Financial Assistance/Subsidy Arrangement Notice of Acceptance

Federal Emergency Management Agency
Federal Insurance Administration

FINANCIAL ASSISTANCE/SUBSIDY
ARRANGEMENT
(APPENDIX A – PART 62)

Purpose
To assist the company in underwriting flood insurance
using the Standard Flood Insurance Policy.
Accounting Data
Pursuant to Section 1310 of the Act, a Letter of Credit shall be issued
for payment as provided for herein from the
National Flood Insurance Fund.
Effective Date
October 1, 2009
Issued By
Federal Emergency Management Agency
Federal Insurance Administration
500 C Street, S.W. • Washington, D.C. 20472

Financial Assistance/Subsidy Arrangement Notice of Acceptance
OMB Control Number
1660-0086
Expiration Date
8/31/2010

Paperwork Burden Disclosure
Public reporting burden for this collection activity is estimated to average .5
hours per response. The burden estimate includes the time for reviewing
instructions, searching existing data sources, gathering and maintaining the
data needed, and completing and submitting the collection activity. You are
not required to respond to this collection of information unless it displays a
valid OMB control number. Send comments regarding the accuracy of the
burden estimate and any suggestions for reducing the burden to: Information
Collections Management, Department of Homeland Security, Federal
Emergency Management Agency, 500 C Street, SW, Washington, DC 20472,
Paperwork Reduction Project (1660-0086) NOTE: Do not send your
completed form to this address.

Federal Emergency Management Agency
Federal Insurance Administration
Appendix A to Part 62

Financial Assistance/Subsidy Arrangement
Article I—Findings, Purpose, and
Authority
Whereas, the Congress in its “Finding
and Declaration of Purpose” in the National
Flood Insurance Act of 1968, as amended,
(“the Act” or “Act”) recognized the benefit
of having the National Flood Insurance
Program (the “Program” or “NFIP”)
“carried out to the maximum extent
practicable by the private insurance
industry”; and
Whereas, the Federal Insurance
Administration (FIA) within the Mitigation
Division recognizes this Arrangement as
coming under the provisions of Section 1345
of the Act (42 U.S.C. 4081); and
Whereas, the goal of the FIA is to
develop a program with the insurance
industry where, over time, some risk-bearing
role for the industry will evolve as intended
by the Congress (Section 1304 of the Act
[42 U.S.C. 4011]); and
Whereas, the insurer (hereinafter the
“Company”) under this Arrangement shall
charge rates established by the FIA; and
Whereas, FIA has promulgated
regulations and guidance implementing the
Act and the Write-Your-Own Program
whereby participating private insurance
companies act in a fiduciary capacity
utilizing Federal funds to sell and administer
the Standard Flood Insurance Policies, and
has extensively regulated the participating
companies’ activities when selling or
administering the Standard Flood Insurance
Policies; and
Whereas, any litigation resulting from,
related to, or arising from the Company’s

compliance with the written standards,
procedures, and guidance issued by FEMA
or FIA arises under the Act, regulations, or
FIA guidance, and legal issues thereunder
raise a federal question; and
Whereas, through this Arrangement, the
Federal Treasury will back all flood policy
claim payments by the Company; and
Whereas, this Arrangement has been
developed to enable any interested qualified
insurer to write flood insurance under its
own name; and
Whereas, one of the primary objectives
of the Program is to provide coverage to the
maximum number of structures at risk and
because the insurance industry has
marketing access through its existing
facilities not directly available to the FIA, it
has been concluded that coverage will be
extended to those who would not otherwise
be insured under the Program; and
Whereas, flood insurance policies issued
subject to this Arrangement shall be only
that insurance written by the Company in its
own name under prescribed policy
conditions and pursuant to this Arrangement
and the Act; and
Whereas, over time, the Program is
designed to increase industry participation,
and, accordingly, reduce or eliminate
Government as the principal vehicle for
delivering flood insurance to the public; and
Whereas, the sole parties under this
Arrangement are the WYO Companies and
the Federal Government.
Now, therefore, the parties hereto
mutually undertake the following:

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Article II—Undertakings of the Company
A. Eligibility Requirements for
Participation in the NFIP:
1. Policy Administration. All fund
receipt, recording, control, timely
deposit requirements, and
disbursement in connection with all
Policy Administration and any other
related activities or correspondences,
must meet all requirements of the
Financial Control Plan. The
Company shall be responsible for:
a. Compliance with the Community
Eligibility/Rating Criteria
b. Making Policyholder Eligibility
Determinations
c. Policy Issuances
d. Policy Endorsements
e. Policy Cancellations
f. Policy Correspondence
g. Payment of Agents’
Commissions
2. Claims Processing. All claims
processing must be processed in
accordance with the processing of all
the companies’ insurance policies
and with the Financial Control Plan.
Companies will also be required to
comply with FIA Policy Issuances
and other guidance authorized by
FIA or the Federal Emergency
Management Agency (“FEMA”).
3. Reports
a. Monthly Financial Reporting and
Statistical Transaction reporting
requirements. All monthly

financial reporting and statistical
transaction reporting shall be in
accordance with the requirements
of the NFIP Transaction Record
Reporting and Processing Plan
for the Company Program and
the Financial Control Plan for
business written under the WYO
(Write Your Own) Program, 44
C.F.R. Part 62, App. (B). These
data shall be validated/edited/
audited in detail and shall be
compared and balanced against
Company reports.
b. Monthly financial reporting
procedure shall be in accordance
with the WYO Accounting
Procedures.
B. Time Standards. Time will be measured
from the date of receipt through the date
mailed out. All dates referenced are
working days, not calendar days. In
addition to the standards set forth below,
all functions performed by the company
shall be in accordance with the highest
reasonably attainable quality standards
generally utilized in the insurance and
data processing field. Continual failure
to meet these requirements may result in
limitations on the company’s authority
to write new business or the removal of
the Company from the program.
Applicable time standards are:
1. Application Processing—15 days
(note: if the policy cannot be mailed
due to insufficient or erroneous
information or insufficient funds, a
request for correction or added
moneys shall be mailed within 10
days);
2. Renewal Processing—7 days

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facilitate the adjustment of its wind
loss by the adjuster engaged to adjust
the flood loss of the Company.

3. Endorsement Processing—15 days
4. Cancellation Processing—15 days

D. Policy Issuance.

5. Claims Draft Processing—7 days
from completion of file examination

1. The flood insurance subject to this
Arrangement shall be only that
insurance written by the Company in
its own name pursuant to the Act.

6. Claims Adjustment—45 days
average from the receipt of Notice of
Loss (or equivalent) through
completion of examination.

2. The Company shall issue policies
under the regulations prescribed by
the Administrator in accordance with
the Act.

C. Single Adjuster Program. To ensure the
maximum responsiveness to the NFIP
policyholders following a catastrophic
event, e.g., a hurricane, involving
insured wind and flood damage to
policyholders, the Company shall agree
to the adjustment of the combined flood
and wind losses utilizing one adjuster
under an NFIP-approved Single Adjuster
Program using procedures issued by the
Administrator. The Single Adjuster
procedure shall be followed in the
following cases:

3. All such policies of insurance shall
conform to the regulations prescribed
by the Administrator pursuant to the
Act, and be issued on a form
approved by the Administrator.
4. All policies shall be issued in
consideration of such premiums and
upon such terms and conditions and
in such States or areas or
subdivisions thereof as may be
designated by the Administrator and
only where the Company is licensed
by State law to engage in the
property insurance business.

1. Where the flood and wind coverage
is provided by the Company;
2. Where the flood coverage is
provided by the Company and the
wind coverage is provided by a
participating State Property
Insurance Plan, Windpool
Association, Beach Plan, Joint
Underwriting Association, FAIR
Plan, or similar property insurance
mechanism; and

5. The Administrator may require the
Company to discontinue issuing
policies subject to this Arrangement
immediately in the event
Congressional authorization or
appropriation for the National Flood
Insurance Program is withdrawn.

3. Where the flood coverage is
provided by the Company and the
wind coverage is provided by
another property insurer and the
State Insurance Regulator has
determined that such property insurer
shall, in the interest of consumers,

E. The Company shall separate Federal
flood insurance funds from all other
Company accounts, at a bank or banks of
its choosing for the collection, retention
and disbursement of Federal funds
relating to its obligation under this
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any other expense of whatever nature
incurred by the Company in the
performance of its obligations under this
Arrangement but excluding other taxes
or fees, such as surcharges on flood
insurance premium and guaranty fund
assessments.

Arrangement, less the Company’s
expenses as set forth in Article III, and
the operation of the Letter of Credit
established pursuant to Article IV. All
funds not required to meet current
expenditures shall be remitted to the
United States Treasury, in accordance
with the provisions of the WYO
Accounting Procedures Manual.

B. The Company may withhold, as
operating and administrative expenses,
other than agents’ or brokers’
commissions, an amount from the
Company’s written premium on the
policies covered by this Arrangement in
reimbursement of all of the Company’s
marketing, operating and administrative
expenses, except for allocated and
unallocated loss adjustment expenses
described in C. of this article. This
amount will equal the sum of the
average industry expenses ratios for
“Other Acq.”, “Gen. Exp.” and “Taxes”
calculated by aggregating premiums and
expense amounts for each of five
property coverages using direct premium
and expense information to derive
weighted average expense ratios. For
this purpose, we (the Federal Insurance
Administration) will use data for the
property/casualty industry published, as
of March 15 of the prior Arrangement
year, in Part III of the Insurance Expense
Exhibit in A.M. Best Company’s
Aggregates and Averages for the
following five property coverages: Fire,
Allied Lines, Farmowners Multiple
Peril, Homeowners Multiple Peril, and
Commercial Multiple Peril (non-liability
portion). In addition, this amount will be
increased by one (1) percentage point to
reimburse expenses beyond regular
property/casualty expenses.

F. The Company shall investigate, adjust,
settle and defend all claims or losses
arising from policies issued under this
Arrangement. Payment of flood
insurance claims by the Company shall
be binding upon the FIA.
G. Compliance with Agency Standards and
Guidelines.
1. The Company shall comply with
written standards, procedures, and
guidance issued by FEMA or FIA
relating to the NFIP and applicable
to the Company.
2. The Company shall market flood
insurance policies in a manner
consistent with marketing guidelines
established by FIA.
3. The Company shall notify its agents
of the requirement to comply with
State regulations regarding flood
insurance agent education, notify
agents of flood insurance training
opportunities, and assist FEMA in
periodic assessment of agent training
needs.
Article III—Loss Costs, Expenses,
Expense Reimbursement, and Premium
Refunds
A. The Company shall be liable for
operating, administrative and production
expenses, including any State premium
taxes, dividends, agents’ commissions or

The Company may retain 15 percent
(15%) of the Company’s written
premium on the policies covered by this
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pursuant to a “Fee Schedule”
coordinated with the Company and
provided by the Administrator.

Arrangement as the commission
allowance to meet the commissions or
salaries of insurance agents, brokers, or
other entities producing qualified flood
insurance applications and other related
expenses.

3. Special allocated loss expenses shall
be reimbursed to the Company in
accordance with guidelines issued by
the Administrator.

The amount of expense allowance
retained by the Company may increase a
maximum of two (2) percentage points
depending on the extent to which the
company meets the marketing goals for
the Arrangement year contained in
marketing guidelines established
pursuant to Article II.G. We will pay the
Company the amount of any increase
after the end of the Arrangement year.

D. Loss Payments.
1. Loss payments under policies of
flood insurance shall be made by the
Company from Federal funds
retained in the bank account(s)
established under Article II, Section
E and, if such funds are depleted,
from Federal funds derived by
drawing against the Letter of Credit
established pursuant to Article IV.

The Company, with the consent of the
Administrator as to terms and costs, may
use the services of a national rating
organization, licensed under state law, to
help us undertake and carry out such
studies and investigations on a
community or individual risk basis, and
to determine equitable and accurate
estimates of flood insurance risk
premium rates as authorized under the
National Flood Insurance Act of 1968,
as amended. We will reimburse the
Company for the charges or fees for
such services under the provisions of the
WYO Accounting Procedures Manual.

2. Loss payments include payments as
a result of litigation that arises under
the scope of this Arrangement, and
the Authorities set forth herein. All
such loss payments and related
expenses must meet the
documentation requirements of the
Financial Control Plan and of this
Arrangement, and the Company
must comply with the litigation
documentation and notification
requirements established by FEMA.
Failure to meet these requirements
may result in the Administrator’s
decision not to provide
reimbursement.

C. Loss Adjustment Expenses shall be
reimbursed as follows:
1. Unallocated loss adjustment expense
shall be reimbursed to the Company
pursuant to a “ULAE Schedule”
coordinated with the Company and
provided by the Federal Insurance
Administrator.

3. Limitation on Litigation Costs.
a. Following receipt of notice of
such litigation, the FEMA Office
of the General Counsel (“OGC”)
shall review the information
submitted. If the FEMA OGC
finds that the litigation is

2. Allocated loss adjustment expense
shall be reimbursed to the Company
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grounded in actions by the
Company that are significantly
outside the scope of this
Arrangement, and/or involves
issues of agent negligence, then
the FEMA OGC shall make a
recommendation to the
Administrator regarding whether
all or part of the litigation is
significantly outside the scope of
the Arrangement.

request advice on other than legal
matters of the WYO Standards
Committee established under the
WYO Financial Control Plan. The
WYO Standards Committee will
consider the request at its next
regularly scheduled meeting or at a
special meeting called for that
purpose by the Chairman and issue
a written recommendation to the
Administrator. The Administrator’s
final determination will be made in
writing within a reasonable time to
the Company.

b. In the event the Administrator
agrees with the determination of
the FEMA OGC under Article
III, Section D.3.a then the
Company will be notified in
writing within thirty (30) days of
the Administrator’s decision that
any award or judgment for
damages and any costs to defend
such litigation will not be
recognized under Article III as a
reimbursable loss cost, expense
or expense reimbursement.

E. Premium refunds to applicants and
policyholders required pursuant to rules
contained in the National Flood
Insurance Program (NFIP) “Flood
Insurance Manual” shall be made by the
Company from Federal flood insurance
funds referred to in Article II, Section E,
and, if such funds are depleted, from
funds derived by drawing against the
Letter of Credit established pursuant to
Article IV. As fiscal agent, the Company
shall not refund any premium to
applicants or policyholders in any
manner other than as specified in the
NFIP’s “Flood Insurance Manual” since
flood insurance premiums are funds of
the Federal Government.

c. In the event a question arises
whether only part of a litigation
is reimbursable, the FEMA OGC
shall make a recommendation to
the Administrator about the
appropriate division of
responsibility, if possible.

Article IV—Undertakings of the
Government

d. In the event that the Company
wishes to petition for
reconsideration of the
determination that it will not be
reimbursed for any part of the
award or judgment or any part of
the costs expended to defend such
litigation made under Article III,
Section D.3.a-c, it may do so by
mailing, within thirty (30) days of
the notice that reimbursement will
not be made, a written petition to
the Administrator, who may

A. Letter(s) of Credit shall be established
by the Federal Emergency Management
Agency (FEMA) against which the
Company may withdraw funds daily, if
needed, pursuant to prescribed
procedures implemented by FEMA. The
amounts of the authorizations will be
increased as necessary to meet the
obligations of the Company under
Article III, Sections C, D, and E.
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Request for funds shall be made only
when net premium income has been
depleted. The timing and amount of cash
advances shall be as close as is
administratively feasible to the actual
disbursements by the recipient
organization for allowable Letter of
Credit expenses. Request for payment on
Letters of Credit shall not ordinarily be
drawn more frequently than daily nor in
amounts less than $5,000, and in no case
more than $5,000,000 unless so stated on
the Letter of Credit. This Letter of Credit
may be drawn by the Company for any
of the following reasons:

Article V—Commencement and
Termination

1. Payment of claim as described in
Article III, Section D;

B. Each year, the FIA shall publish in the
Federal Register and make available to
the Company the terms for subscription
or re-subscription to this Financial
Assistance/Subsidy Arrangement. The
Company shall notify the FIA of its
intent to re-subscribe or not re-subscribe
within thirty days of publication.

A. The initial period of this Arrangement is
from October 1, 2009, through
September 30, 2010. Thereafter the
Arrangement will be effective on an
annual basis for the period October 1
through September 30. The FIA shall
provide financial assistance only for
policy applications and endorsements
accepted by the Company during this
period pursuant to the Program’s
effective date, underwriting and
eligibility rules.

2. Refunds to applicants and
policyholders for insurance premium
overpayment, or if the application for
insurance is rejected or when
cancellation or endorsement of a
policy results in a premium refund as
described in Article III, Section E;
and

C. In order to assure uninterrupted service
to policyholders, the Company shall
promptly notify the FIA in the event the
Company elects not to participate in the
Program during the Arrangement year. If
so notified, or if the FIA chooses not to
renew the Company’s participation, the
FIA, at its option, may require the
continued performance of all or selected
elements of this Arrangement for the
period required for orderly transfer or
cessation of business and settlement of
accounts, not to exceed 18 months, and
may either require Article V.C.1 or
allow Article V.C.2:

3. Allocated and unallocated Loss
Adjustment Expenses as described in
Article III, Section C.
B. The FIA shall provide technical
assistance to the Company as follows:
1. The FIA’s policy and history
concerning underwriting and claims
handling.
2. A mechanism to assist in
clarification of coverage and claims
questions.

1. The delivery to the FIA of:
a. A plan for the orderly transfer to
the FIA of any continuing
responsibilities in administering

3. Other assistance as needed.

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written notice to the Company by
certified mail stating one of the
following reasons for such cancellation:
(i) Fraud or misrepresentation by the
Company subsequent to the inception of
the Arrangement; or (ii) Nonpayment to
the FIA of any amount due the FIA; or
(iii) Material failure to comply with the
requirements of this Arrangement or
with the written standards, procedures,
or guidance issued by FEMA or FIA
relating to the NFIP and applicable to
the Company. Under these specific
conditions, the FIA may require the
transfer of administrative responsibilities
and the transfer of data and records as
provided in Article V, Section C.1.a
through d. If transfer is required, the
unearned expenses retained by the
Company shall be remitted to the FIA. In
such event, the Government will assume
all obligations and liabilities owed to
policyholders under such policies,
arising before and after the date of
transfer. As an alternative to transfer of
the policies to the Government, the FIA
will consider a proposal, if it is made by
the Company, for the assumption of
responsibilities by another WYO
Company as provided in Article V,
Section C.2.

the policies issued by the
Company under the Program
including provisions for
coordination assistance; and
b. All data received, produced, and
maintained through the life of the
Company’s participation in the
Program, including certain data,
as determined by FIA, in a
standard format and medium; and
c. All claims and policy files,
including those pertaining to
receipts and disbursements that
have occurred during the life of
each policy. In the event of a
transfer of the services provided,
the Company shall provide the
FIA with a report showing, on a
policy basis, any amounts due
from or payable to insureds,
agents, brokers, and others as of
the transition date; and
d. All funds in its possession with
respect to any policies transferred
to FIA for administration and the
unearned expenses retained by
the Company.
2. Submission of plans for the renewal
of the business by another WYO
Company or Companies or the
submission of detailed plans for
another WYO Company to assume
responsibility for the Company’s
NFIP policies. Such plans shall
assure uninterrupted service to
policyholders and shall be
accompanied by a formal request for
FIA approval of such transfers.

E. In the event that the Company is unable
or otherwise fails to carry out its
obligations under this Arrangement by
reason of any order or directive duly
issued by the Department of Insurance of
any jurisdiction to which the Company is
subject, the Company agrees to transfer,
and the Government will accept, any and
all WYO policies issued by the
Company and in force as of the date of
such inability or failure to perform. In
such event the Government will assume
all obligations and liabilities within the
scope of the Arrangement owed to

D. Financial assistance under this
Arrangement may be canceled by the
FIA in its entirety upon thirty (30) days
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Authority of the Company’s domiciliary
State.

policyholders arising before and after the
date of transfer, and the Company will
immediately transfer to the Government
all needed records and data and all funds
in its possession with respect to all such
policies transferred and the unearned
expenses retained by the Company. As
an alternative to transfer of the policies
to the Government, the FIA will
consider a proposal, if it is made by the
Company, for the assumption of
responsibilities by another WYO
Company as provided by Article V,
Section C.2.

Article VII—Cash Management and
Accounting
A. FEMA shall make available to the
Company during the entire term of this
Arrangement and any continuation
period required by FIA pursuant to
Article V, Section C., the Letter of
Credit provided for in Article IV drawn
on a repository bank within the Federal
Reserve System upon which the
Company may draw for reimbursement
of its expenses as set forth in Article IV
that exceed net written premiums
collected by the Company from the
effective date of this Arrangement or
continuation period to the date of the
draw. In the event that adequate Letter
of Credit funding is not available to meet
current Company obligations for flood
policy claim payments issued, FIA shall
direct the Company to immediately
suspend the issuance of loss payments
until such time as adequate funds are
available. The Companies are not
required to pay claims from their own
funds in the event of such suspension.

F. In the event the Act is amended, or
repealed, or expires, or if the FIA is
otherwise without authority to continue
the Program, financial assistance under
this Arrangement may be canceled for
any new or renewal business, but the
Arrangement shall continue for policies
in force that shall be allowed to run their
term under the Arrangement.
Article VI—Information and Annual
Statements
The Company shall furnish to FEMA such
summaries and analysis of information
including claim file information, and
property address, location, and/or site
information in its records as may be
necessary to carry out the purposes of the
National Flood Insurance Act of 1968, as
amended, in such form as the FIA, in
cooperation with the Company, shall
prescribe. The Company shall be a
property/casualty insurer domiciled in a
State or territory of the United States. Upon
request, the Company shall file with the FIA
a true and correct copy of the Company’s
Fire and Casualty Annual Statement, and
Insurance Expense Exhibit or amendments
thereof as filed with the State Insurance

B. The Company shall remit all funds,
including interest, not required to meet
current expenditures to the United States
Treasury, in accordance with the
provisions of the WYO Accounting
Procedures Manual or procedures
approved in writing by the FIA.
C. In the event the Company elects not to
participate in the Program in this or any
subsequent fiscal year, or is otherwise
unable or not permitted to participate,
the Company and FIA shall make a
provisional settlement of all amounts
due or owing within three months of the
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The Company and the FIA shall bear in
equal shares all expenses of the arbitration.
Findings, proposed awards, and
determinations resulting from arbitration
proceedings carried out under this section,
upon objection by FIA or the Company,
shall be inadmissible as evidence in any
subsequent proceedings in any court of
competent jurisdiction.

expiration or termination of this
Arrangement. This settlement shall
include net premiums collected, funds
drawn on the Letter of Credit, and
reserves for outstanding claims. The
Company and FIA agree to make a final
settlement, subject to audit, of accounts
for all obligations arising from this
Arrangement within 18 months of its
expiration or termination, except for
contingent liabilities that shall be listed
by the Company. At the time of final
settlement, the balance, if any, due the
FIA or the Company shall be remitted by
the other immediately and the operating
year under this Arrangement shall be
closed.

This Article shall indefinitely succeed the
term of this Arrangement.
Article IX—Errors and Omissions
In the event of negligence by the Company
that has not resulted in litigation but has
resulted in a claim against the Company,
FEMA will not consider reimbursement of
the Company for costs incurred due to that
negligence unless the Company takes all
reasonable actions to rectify the negligence
and to mitigate any such costs as soon as
possible after discovery of the negligence.
Further, (i) if the claim against the Company
is grounded in actions significantly outside
the scope of this Arrangement or (ii) if there
is negligence by the agent, FEMA will not
reimburse any costs incurred due to that
negligence. The Company will be notified in
writing within thirty (30) days of a decision
not to reimburse. In the event the Company
wishes to petition for reconsideration of the
decision not to reimburse, the procedure in
Article III, Section D.3.d shall apply.

Article VIII—Arbitration
If any misunderstanding or dispute arises
between the Company and the FIA with
reference to any factual issue under any
provisions of this Arrangement or with
respect to the FIA’s nonrenewal of the
Company’s participation, other than as to
legal liability under or interpretation of the
standard flood insurance policy, such
misunderstanding or dispute may be
submitted to arbitration for a determination
that shall be binding upon approval by the
FIA. The Company and the FIA may agree
on and appoint an arbitrator who shall
investigate the subject of the
misunderstanding or dispute and make a
determination. If the Company and the FIA
cannot agree on the appointment of an
arbitrator, then two arbitrators shall be
appointed, one to be chosen by the Company
and one by the FIA.

However, in the event that the Company has
made a claim payment to an insured without
including a mortgagee (or trustee) of which
the Company had actual notice prior to
making payment, and subsequently
determines that the mortgagee (or trustee) is
also entitled to any part of said claim
payment, any additional payment shall not
be paid by the Company from any portion of
the premium and any funds derived from
any Federal Letter of Credit deposited in the

The two arbitrators so chosen, if they are
unable to reach an agreement, shall select a
third arbitrator who shall act as umpire, and
such umpire’s determination shall become
final only upon approval by the FIA.
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or transferred to a party hereunder to be used
as an offset.

bank account described in Article II, Section
E. In addition, the Company agrees to hold
the Federal Government harmless against
any claim asserted against the Federal
Government by any such mortgagee (or
trustee), as described in the preceding
sentence, by reason of any claim payment
made to any insured under the circumstances
described above.

Although a claim on the part of either party
against the other may be unliquidated or
undetermined in amount on the date of the
entry of the order, such claim will be
regarded as being in existence as of the date
of such order and any credits or claims of
the same class then in existence and held by
the other party may be offset against it.

Article X—Officials Not to Benefit
No Member or Delegate to Congress, or
Resident Commissioner, shall be admitted to
any share or part of this Arrangement, or to
any benefit that may arise therefrom; but
this provision shall not be construed to
extend to this Arrangement if made with a
corporation for its general benefit.

Article XII—Equal Opportunity
The Company shall not discriminate against
any applicant for insurance because of race,
color, religion, sex, age, handicap, marital
status, or national origin.

Article XI—Offset

Article XIII—Restriction on Other Flood
Insurance

At the settlement of accounts, the Company
and the FIA shall have, and may exercise,
the right to offset any balance or balances,
whether on account of premiums,
commissions, losses, loss adjustment
expenses, salvage, or otherwise due one
party to the other, its successors or assigns,
hereunder or under any other Arrangements
heretofore or hereafter entered into between
the Company and the FIA. This right of
offset shall not be affected or diminished
because of insolvency of the Company.

As a condition of entering into this
Arrangement, the Company agrees that in
any area in which the Administrator
authorizes the purchase of flood insurance
pursuant to the Program, all flood insurance
offered and sold by the Company to persons
eligible to buy pursuant to the Program for
coverages available under the Program shall
be written pursuant to this Arrangement.
However, this restriction applies solely to
policies providing only flood insurance. It
does not apply to policies provided by the
Company of which flood is one of the
several perils covered, or where the flood
insurance coverage amount is over and
above the limits of liability available to the
insured under the Program.

All debts or credits of the same class,
whether liquidated or unliquidated, in favor
of or against either party to this
Arrangement on the date of entry, or any
order of conservation, receivership, or
liquidation, shall be deemed to be mutual
debts and credits and shall be offset with the
balance only to be allowed or paid. No
offset shall be allowed where a conservator,
receiver, or liquidator has been appointed
and where an obligation was purchased by

Article XIV—Access to Books and
Records
The FIA and the Comptroller General of
The United States, or their duly authorized
representatives, for the purpose of
11

Financial Assistance/Subsidy Arrangement

investigation, audit, and examination shall
have access to any books, documents, papers
and records of the Company that are
pertinent to this Arrangement. The Company
shall keep records that fully disclose all
matters pertinent to this Arrangement,
including premiums and claims paid or
payable under policies issued pursuant to
this Arrangement. Records of accounts and
records relating to financial assistance shall
be retained and available for three (3) years
after final settlement of accounts, and to
financial assistance, three (3) years after
final adjustment of such claims. FIA shall
have access to policyholder and claim
records at all times for purposes of the
review, defense, examination, adjustment, or
investigation of any claim under a flood
insurance policy subject to this
Arrangement.

Article XVI—Relationship Between the
Parties (Federal Government and
Company) and the Insured
Inasmuch as the Federal Government is a
guarantor hereunder, the primary
relationship between the Company and the
Federal Government is one of a fiduciary
nature, i.e., to assure that any taxpayer funds
are accounted for and appropriately
expended. The Company is a fiscal agent of
the Federal Government, but is not a general
agent of the Federal Government. The
Company is solely responsible for its
obligations to its insured under any policy
issued pursuant hereto, such that the Federal
Government is not a proper party to any
lawsuit arising out of such policies.

Article XV—Compliance with Act and
Regulations
This Arrangement and all policies of
insurance issued pursuant thereto shall be
subject to the provisions of the National
Flood Insurance Act of 1968, as amended,
the Flood Disaster Protection Act of 1973,
as amended, the National Flood Insurance
Reform Act of 1994, and Regulations issued
pursuant thereto and all Regulations
affecting the work that are issued pursuant
thereto, during the term hereof.

12
Financial Assistance/Subsidy Arrangement

Federal Emergency Management Agency
Federal Insurance Administration
WYO Financial Assistance/Subsidy Arrangement
and Mortgage Portfolio Protection Program Agreement
Addendum 1
Notice of Acceptance
I. WYO Financial Assistance/Subsidy Arrangement Notice of Acceptance. Whereas, in 2009,
there was published a Notice of Offer by the Federal Insurance Administration (FIA) for qualified
property and casualty insurance companies to enter into a Financial Assistance/Subsidy Arrangement
(hereinafter, the/an Arrangement) for participation in the Write Your Own (WYO) Program of the
National Flood Insurance Program (NFIP); and
Whereas, the above cited Arrangement, as published in and reprinted from the United States Federal
Register, does not provide sufficient space to type in the full name of the insurance company.
Now, therefore, the parties hereby agree that this Notice of Acceptance is incorporated into and is an
integral part of the entire Arrangement and is substituted in place of the signature block contained in the
United States Federal Register under Article XVI of the Arrangement. The above cited Arrangement is
effective in the states in which the insurance company listed below is duly licensed to engage in the
business of property insurance.
II. Mortgage Portfolio Protection Program Agreement. In conjunction with acceptance of the offer
by the FIA to participate in the WYO Program under the Arrangement, the insurance company may also
elect to participate in the Mortgage Portfolio Protection Program (MPPP) of the NFIP. To participate in
the MPPP, the company must agree to adhere to all guidelines and requirements in the implementation
package published by the FIA.
III. Acceptance. By completing and submitting all required copies of this form, the insurance company
indicates its intention to participate in (check one):
WYO Program under the Arrangement
WYO Program under the Arrangement and MPPP Program
Signature by an official of the insurance company who is authorized to serve as contact person for the
WYO Program and, if appropriate, for the MPPP will indicate and provide evidence of the company’s
acceptance of these terms. Submit a separate form for each writing company.
In witness whereof, the parties hereto have accepted this agreement on this date _________________.
Group/Parent Company _______________________________________________________________
Writing Company _______________________________________ NAIC Number _______________
Signature of Authorized Official ________________________________________________________
Printed Name _______________________________________________________________________
Title ______________________________________________________________________________
U.S. Department of Homeland Security
Federal Emergency Management Agency
Acknowledged _________________________________
Federal Insurance Administrator

Federal Emergency Management Agency
Federal Insurance Administration
WYO Financial Assistance/Subsidy Arrangement
and Mortgage Portfolio Protection Program Agreement
Addendum 1
Notice of Acceptance
I. WYO Financial Assistance/Subsidy Arrangement Notice of Acceptance. Whereas, in 2009,
there was published a Notice of Offer by the Federal Insurance Administration (FIA) for qualified
property and casualty insurance companies to enter into a Financial Assistance/Subsidy Arrangement
(hereinafter, the/an Arrangement) for participation in the Write Your Own (WYO) Program of the
National Flood Insurance Program (NFIP); and
Whereas, the above cited Arrangement, as published in and reprinted from the United States Federal
Register, does not provide sufficient space to type in the full name of the insurance company.
Now, therefore, the parties hereby agree that this Notice of Acceptance is incorporated into and is an
integral part of the entire Arrangement and is substituted in place of the signature block contained in the
United States Federal Register under Article XVI of the Arrangement. The above cited Arrangement is
effective in the states in which the insurance company listed below is duly licensed to engage in the
business of property insurance.
II. Mortgage Portfolio Protection Program Agreement. In conjunction with acceptance of the offer
by the FIA to participate in the WYO Program under the Arrangement, the insurance company may also
elect to participate in the Mortgage Portfolio Protection Program (MPPP) of the NFIP. To participate in
the MPPP, the company must agree to adhere to all guidelines and requirements in the implementation
package published by the FIA.
III. Acceptance. By completing and submitting all required copies of this form, the insurance company
indicates its intention to participate in (check one):
WYO Program under the Arrangement
WYO Program under the Arrangement and MPPP Program
Signature by an official of the insurance company who is authorized to serve as contact person for the
WYO Program and, if appropriate, for the MPPP will indicate and provide evidence of the company’s
acceptance of these terms. Submit a separate form for each writing company.
In witness whereof, the parties hereto have accepted this agreement on this date _________________.
Group/Parent Company _______________________________________________________________
Writing Company _______________________________________ NAIC Number _______________
Signature of Authorized Official ________________________________________________________
Printed Name _______________________________________________________________________
Title ______________________________________________________________________________
U.S. Department of Homeland Security
Federal Emergency Management Agency
Acknowledged _________________________________
Federal Insurance Administrator

Federal Emergency Management Agency
Federal Insurance Administration
WYO Financial Assistance/Subsidy Arrangement
and Mortgage Portfolio Protection Program Agreement
Addendum 1
Notice of Acceptance
I. WYO Financial Assistance/Subsidy Arrangement Notice of Acceptance. Whereas, in 2009,
there was published a Notice of Offer by the Federal Insurance Administration (FIA) for qualified
property and casualty insurance companies to enter into a Financial Assistance/Subsidy Arrangement
(hereinafter, the/an Arrangement) for participation in the Write Your Own (WYO) Program of the
National Flood Insurance Program (NFIP); and
Whereas, the above cited Arrangement, as published in and reprinted from the United States Federal
Register, does not provide sufficient space to type in the full name of the insurance company.
Now, therefore, the parties hereby agree that this Notice of Acceptance is incorporated into and is an
integral part of the entire Arrangement and is substituted in place of the signature block contained in the
United States Federal Register under Article XVI of the Arrangement. The above cited Arrangement is
effective in the states in which the insurance company listed below is duly licensed to engage in the
business of property insurance.
II. Mortgage Portfolio Protection Program Agreement. In conjunction with acceptance of the offer
by the FIA to participate in the WYO Program under the Arrangement, the insurance company may also
elect to participate in the Mortgage Portfolio Protection Program (MPPP) of the NFIP. To participate in
the MPPP, the company must agree to adhere to all guidelines and requirements in the implementation
package published by the FIA.
III. Acceptance. By completing and submitting all required copies of this form, the insurance company
indicates its intention to participate in (check one):
WYO Program under the Arrangement
WYO Program under the Arrangement and MPPP Program
Signature by an official of the insurance company who is authorized to serve as contact person for the
WYO Program and, if appropriate, for the MPPP will indicate and provide evidence of the company’s
acceptance of these terms. Submit a separate form for each writing company.
In witness whereof, the parties hereto have accepted this agreement on this date _________________.
Group/Parent Company _______________________________________________________________
Writing Company _______________________________________ NAIC Number _______________
Signature of Authorized Official ________________________________________________________
Printed Name _______________________________________________________________________
Title ______________________________________________________________________________
U.S. Department of Homeland Security
Federal Emergency Management Agency
Acknowledged _________________________________
Federal Insurance Administrator