2018 SRA Appendix 1

2018 SRA—Appendix I

07-01-17

APPENDIX I
REGULATORY DUTIES AND RESPONSIBILITIES
The Company shall comply with the following regulatory duties and responsibilities.

SECTION I. PROCUREMENT INTEGRITY
(a)

(b)

During the term of this Agreement, the Company shall not knowingly:
(1)

Make, directly or indirectly, any offer or promise of future employment or
business opportunity to, or engage, directly or indirectly, in any discussion
of future employment or business opportunity with any FCIC official;

(2)

Offer, give, or promise to offer or give, directly or indirectly, any money,
gratuity, or other thing of value to any FCIC official; or

(3)

Solicit or obtain, directly or indirectly, from any FCIC official, prior to
FCIC's acceptance of this Agreement, any proprietary or source selection
information regarding the Agreement.

During the term of this Agreement, no FCIC official shall knowingly:
(1)

Solicit or accept, directly or indirectly, any promise of future employment
or business opportunity from, or engage, directly or indirectly, in any
discussion of future employment or business opportunity with any officer,
employee, representative, agent, consultant, or affiliate of the Company;

(2)

Ask for, demand, exact, solicit, seek, accept, receive, or agree to receive,
directly or indirectly, any gratuity, gift, favor, entertainment, loan, or
anything of monetary value from any officer, employee, representative,
agent, consultant or affiliate of the Company; or

(3)

Disclose any proprietary or source selection information regarding the
Agreement, directly or indirectly, to any person other than a person
authorized by FCIC to receive such information.

(c)

During the term of this Agreement, no person who is given authorized or
unauthorized access to proprietary information regarding the Agreement shall
knowingly disclose such information, directly or indirectly, to any person other
than a person authorized by FCIC to receive such information.

(d)

No USDA official or employee who has participated personally and substantially
in the deliberation of the Agreement with the Company shall:

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(1)

Participate in any manner, as an officer, employee, agent, representative,
or affiliate of another party to this Agreement, in any negotiations
regarding such an Agreement; or

(2)

Participate personally and substantially on behalf of another party to this
Agreement in the performance of such Agreement, during the period
ending 2 years after the last date such individual participated personally
and substantially in the conduct of activities associated with this
Agreement.

(e)

The definitions at 48 C.F.R. § 3.104-1 are incorporated in this Agreement for the
purposes of this section, unless the term is otherwise defined herein.

(f)

If the Company fails to comply with this section, FCIC may terminate this
Agreement for cause.

(g)

For the purpose of this section, the term "FCIC Official" has the same meaning as
the term "Procurement Official" in section 6 of the Office of Federal Procurement
Policy Act Amendments of 1988 (Pub. L. 100-679).

SECTION II. DRUG FREE WORKPLACE
(a)

The Company shall make a good faith effort, on a continuing basis, to maintain a
drug-free workplace and identify all known workplaces.

(b)

The Company shall, no later than 30 days after the date the Agreement goes into
effect, complete the following:
(1)

Publish a statement that:
(A)

Tells the Company’s employees that the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled
substance is prohibited in the Company’s workplace;

(B)

Specifies the actions that the Company will take against employees
for violating that prohibition; and

(C)

Lets each employee know that, as a condition of employment, he
or she:
(i)

Shall abide by the terms of the statement; and

(ii)

Shall notify the Company in writing if he or she is
convicted for a violation of a criminal drug statute
occurring in the workplace and shall do so not more than 5
calendar days after the conviction.
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(c)

(d)

07-01-17

(2)

Provide all employees with a copy of the statement required by subsection
(b)(1);

(3)

Establish an ongoing drug-free awareness program to inform employees
about:
(A)

The dangers of drug abuse in the workplace;

(B)

The Company’s policy of maintaining a drug-free workplace;

(C)

Any available drug counseling, rehabilitation, and employee
assistance programs; and

(D)

The penalties that the Company may impose upon them for drug
abuse violations occurring in the workplace.

The Company shall identify all known workplaces and failure to do so is a
violation of the drug-free workplace requirements.
(1)

The Company may provide a list of workplaces at the time of execution of
the Agreement or maintain a list in the Company offices and make such
information available for examination upon request by any USDA official
or designated representatives.

(2)

The list of workplaces must include the actual addresses of buildings (or
parts of buildings) or other sites where work under the Agreement takes
place. The addresses of all business offices for agents and loss adjusters
must be included. Address information for agents and loss adjusters
submitted in accordance with Appendix III will constitute a list of
workplaces provided to FCIC for such agents and loss adjusters.
Categorical descriptions may be used for agents, employees, or loss
adjusters who also work from other multiple locations (e.g. personal
vehicles, agent residences, and residences and farming operations of
policyholders). For example, the list of workplaces may include as a
category: “the personal vehicles of all loss adjusters.”

(3)

If the Company provides a list of workplaces to FCIC, the Company must
inform FCIC of any changes in workplaces during the reinsurance year
from those workplaces identified at the time of execution of the
Agreement.

If an employee is convicted of a drug violation in the workplace, the Company
shall:

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(1)

Notify FCIC in writing within 10 days after receiving notice from any
employee or otherwise learning of such conviction. The notice shall
include the position/title of the employee; and

(2)

Within 30 days after receiving notice from any employee or otherwise
learning of a conviction, take one of the following actions with respect to
any employee who is convicted of a drug abuse violation occurring in the
workplace:
(A)

Take appropriate personnel action against such employee, up to
and including termination; or

(B)

Require that such employee satisfactorily participate in a drug
abuse assistance or rehabilitation program approved for such
purposes by a Federal, State, or local health, law enforcement, or
other appropriate agency.

(e)

The Company shall not engage in the unlawful manufacture, distribution,
dispensing, possession, or use of a controlled substance in the performance of this
Agreement.

(f)

The Company shall certify compliance with this section in accordance with
Appendix II.

SECTION III. ANTI-LOBBYING
The Company shall comply with all provisions and requirements of 7 C.F.R. part 3018,
certify its compliance with such, and provide any required disclosure. This certification
and any disclosures are material representations of fact upon which FCIC relied when the
Company entered into the Agreement. Submission of this certification and any
disclosures are prerequisites for making or entering into this Agreement as imposed by 31
U.S.C. § 1352. Any person who fails to file or amend the disclosure form, as required by
7 C.F.R. part 3018, shall be subject to a civil penalty of not less than $10,000, and not
more than $100,000, for each such failure.

SECTION IV. LARGE CLAIMS
As a condition of reinsurance and prior to commencing any loss adjustment activity, the
Company agrees to comply with all provisions of FCIC’s Large Claims Procedures, as
applicable.

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SECTION V. COMPLIANCE WITH STATE INSURANCE LAWS
(a)

Unless preempted in accordance with the Act or section IV(o) of the Agreement,
the Company and its affiliates shall comply with applicable State law.

(b)

If a State insurance department determines that the Company or any of its
affiliates are in non-compliance with an applicable State law and FCIC
determines that the non-compliance materially affects the Company’s ability to
meet its obligations under this Agreement, such non-compliance shall be
considered a breach of this Agreement unless remedial action by the Company or
affiliate to correct the non-compliance is approved by FCIC.

(c)

Upon the request of FCIC, the Company shall submit to FCIC information or
documentation the Company is required to submit to a State insurance department
under applicable State law related to the business conducted under this
Agreement.

(d)

If a State insurance department notifies the Company or its affiliates that it is
taking, or proposes to take, an action against the Company or its affiliates or
directs the Company to take an action, the Company must immediately notify
FCIC of such action and any remedial action proposed by the Company or
directed by the State insurance department that directly or indirectly affects the
Company’s ability to perform its obligations under this Agreement.

SECTION VI. CONFLICT OF INTEREST
In this section, any reference to an agent or agents also includes a subagent or subagents.
(a)

Loss Adjustment
(1)

The Company and its affiliates shall not permit:
(A)

Its sales agents, agency employees, or sales supervisors to be
involved in loss adjustment activities in a county or adjoining
county where the sales agent, agency employee, or sales supervisor
performs sales functions (except receipt and transfer to the
Company of a notice of loss) on behalf of any AIP.

(B)

A relative of a sales agent, agency employee, or sales supervisor to
be involved in loss adjustment activities in a county or adjoining
county where the sales agent, agency employee, or sales supervisor
performs sales functions (except receipt and transfer to the
Company of a notice of loss) on behalf of the Company.

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(2)

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Prohibited loss adjustment activities for all individuals referenced in
paragraph (1)(A) and (B) include the following:
(A)

The supervision, control, or adjustment of a claim. The Company
is solely responsible for the supervision and control of the loss
adjustment process for a loss determination and all loss adjustment
oversight. The agent’s prohibition in loss adjustment activities is
not intended to preempt any duty or obligation of the agent to
provide information to the policyholder on his or her policy
options, duties, rights, and responsibilities.

(B)

Obtaining sales or production records for purposes of loss
adjustment on behalf of the policyholder (other than simply
collecting information directly from the policyholder and
providing it to the Company).
(i)

(ii)

(C)

The agent may:
(I)

Receive a notice of loss from the policyholder and
transfer it to the Company;

(II)

Provide a copy of the Company’s official file
folder, as applicable, to the loss adjuster or
reviewer;

(III)

Provide the loss adjuster or reviewer with any
information provided by the policyholder related to
the loss;

(IV)

Facilitate the loss adjuster’s gathering of
information directly from other parties; and

(V)

Assist the loss adjuster in locating the policyholder
or vice versa.

Loss adjusters and reviewers are directly responsible for the
verification and validation of the information from a third
party source of such information and nothing in the
facilitation of such interactions or information gathering
permits activities that may allow the agent to influence the
loss adjustment process or the loss adjuster’s or reviewer’s
independent determination of loss.

A loss adjustment determination or verification required to
complete a claim or the determination or verification of a cause of
loss.
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(i)

(ii)

(iii)

Other than to facilitate the loss adjuster or reviewer’s
gathering of information from the policyholder, an agent
shall not influence the policyholder or loss adjuster in:
(I)

The preparation or presentation of information
associated with a claim;

(II)

The determination or verification of facts or
information associated with a claim; or

(III)

The determination of the cause of loss or the
amount of a claim,

Prohibited agent activities include, but are not limited to:
(I)

Riding with the loss adjuster to the field;

(II)

Being present with the loss adjuster during the loss
inspection and related processes;

(III)

Accompanying the loss adjuster or reviewer in their
independent verification and validation of claim
information from third parties; or

(IV)

Allowing a loss adjuster to use the agent’s or
agency’s office, computer, or other similar
resources to prepare the claim and related
documentation.

Prohibited agent and loss adjuster contact does not include:
(I)

Social interactions;

(II)

Checking on the status of a claim or claim payment;

(III)

Facilitating follow up contact between the
policyholder and loss adjuster;

(IV)

Business contact on other insurance matters not
related to a specific open claim covered by this
Agreement; and

(V)

Interaction on a claim after the loss adjuster has
filed the appropriate claim documentation with the

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Company (the agent shall not engage the loss
adjuster directly on a claim dispute).

(D)

Verification of yields for the purpose of validating insurance
coverage or the guarantee. The agent must not be present during
any inspections performed by the Company for the purposes of
determining insurability of the crop or the amount of the crop to be
insured.

(E)

After a notice of loss is filed by the policyholder, advising or
assisting the policyholder in any manner regarding the preparation
of the claim and the determination of the indemnity, including, but
not limited to, whether the loss adjuster correctly applied FCIC
procedures regarding loss adjustment.

(F)
(3)

(i)

The agent is permitted to consult with the policyholder to
explain crop insurance terms and conditions, insurance
processes, and the implications of decisions or actions that
may be taken by the policyholder under the policy.
However, such consultation shall not include opinions,
influence, or coercion as to the facts of a claim on policies
written by the agent or the determinations of the loss
adjuster on a claim.

(ii)

If the agent suspects that a claim has been adjusted
improperly or contains factual errors, the agent may contact
the Company’s field supervisor or claims manager for
review and assistance, but shall not discuss the matter
directly with the loss adjuster.

Any other function reserved for loss adjusters in FCIC procedures.

The Company and its service providers shall not permit any individual
involved in the loss adjustment determination or verification required to
complete a claim, or the determination or verification of a cause of loss, to
adjust a loss for:
(A)

A policyholder with whom the individual referred to in paragraph
(3) above has a business, financial or legal relationship including,
but not limited to, lending money, custom farming, leasing land or
other property, selling other goods or services besides insurance, or
activities of a similar nature;

(B)

A policyholder, or an individual with a substantial beneficial
interest in the policyholder, whose eligible crop insurance contract

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was sold by a relative of the individual referred to in paragraph (3)
above; or

(C)
(4)

(b)

(c)

A relative of the individual referred to in paragraph (3) above.

If a claims supervisor adjusts a loss in any county in which loss
adjustment is subject to his or her supervision, and if the claim is one
subject to review in accordance with Appendix IV, the review shall be
performed by an individual who is not under the direct supervision of the
supervisor.

Sales, Solicitation and Brokering
(1)

The Company and its affiliates shall not permit any individual involved in
the loss adjustment determination or verification required to complete a
claim or the determination or verification of a cause of loss to be involved
with the sales, solicitation or brokering of an eligible crop insurance
contract or with any other function reserved for the agent in FCIC
procedures in a county or adjoining county where such individual
performs claims functions on behalf of any AIP.

(2)

The Company and its affiliates shall not permit a relative of any individual
involved in the loss adjustment determination or verification required to
complete a claim or the determination or verification of a cause of loss to
be involved with the sales, solicitation or brokering of an eligible crop
insurance contract or with any other function reserved for the agent in
FCIC procedures in a county or adjoining county where such individual
performs claims functions on behalf of the Company.

Underwriting
The Company and its service providers shall not permit their sales agents, the
owners or employees of their sales agencies, their sales supervisors, or any
relative of the aforementioned individuals to be involved in the acceptance and
verification of underwriting data relating to eligibility and coverage for an eligible
crop insurance contract written by such individuals. This prohibition shall not
apply to the routine transmission of information provided by applicants or
policyholders that is necessary to issue eligible crop insurance contracts or
coverage.

(d)

Supervision
An individual employed by the Company or its service provider for the general
supervision of the sales and service of eligible crop insurance contracts, as
identified by the Company in section IV(e) of Appendix II may supervise those

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activities associated with the general administration of such contracts, which may
include the management of service, underwriting, and loss adjustment.
(e)

Disclosure
(1)

(2)

In accordance with FCIC procedures, the Company must notify all of its
employees and affiliates, including, but not limited to, agents, agencies,
and loss adjusters, in writing, of the conflict of interest requirements,
including their requirement to disclose to the Company, and the
Company’s obligation to disclose to FCIC:
(i)

Any business, financial, or legal relationship that any such person
has with a policyholder;

(ii)

Whether any employee or affiliate is a relative of the policyholder;
or

(iii)

Whether any employee or affiliate has a substantial beneficial
interest in the policyholder.

In addition to any other sanctions in this Agreement, if the Company fails
to follow the provisions of this section and FCIC procedures, eligible crop
insurance contracts sold or serviced by the person who failed to disclose a
business, financial, or legal relationship with a policyholder or is a relative
of the policyholder may not, at FCIC’s discretion, be reinsured or receive
A&O subsidy, CAT LAE, or risk subsidies for the reinsurance year for
which such disclosure was not provided.
(A)

Disclosure and Notification Requirements
(i)

Applicable employees and affiliates will be required each
year to submit a signed statement that verifies awareness of
the conflict of interest rules and an agreement to abide by
them.

(ii)

Applicable employees and affiliates must annually disclose
the required information by the applicable acreage
reporting date. Such disclosure must include the name of
the policyholder or person with a substantial beneficial
interest in the policyholder, and the type of relationship.

(iii)

If the applicable employee or affiliate enters into a
business, financial, or legal relationship or becomes a
relative with the policyholder after the annual disclosure,
the applicable employee or affiliate must disclose the

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information required in paragraph (1) within 15 days of
entering the relationship.
(iv)

(f)

The Company must evaluate the business, financial or legal
relationship or the relationship with the relative to
determine whether the applicable employee or affiliate is in
violation of subsection (a), (b), or (c) or whether a conflict
of interest review is necessary to determine if such
violation has occurred. At a minimum, such reviews will
be necessary when:
(I)

The applicable employee or affiliate is in the
immediate family of the policyholder or is a person
with a substantial beneficial interest in the
policyholder; or

(II)

The business, financial or legal relationship with the
policyholder has the potential to produce an
incentive to create or inflate a loss because the
applicable employee or affiliate, or a relative of the
employee or affiliate, is entitled to a portion of the
proceeds of the crop or the crop insurance payment
or would otherwise receive a benefit from the
policyholder based on the existence of crop
insurance and their relationship.

Notification
The Company shall notify FCIC within 3 business days in writing when it
discovers that a Company employee or affiliate of the Company has violated the
requirements of this section.

SECTION VII. CONTROLLED BUSINESS
(a)

No individual (including a subagent) may receive directly, or indirectly through a
Company or its affiliates, any compensation (including, but not limited to, any
commission, profit sharing, bonus, or any other direct or indirect benefit) for the
sale and service of an eligible crop insurance contract if:
(1)

The individual has a substantial beneficial interest, or a member of the
individual’s immediate family has a substantial beneficial interest, in the
eligible crop insurance contract; and

(2)

The total compensation to be paid to the individual with respect to the sale
or service of the eligible crop insurance contract that meets the condition
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described in paragraph 1 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 reinsurance year.
(b)

Not later than 90 days after the first annual settlement for the reinsurance year,
any individual that received directly or indirectly any compensation through a
Company or its affiliates for the service or sale of any eligible crop insurance
contract in the prior reinsurance year shall certify to the applicable Company, in
format approved by FCIC, that the compensation that the individual received was
in compliance with this paragraph.

(c)

Not later than 120 days after the first annual settlement for the reinsurance year,
the Company shall provide FCIC a list of individuals who either failed to timely
provide the required certification or whose certification demonstrated noncompliance with the requirements of this paragraph. If the Company fails to
comply with this provision, FCIC may deny all or a portion of A&O subsidy or
CAT LAE.

(d)

Non-compliance
(1)

(2)

(e)

The following individuals are subject to disqualification and civil fines
under FCIC procedures implementing section 515(h) of the Act (7 U.S.C.
§ 1515(h)) and any other FCIC procedures implementing section 515(h):
(A)

Individuals who failed to timely provide the required certification;

(B)

Individuals who certified non-compliance with the requirements of
this paragraph, except where non-compliance results from
circumstances beyond the control of the individual; or

(C)

Individuals who certified compliance but who have been
determined to not be in compliance.

Reinsurance will not be denied for the eligible crop insurance contracts
associated with any violation with respect to paragraph (1).

If the amount of compensation to which the individual is entitled under its
contract with the Company or affiliate would result in the agent receiving more
than 30 percent from immediate family policies, the individual is in violation and
the violation must be disclosed. An individual cannot (1) pay back an amount
necessary to be compliant; (2) defer payments to determine whether the individual
will violate the provision; or (3) take any other action to adjust the individual’s
compensation owed under the contract with the Company or affiliate. The gravity
of the violation will be taken into consideration before imposing any sanctions.

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SECTION VIII. TRAINING REQUIREMENTS
The Company shall ensure that all of its employees, agents, agency employees, loss
adjusters, and contractors that act on behalf of the Company with respect to the selling,
servicing, and adjusting of eligible crop insurance contracts meet all the requirements
contained in the Appendices and FCIC procedures.
(a)

All applicable employees, agents, agency employees, loss adjusters, and
contractors must be trained in accordance with Appendix IV.

(b)

All employees, agents, and agency employees, who are involved in the selling and
servicing (except loss adjustment) of eligible crop insurance contracts, must be
licensed in the State in which they are doing business if required by the State; and

(c)

All loss adjusters adjusting eligible crop insurance contracts must be certified by
FCIC before they can conduct any loss adjustment. Certification of loss adjusters
may be obtained by completing the training requirements in subsection (a) and:

(d)

(1)

If any State in which the loss adjuster performs loss adjustment activities
requires the loss adjuster to take a test which is directly related to crop
insurance to obtain a license to adjust an eligible crop insurance contract,
taking and passing the State test and obtaining the license required by the
State;

(2)

If any State in which the loss adjuster performs loss adjustment activities
does not require the loss adjuster to obtain a license to adjust an eligible
crop insurance contract (including those cases where the loss adjuster is a
company employee and the State excludes company employees from
licensing requirements), taking and completing with a passing grade a
proficiency testing program developed, approved, and implemented under
FCIC procedures or, if such FCIC-approved proficiency testing program is
not available in the State, completing the training required by the
Company under Appendix IV; or

(3)

If any State in which the loss adjuster performs loss adjustment activities
requires a test which is not crop insurance-specific (as determined by FCIC)
to obtain a license to adjust an eligible crop insurance contract, taking and
completing with a passing grade a proficiency testing program developed,
approved, and implemented under FCIC procedures in lieu of obtaining a
license in such State, or, if such FCIC-approved proficiency testing program
is not available in the State, taking and passing the State test and obtaining the
license required by the State.

The Company shall not permit a loss adjuster to conduct any loss adjustment
activity for the reinsurance year until he or she has been certified. FCIC will
consider the loss adjuster to be certified after:
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(1)

The loss adjuster provides to the Company verifiable documentation
showing that he or she has completed the required training, obtained the
proper license or has taken and completed with a passing grade the
applicable test or testing program specified in subsection (c); and

(2)

The Company submits proper written or electronic verification to FCIC, as
directed by FCIC.

(e)

Loss adjusters shall be required to retake the required FCIC-approved proficiency
testing program referenced in subsections (c)(2) and (3) as required by the
Company or FCIC.

(f)

Any person who has been found in material noncompliance with any loss
adjustment policy, FCIC procedure, or training requirement approved by FCIC
shall be de-certified by FCIC. In such case, FCIC will provide written
notification to the Company, and the Company shall not permit that person to
perform loss adjustment activities until he or she has received the training
specified by FCIC, has retaken and completed with a passing grade the required
proficiency testing program, and has been certified by FCIC. A listing of persons
decertified will be available to the Company.

(g)

Allowing a loss adjuster to conduct any loss adjustment activity on a policy
before he or she is properly certified or after he or she has been de-certified shall
result in the denial of reinsurance, A&O subsidy, CAT LAE, or risk subsidy for
all policies upon which such activity occurred.

SECTION IX. OVERSIGHT AND CUT-THROUGH
(a)

Whenever FCIC determines that the Company is unable to substantially fulfill an
obligation that materially affects its performance under this Agreement with
respect to some or all of the eligible crop insurance contracts it has in its book of
business, FCIC may impose one or more of the following on the Company:
(1)

Require additional reporting to FCIC of financial or operational
information related to business conducted under the Agreement.

(2)

Allow the placement of representatives of FCIC at any location of the
Company and its service providers to monitor activities that directly or
indirectly affect the performance of the Company’s obligations under this
Agreement.

(3)

Require the Company to obtain approval from FCIC of some or all
decisions or actions (including, but not limited to, any transaction,
payment, agreement, and servicing of eligible crop insurance contracts)
taken or contemplated by the Company or its service providers that could
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directly or indirectly affect the performance of the Company’s obligations
under this Agreement.
(4)

Take all reasonable steps to preserve the assets and financial and operating
capabilities of the Company to perform its obligations under this
Agreement.

(5)

Transfer to FCIC, or its designee, without further action of the Company,
any or all eligible crop insurance contracts. With respect to any eligible
crop insurance contract transferred to FCIC:

(6)

(A)

FCIC will assume all obligations for unpaid losses whether
occurring before or after the date of transfer regarding such eligible
crop insurance contracts, and the Company must pay FCIC all
funds in possession of the Company and its affiliates with respect
to all such eligible crop insurance contracts transferred including,
but not limited to, premiums collected or any payments from
commercial reinsurers related to the book of business.

(B)

FCIC, or its designee, will have the right to conduct all activities
related to the sale and service of eligible crop insurance contracts.

(C)

FCIC has the right to all uncollected premiums on all eligible crop
insurance contracts.

(D)

Any uncollected debts owed to the Company under an eligible crop
insurance contract will become a debt owed to FCIC.

(E)

To the extent that FCIC contracts for an AIP or other entity to
service the transferred eligible crop insurance contracts, the AIP or
other entity will receive A&O subsidy for service the AIP or other
entity must perform for such eligible crop insurance contracts in
proportion to the amount of service required for the remainder of
the crop year.

With respect to eligible crop insurance contracts that are transferred to
FCIC and when another AIP agrees to assume the eligible crop insurance
contracts:
(A)

The AIP will assume the obligations for unpaid losses whether
occurring before or after the date of transfer regarding such eligible
crop insurance contracts, unless otherwise determined by FCIC;

(B)

FCIC will remit to the AIP any premium or any applicable
payments from commercial reinsurers collected from the
Company; and
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(C)

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The AIP will receive A&O subsidy for services the AIP must
perform for such eligible crop insurance contracts in proportion to
the amount of service required for the remainder of the crop year.

(b)

A Company in supervision, rehabilitation, liquidation, or any equivalent action by
a State is presumed to be unable to substantially fulfill obligations that materially
affect its performance under this Agreement with respect to some or all of the
eligible crop insurance contracts it has in its book of business for the purposes of
subsection (a).

(c)

If either subsection (a)(4) or (5) is implemented with respect to another AIP, the
Company, within the limits of its financial and operational resources, agrees to
cooperate with FCIC in the transferring and servicing of such eligible crop
insurance contracts.

SECTION X. SUPERVISION, REHABILITATION, AND LIQUIDATION
If the Company is placed in supervision, rehabilitation, liquidation, or any equivalent
action by a State Insurance Department:
(a)

The Company shall take all reasonable steps to facilitate a working relationship
between FCIC and the State Insurance Department during the period the
Company is in supervision, rehabilitation, liquidation, or any equivalent action.

(b)

The Company shall take all reasonable steps to ensure that FCIC has access to
information and use of the operating systems, records, equipment, or other
property used in the administration of the Company’s book of business for as long
as necessary to service the book of business.

(c)

In liquidation (or equivalent situation):
(1)

If FCIC has expended funds to keep the Company operational, including,
but not limited to, the payment of expenses already included in the A&O
subsidy, or to pay other expenses not included in the A&O subsidy, when
the Company was in supervision, rehabilitation liquidation, or any
equivalent situation, with respect to the repayment of such funds, FCIC
shall have priority over all other creditors except for expenses of the state
supervisor, rehabilitator, liquidator, or equivalent person; and

(2)

If the Company owes any other funds to FCIC not included in paragraph
(1) with respect to the repayment of such funds, FCIC shall have priority
over all other non-federal creditors.

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(d)

FCIC will have the right to conduct all activities related to the sale and service of
eligible crop insurance contracts.

(e)

The Company and its affiliates must pay to FCIC all funds in their possession
with respect to all eligible crop insurance contracts including, but not limited to,
premiums collected or any applicable payments from commercial reinsurers.

(f)

Any uncollected debts or premiums owed to the Company under an eligible crop
insurance contract will become a debt owed to FCIC.

(g)

The Company and its affiliates shall:

(h)

(1)

Properly and fully service all eligible crop insurance contracts until
transferred or the applicable cancellation date, whichever is the later;

(2)

Take all reasonable efforts to ensure that the Company’s commercial
reinsurance applicable to its book of business remains in effect; and

(3)

Not delay any payment to FCIC or the policyholder related to an eligible
crop insurance contract.

Those persons found not in compliance with subsection (g)(3) shall be subject to
debarment from participating in the programs of FCIC and USDA.

SECTION XI. MEDIATION, ARBITRATION, LITIGATION AND ASSISTANCE
(a)

The Company’s expenses incurred as a result of litigation are covered by the
A&O subsidy. FCIC has no obligation to provide other funds to reimburse the
Company for litigation costs.

(b)

In accordance with FCIC procedures, the Company may request FCIC to provide
non-monetary assistance, including, but not limited to, witnesses, documents, and
direction or such other assistance for mediation, arbitration or litigation. FCIC
will only consider the Company's request for assistance if the Company:
(1)

Reports the matter in accordance with subsection (c);

(2)

Immediately notifies FCIC in writing of the requested action setting forth
the reasons such action would be in the best interests of FCIC;

(3)

Presents all legal arguments favorable to its defense which it has a good
faith basis to assert, including those suggested by FCIC; and

(4)

Does not join FCIC as a party to the action unless FCIC agrees in writing
to be joined as a party, or unless otherwise required by law.
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(c)

The Company shall report to FCIC in accordance with FCIC procedures, disputes
with policyholders in mediation, arbitration, litigation or legal action, within 30
days after the Company has been notified of such dispute.

(d)

FCIC will, at its sole discretion, determine if the requested action under this
section will be granted. The criteria to determine such action will be whether
such action is in the best interest of FCIC and the Federal crop insurance program.

(e)

Unless otherwise provided in this Agreement, FCIC will pay ultimate net losses
for eligible crop insurance contracts of the Company in accordance with the
provisions of section II(b) of the Agreement:
(1)

In addition to the amount of the claim, ultimate net loss may include
interest owed to policyholders related to the eligible crop insurance
contract that is included:
(A)

(B)

(2)

In a final judgment against the Company by an arbitrator or a court
of competent jurisdiction if FCIC determines that:
(i)

Such interest resulted from the Company's substantial
compliance with all applicable FCIC procedures in the
selling and servicing of the eligible crop insurance contract;
and

(ii)

The award of such interest did not involve negligence or
culpability on the part of the Company or its affiliates; and

In the settlement of any claim if FCIC, in addition to the
determinations included above, determines that the settlement
should be approved.

In all arbitration and mediation cases or any other case that has been
settled by the Company and policyholder:
(A)

The Company must provide to FCIC all written statements from
the arbitrator describing the issues in dispute, the factual findings,
the determinations and the amount and basis for any award;

(B)

The Company must provide to FCIC all settlement agreements that
contain at a minimum, a statement of the issues in dispute and the
amount of the settlement;

(C)

The Company must provide to FCIC all written opinions of the
court, all pleadings filed in the case, and other documentation
requested by FCIC; and
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2018 SRA—Appendix I

(D)

07-01-17

Failure of the Company to provide the required information in this
subparagraph for an eligible crop insurance contract will result in
denial of reinsurance for such contract.

(f)

Under no circumstance are any punitive or consequential damages, attorney fees
or any other costs, including court costs, included in the calculation of ultimate
net loss.

(g)

For the purposes of this subsection only, the term “settlement” means the
compromise or resolution of a dispute under an eligible crop insurance contract
between the Company and a policyholder.

SECTION XII. SANCTIONED PERSONS
The Company and its affiliates shall not use any person who has been debarred or
suspended, or voluntarily excluded under 7 C.F.R. Part 3017, 7 C.F.R. § 400.456 or any
successor regulation by FCIC or any other U.S. Government Agency or disqualified by
FCIC under section 515(h) (7 U.S.C. § 1515(h)), as applicable, in any manner which
involves performance under this Agreement. Use of a disqualified, debarred, suspended
or voluntarily excluded person or entity may subject the Company and affiliate to
suspension and debarment in accordance with 7 C.F.R. Part 3017, 7 C.F.R. § 400.456 or
any successor regulation.

SECTION XIII. MEMBER - DELEGATE
No member of or delegate to Congress nor any resident commissioner will be permitted
to have any share or part of this Agreement or receive any benefit that may arise
therefrom, except that this provision will not be construed to apply to a benefit from this
Agreement that accrues to a member of or delegate to Congress or any resident
commissioner as a result of an interest in a corporation and the benefit is for the
corporation’s general benefit. Members of or delegates to Congress or any resident
commissioner are eligible to purchase a crop insurance contract for any crop in which
they have an insurable interest.

SECTION XIV. DATA COLLECTION
The Company shall fully cooperate with FCIC in the collection of information required
under section 2501A of the Food, Agriculture, Conservation and Trade Act of 1990.

SECTION XV. NON-DISCLOSURE
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2018 SRA—Appendix I
(a)

07-01-17

The Company shall:
(1)

Ensure that all persons having access to Protected Information, who are
either employed by or have contracted with the Company, sign an
Individual Non-disclosure Statement (NDS). If a person employed by or
having a contract with the Company has previously executed a NDS with
another AIP, that person must either submit a copy of the original NDS to
the Company or sign and submit a new NDS.

(2)

Maintain copies of all NDSs and have them available for examination.

(3)

Ensure that its affiliates and contractors are fully aware of the need to
protect information and the requirement to collect NDSs from all persons
having access to Protected Information. Affiliates and contractors, in turn,
must ensure that all persons having access to Protected Information who
are either employed by or have contracted with them must sign a NDS.

(4)

Ensure that all contractors or affiliates of the Company maintain copies of
all such NDSs and have them available for examination.

(5)

By April 1st of each year, obtain an annual certification from each of its
contractors and affiliates that the respective contractor or affiliate has
obtained a NDS from each person who has access to any Protected
Information and who is employed by or has a contract with the contractor
or the affiliate. The purpose of the annual certification by the contractor
or affiliate to the Company is to ensure that the contractor or affiliate
annually reviews its files to determine that any new employees or other
persons having access to Protected Information have signed a NDS. The
written and signed certification must be from an officer of the affiliate or
contractor to the Company and can state: “I hereby certify that [insert the
name of the affiliate or contractor] has reviewed its files and, as of [insert
date review was completed], all employees or other persons having access
to Protected Information have signed a Non-disclosure Statement.”

(6)

Maintain copies of all certifications from contractors or affiliates and have
them available for examination.

(7)

Ensure that all persons who are employed by or have a contract with the
Company have executed a NDS prior to obtaining access to Protected
Information.

(8)

Notify contractors and affiliates regarding the requirement that all persons
employed by or having a contract with the contractor or affiliate must sign
a NDS prior to obtaining access to Protected Information.

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2018 SRA—Appendix I

(b)

07-01-17

(9)

Provide an annual certification to FCIC in the Plan of Operations,
according to section II of Appendix II, that it has obtained a NDS from all
persons who have access to any protected information and who are
employed by or have a contract with the AIP; and, in the case of persons
employed by or having a contract with a contractor or affiliate, has
obtained a certification from the contractor or affiliate that the contractor
or affiliate has obtained an Non-disclosure Statement from all such
persons. The purpose of the annual certification by the Company to FCIC
is to ensure that the Company annually reviews its files to determine that
any new employees or other persons having access to Protected
Information have signed a NDS and that all affiliates and contractors have
provided an annual certification as to the NDSs signed by their employees.
The written and signed certification must be from an officer of the
Company and can state: “I hereby certify that [insert the name of the
Company] has reviewed its files and as of [insert date review was
completed], all employees or other persons having access to Protected
Information have signed a Non-disclosure Statement and all affiliates and
contractors have certified that their employees and other persons having
access to Protected Information have signed Non-disclosure Statements.”

(10)

Not provide Comprehensive Information Management System (CIMS)
information to anyone who has not signed and submitted an individual
NDS to the Company or the respective contractor or affiliate.

The Company and its contractors and affiliates may use electronic versions of the
NDS which incorporate either a digital signature or an authentication system to
properly identify the submitter. Electronic records of signed or authenticated
NDSs must be retained by the respective contractor, or affiliate and be available
for examination.

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