Supporting Statement for OMB Collection 1660-0038, rev (final)

July 23, 2015

Supporting Statement for

Paperwork Reduction Act Submissions

OMB Control Number: 1660 - 0038

Title: Write Your Own (WYO) Company Participation Criteria; New Applicant

Form Number(s): None

General Instructions

A Supporting Statement, including the text of the notice to the public required by 5 CFR 1320.5(a)(i)(iv) and its actual or estimated date of publication in the Federal Register, must accompany each request for approval of a collection of information. The Supporting Statement must be prepared in the format described below, and must contain the information specified in Section A below. If an item is not applicable, provide a brief explanation. When Item 17 or the OMB Form 83-I is checked “Yes”, Section B of the Supporting Statement must be completed. OMB reserves the right to require the submission of additional information with respect to any request for approval.

Specific Instructions

A. Justification

1. Explain the circumstances that make the collection of information necessary.

Identify any legal or administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information. Provide a detailed description of the nature and source of the information to be collected.

Under the National Flood Insurance Program’s (NFIP) Write Your Own (WYO) Program, the Federal Emergency Management Agency may enter into arrangements authorized by the National Flood Insurance Act of 1968, as amended (the Act), with individual private sector insurance companies that are licensed to engage in the business of property insurance. Under these arrangements, such companies or other insurers may offer flood insurance coverage under the program to eligible applicants. The WYO Companies act in a fiduciary capacity to FEMA, utilizing Federal funds to sell and administer the Standard Flood Insurance Policies and to pay covered losses under those policies.

Any private sector property insurance company that meets the requirements of 44 CFR 62.24 and signs the Arrangement to participate in the Write Your Own (WYO) Program can be a WYO company. To ensure that a company seeking to return or participate in the WYO program meets the eligibility requirements of 44 CFR 62.23, FEMA is requiring a submission of information to determine the company’s qualifications, as set forth in 44 CFR 62.24. This will generally be a one-time submission, but there may be cases where this information is requested more than once. For example, if a WYO company ends its participation in the program and later rejoins the program, it will be asked to submit this information again.

2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection. Provide a detailed description of: how the information will be shared, if applicable, and for what programmatic purpose.

There is no collection instrument associated with this data collection. New insurance companies that wish to join the NFIP WYO Program are notified annually by Federal Register Notice, as required by the WYO Arrangement, to advise private insurance companies of the availability of that Arrangement, and to make available to the companies the terms for subscription or re-subscription to the Arrangement. The Arrangement is set forth at 44 CFR 62, Appendix A. That Notice includes information to both WYO Program participating and non-participating private insurance companies wishing to consider FEMA’s offer, including where those companies can find out the type of information companies need to apply to participate in the Arrangement and where to submit that information.

New insurance companies that seek to participate in the WYO program, as well as former WYO companies seeking to return, must meet standards for WYO Financial Control Plan (approved under OMB Control# 1660-0020). Private Insurance Companies wishing to enter or reenter the WYO program must demonstrate the ability to meet the financial requirements. The information allows FEMA to determine the applicant’s capability of meeting program goals for, among other things, the marketing and administering of National Flood Insurance Program (NFIP) flood insurance policies, and to meet the financial control and reporting requirements of the NFIP.

New and returning insurance company ability to meet these standards are confirmed by running a test through the NFIP Transaction Record Reporting and Processing Plan (TRRP) and other financial cycles to ensure financial processes and reporting run smoothly with no problems. All burden hours and costs associated with the NFIP Transaction Record Reporting and Processing Plan (TRRP) and other financial requirements of the NFIP Financial Control Plan are accounted for in data collection 1660-0020, the Write-Your-Own (WYO) Program. The one time test of the insurance company’s ability to use the TRRP System has an estimated burden time of two hours. That burden has been included in Section 12, Estimated Annualized Burden Hours and Costs, below.

Applicants must submit evidence of the following to FEMA:

• That the company is a licensed property insurance company;

• That the company has a five year history of writing property insurance;

• Any legal proceedings during the prior five years regarding company’s business practices;

• The most recent National Association of Insurance Commissioners (NAIC) annual statement;

• Documentation that the Company meets or exceeds NAIC standards for risk-based capital and surplus; and

• Documentation of the most recent state or regional audits, which should contain no material negative findings.

FEMA collects this information to determine if companies are qualified to participate in the WYO Program per the requirements of 44 CFR Part 62.24.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also describe any consideration of using information technology to reduce burden.

FEMA requires that the information be sent via the U.S. Postal Service system. The requirement to use regular mail is due to the large and varied types of documentation required of an insurance company to document their competency. It is not cost-efficient, but FEMA believes that such a measure is needed for a complete and effective transmission of the documents.

The NFIP and FEMA are committed to modernizing all forms of information collection to make the process as simple, inexpensive and efficient as possible for the public. However, for this collection (Write Your Own (WYO) company business/fiduciary data in support of the NFIP WYO program) to protect federal money and ensure competency, FEMA continues to requires that some data/information be sent via the U.S. Postal Service system. In some cases, these documents may involve printed annual stockholder statements; private corporate reports and audits; and yearly documentation from state insurance reviewers (such as their most recent National Association of Insurance Commissioners (NAIC) annual statement). Some of these must be protected for privacy and or corporate reasons, and in some instance, cannot be submitted through electronic mail due to the sheer size of the paperwork. We understand that in some instances, it is not cost-efficient, but FEMA believes that such a measure is needed for a complete and effective transmission of the documents.

The NFIP will continue to explore broader electronic submission to ensure this type of data can be submitted as simply and inexpensively as possible, while still protecting its privacy and safely.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above. 

This information is not collected in any form, and therefore is not duplicated elsewhere.

5. If the collection of information impacts small businesses or other small entities (Item 5 of OMB Form 83-I), describe any methods used to minimize.

This information collection does not have an impact on small businesses or other small entities.

6. Describe the consequence to Federal/FEMA program or policy activities if the collection of information is not conducted, or is conducted less frequently as well as any technical or legal obstacles to reducing burden.

If FEMA does not collect this information, it cannot determine if companies seeking to sell flood insurance meet the requirements for participation in the WYO.

7. Explain any special circumstances that would cause an information collection to be conducted in a manner:

1. Requiring respondents to report information to the agency more often than quarterly.

 (b) Requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it.

3. Requiring respondents to submit more than an original and two

copies of any document.

3. Requiring respondents to retain records, other than health,

medical, government contract, grant-in-aid, or tax records for more than three years.

3. In connection with a statistical survey, that is not designed to

produce valid and reliable results that can be generalized to the universe of study.

 (f) Requiring the use of a statistical data classification that has not

been reviewed and approved by OMB.

 (g) That includes a pledge of confidentiality that is not supported by authority established in statute or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or which unnecessarily impedes sharing of data with other agencies for compatible confidential use.

 (h) Requiring respondents to submit proprietary trade secret, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information’s confidentiality to the extent permitted by law.

This information collection is conducted in a manner consistent with the guidelines in 5 CFR 1320.5(d)(2).

8. Federal Register Notice: 

 a. Provide a copy and identify the date and page number of publication in the Federal Register of the agency’s notice soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency in response to these comments. Specifically address comments received on cost and hour burden.

A 60-day Federal Register Notice inviting public comments was published on February 2, 2015, 80 FR 5568. No comments were received. See attached copy of the published notice included in this package.

A 30-day Federal Register Notice inviting public comments was published on April 21, 2015, 80 FR 22216. No comments were received. See attached copy of the published notice included in this package.

 b. Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported.

The requirements for participation criteria were developed within the Federal Emergency Management Agency. Outside consultation was not necessary.

c. Describe consultations with representatives of those from whom information is to be obtained or those who must compile records. Consultation should occur at least once every three years, even if the collection of information activities is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained.

When FEMA receives information from insurance company representatives seeking entry into the WYO program, consultation may be necessary if we do not receive the requested information. For further assistance, insurance company representatives may consult with FEMA several times before submitting information for review. This is an ongoing process, it occurs when a new company applies to the WYO program.

9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees.

FEMA does not provide payments or gifts to respondents in exchange for a benefit sought.

10. Describe any assurance of confidentiality provided to respondents. Present the basis for the assurance in statute, regulation, or agency policy.

A Privacy Threshold Analysis (PTA) was completed on November 10, 2014 for this collection and forwarded to the FEMA Privacy Office for review/approval. The PTA is still currently with the FEMA Privacy Office as of May 2015. 

This collection is covered by an existing Privacy Impact Assessment (PIA), DHS/FEMA/PIA-0011- National Flood Insurance Program Information Technology System, approved by DHS on October 12, 2012. No System of Records Notice (SORN) is required for this collection.

There are no assurances of confidentiality provided to the respondents for this information collection.

11. Provide additional justification for any question of a sensitive nature (such as sexual behavior and attitudes, religious beliefs and other matters that are commonly considered private). This justification should include the reasons why the agency considers the questions necessary, the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and any steps to be taken to obtain their consent.

There are no questions of a sensitive nature.

 12. Provide estimates of the hour burden of the collection of information. The statement should:

 a. Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated for each collection instrument (separately list each instrument and describe information as requested). Unless directed to do so, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desired. If the hour burden on respondents is expected to vary widely because of differences in activity, size, or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.

FEMA estimates that 5 private insurance companies will seek to participate in the NFIP WYO program annually. FEMA also estimates that it will take approximately 9 hours to gather and submit the requested information for the application. The total annual burden is estimated to be 5 responses x 9 hours per response = 45 total annual burden hours.

 b. If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in Item 13 of OMB Form 83-I.

c. Provide an estimate of annualized cost to respondents for the hour burdens for collections of information, identifying and using appropriate wage rate categories. NOTE: The wage-rate category for each respondent must be multiplied by 1.4 and this total should be entered in the cell for “Avg. Hourly Wage Rate”. The cost to the respondents of contracting out or paying outside parties for information collection activities should not be included here. Instead this cost should be included in Item 13.

Estimated Annualized Burden Hours and Costs
Type of Respondent	Form Name / Form Number	No. of Respon-dents	No. of Respon-ses per Respon-dent	Total No. of Responses	Avg. Burden per Response (in hours)	Total Annual Burden (in hours)	Avg. Hourly Wage Rate	Total Annual Respondent Cost
Business or Other for-profit (Insurance Industry)	Application Process / No Form	5	1	5	9 hours	45	$64.28	$2,892.60
Total		5		5		45		$2,892.60

Note: The “Avg. Hourly Wage Rate” for each respondent includes a 1.4 multiplier to reflect a fully-loaded wage rate.

According to the U.S. Department of Labor, Bureau of Labor Statistics website (www.bls.gov) the wage rate category for (Management Occupations) is estimated to be ($64.28) per hour including the wage rate multiplier, therefore, the estimated burden hour cost to respondents (Marketing Manager) is estimated to be ($2,892.60) annually.

13. Provide an estimate of the total annual cost burden to respondents or recordkeepers resulting from the collection of information. The cost of purchasing or contracting out information collection services should be a part of this cost burden estimate. (Do not include the cost of any hour burden shown in Items 12 and 14.)

The cost estimates should be split into two components:

a. Operation and Maintenance and purchase of services component. These estimates should take into account cost associated with generating, maintaining, and disclosing or providing information. Include descriptions of methods used to estimate major cost factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred.

b. Capital and Start-up-Cost should include, among other items, preparations for collecting information such as purchasing computers and software, monitoring sampling, drilling and testing equipment, and record storage facilities.

The increase is due to the cost of the basic mailing box rising from $27 to $28 in the interim 3 years.

 

14. Provide estimates of annualized cost to the federal government. Also, provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing and support staff), and any other expense that would have been incurred without this collection of information. You may also aggregate cost estimates for Items 12, 13, and 14 in a single table.

Annual Cost to the Federal Government

Item	Cost ($)
Contract Costs [Describe] None	$0
Staff Salaries* 1 GS-14, step 7 employee spending approximately 3% of time annually to process the insurance company information ($128,790 x 3% = $3,863.70 x 1.4 = $5,409.18).	$5,409.18
Facilities [cost for renting, overhead, etc. for data collection activity]
Computer Hardware and Software [cost of equipment annual lifecycle]
Equipment Maintenance [cost of annual maintenance/service agreements for equipment]
Travel
Printing [number of data collection instruments annually]
Postage [annual number of data collection instruments x postage]
Other
Total	$5,409.18

* Note: The “Salary Rate” includes a 1.4 multiplier to reflect a fully-loaded wage rate.

 15. Explain the reasons for any program changes or adjustments reported in Items 13 or 14 of the OMB Form 83-I in a narrative form. Present the itemized changes in hour burden and cost burden according to program changes or adjustments in Table 5. Denote a program increase as a positive number, and a program decrease as a negative number.

A "Program increase" is an additional burden resulting from a federal government regulatory action or directive. (e.g., an increase in sample size or coverage, amount of information, reporting frequency, or expanded use of an existing form). This also includes previously in-use and unapproved information collections discovered during the ICB process, or during the fiscal year, which will be in use during the next fiscal year.

A "Program decrease", is a reduction in burden because of: (1) the discontinuation of an information collection; or (2) a change in an existing information collection by a Federal agency (e.g., the use of sampling (or smaller samples), a decrease in the amount of information requested (fewer questions), or a decrease in reporting frequency).

"Adjustment" denotes a change in burden hours due to factors over which the government has no control, such as population growth, or in factors which do not affect what information the government collects or changes in the methods used to estimate burden or correction of errors in burden estimates.

Itemized Changes in Annual Burden Hours
Data collection Activity/Instrument	Program Change (hours currently on OMB Inventory)	Program Change (New)	Difference	Adjustment (hours currently on OMB Inventory)	Adjustment (New)	Difference
Business or Other for-profit (Insurance Industry)				35	45	+10
Total(s)				35	45	+10

Annual Burden Hours Explained:

The annual burden hours has increased to account for the time respondents spend on the one time test of the insurance company’s ability to successfully use the financial reporting system.  This time was not accounted for in the 60-day Federal Register Notice.  Two hours were added to the Avg. Burden per Response which resulted in an adjusted Total Annual Burden (45 hours).

Annual Cost Burden Explained:

The cost burden increased one dollar due to changes in Post Office shipping rates, as is stated above.

16. For collections of information whose results will be published, outline plans for tabulation and publication. Address any complex analytical techniques that will be used. Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions.

FEMA does not intend to employ the use of statistics or the publication thereof for this information collection.

17. If seeking approval not to display the expiration date for OMB approval of the information collection, explain reasons that display would be inappropriate.

FEMA will display the expiration date for OMB approval of this information collection.



18. Explain each exception to the certification statement identified in Item 19 “Certification for Paperwork Reduction Act Submissions,” of OMB Form 83-I.

FEMA does not request an exception to the certification of this information collection.

B. Collections of Information Employing Statistical Methods.



There is no statistical methodology involved in this collection.

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