliation must be submitted to FCIC within 20 business days of the cut off
date of the Bank Statements and is in addition to the Monthly Summary Reports required by the
SRA.
FCIC may subsequently deposit to or withhold payments from the Escrow Account in a
manner consistent with such reconciliations, but such deposits or withholdings will in no event
be construed as a waiver of any other rights or remedies that FCIC may otherwise possess.
On a monthly basis the escrow funded amount will be reconciled with the escrow loss
data accepted on the Monthly or Annual Summary Report. Any difference in the escrow funded
amount and the losses validated by FCIC will be refunded monthly by the Company to FCIC via
electronic fund transfer.
It is expressly agreed that funding of the Escrow Account by FCIC is in keeping with its
primary responsibility of payment to the insured and is not a waiver of any right of FCIC of
offset or any other method of collection or contract enforcement under the SRA.
This agreement may be terminated at any time after pending indemnity checks/drafts
(checks/drafts, which have been issued by the Company prior to the time notification of
termination has been received by the Company) clear, by either party by written notice to the
other party, but no such termination by the Company will be effective until FCIC receives
written acknowledgment of such termination together with a remittance of all principal and
accrued interest in the Escrow Account from the Bank.
Representatives of the United States General Accounting Office and United States
Department of Agriculture, including, without limitation, FCIC, Office of Inspector General, and
Office of General Counsel, may inspect, review, and make copies of any and all records
regarding the Loss Account and any and all transactions related thereto. The Bank is hereby
authorized to afford any such personnel full access to all such records in the possession of the
Bank.

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Agreement Regarding Reinsurance Escrow Arrangement (Cont’d)
The authorization of the Board of Directors of the Company for the person executing this
agreement on the part of the Company is attached hereto and made a part hereof.
Federal Crop Insurance Corporation

Company

Signature

_____________________________
Signature

Name

_____________________________
Name

Title

_____________________________
Title

Date

_____________________________
Date

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ESCROW AGREEMENT
The Federal Crop Insurance Corporation ("FCIC") and __________________________
("Bank") hereby agree that an escrow account ("Escrow Account") is established for the purpose
of financing the payment of indemnities to insureds in accordance with crop insurance policies
issued by
(the "Company") and reinsured by FCIC
under the terms of the Standard Reinsurance Agreement (SRA).
The bank agrees to post collateral as required by 31 C.F.R. ' 202 in the amount
determined by FCIC. At no time and in no event will the Escrow Account balance be allowed to
exceed the amount of collateral deposited, and/or the $100,000 insurance coverage provided
through the Federal Deposit Insurance Corporation.
The Escrow Account will earn interest at a rate to be agreed upon between the Bank and
FCIC but not less than the highest and best rate available to depositors of the Bank for similar
levels of deposits and frequency of transactions in business accounts, but is otherwise subject to
such terms and conditions that the Bank may impose on such accounts except as such terms and
conditions may be inconsistent with the terms and conditions of this agreement. All interest
earned on balances in the Escrow Account will be credited to the Escrow Account monthly. No
charges or fees arising from or related to the Escrow Account will be charged to the account or
the FCIC. The Escrow Account is not subject to lien, set off, garnishment, attachment, or any
other similar process, mesne or final, on the part of the bank or any other entity.
The Escrow Account will be owned by and established in the name of FCIC. The
Escrow Account is established solely as a means to facilitate the Company's payment of claims
through the reimbursement to the Company, by FCIC, of amounts paid for indemnities. The
Company will establish an account ("Loss Account") with the Bank to be used solely for the
purpose of paying such claims. Upon presentation to the Bank of checks or drafts drawn on the
Loss Account the Bank will transfer funds from the Escrow Account to the Loss Account, to the
extent funds are available in the Escrow Account, in amounts as determined by FCIC but in any
event, not in excess of the amount of the checks or drafts so presented.
The Bank will accept deposits from FCIC by Electronic Funds Transfer or in any other
manner at the option of FCIC and credit those funds, immediately upon receipt to the Escrow
Account. The Bank will provide a monthly statement to FCIC and to the Company for the
Escrow Account identifying all transactions in the Escrow Account during the statement period.
The cut off date for the Escrow Account statement must be the same as the cut off date for the
Loss Account statement.
The Bank represents and warrants that at the time of execution of this Agreement and at
all times during which this Agreement is in effect, the Bank is and will remain a member of the
Fed Wire System.

4

ESCROW AGREEMENT (Con't)

Representatives of the United States General Accounting Office and the United States
Department of Agriculture, including, without limitation, FCIC, Office of Inspector General, and
Office of General Counsel, may inspect, review, and make copies of any and all records of the
Bank relating to the Escrow Account without prior notice during reasonable business hours.
The authorization of the Board of Directors of the Bank for the person executing this
agreement on the part of the Bank is attached hereto and made a part hereof.

Bank:

Federal Crop Insurance Corporation

By:

By:

Name:

Name: _____________________________

Title:

Title: _____________________________

Date:

Date: _____________________________

Bank Address:

5

_____________________________