Exhibit IV.h.1: Escrow Agreement with Reinsured Company

Escrow Agreement With Reinsured Company
Plan of Operation
Section IV. Exhibit h.1.
The Federal Crop Insurance Corporation ("FCIC") and __________________________
("Company") hereby agree that an interest-bearing escrow account ("Escrow Account") may be
established at a bank selected by the Company ("Bank") for the purpose of facilitating the
payment of loss indemnities to insureds under a policy of insurance issued by the Company and
reinsured by FCIC under the Standard Reinsurance Agreement ("SRA").
The Bank must:
1. enter into an Escrow Agreement with FCIC;
2. post collateral as required by 31 C.F.R. § 202 in the amount directed by FCIC; and
3. be a member of the Fed Wire System.
The Company is responsible for the payment of all Bank charges and fees related to or
arising from the Escrow Account.
The Company hereby agrees that it will separately establish and maintain with the Bank
an operating account ("Loss Account") to be used exclusively for clearing the payment to
policyholders of loss indemnities subject to reinsurance under the SRA. The Company
specifically acknowledges and agrees that it is prohibited from paying any other amount from the
Loss Account. If the Company pays any amount other than as permitted hereunder from the
Loss Account, FCIC may, in its sole discretion, immediately terminate this Agreement and the
Escrow Account in addition to exercising any other remedy available at law or in equity. The
Company must otherwise maintain the Loss Account upon such terms and conditions as the
Bank and the Company may agree.
The Company will make indemnity payments as permitted hereunder from the Loss
Account in accordance with the SRA. The Company will submit to FCIC such information, and
documentation that FCIC may request for certification both to the accuracy of the claim and
assurance that payments will be issued to producers within three business days of submission of
the funding request. FCIC will, within threebusiness days of receipt of said evidence (if said
evidence is in order) initiate the procedure to
cause to be deposited into the Escrow Account an amount not to exceed the net amount of the
indemnity payments reflected by the evidence submitted by the Company. Evidence submitted
by the Company will consist of at least a certified list of payments issued or to be issued
showing check/payment number, date of issuance, payee, amount, and policy number.
To the extent sufficient amounts have been deposited into the Escrow Account and are
not subsequently withheld by FCIC, upon presentation to the Bank for payment of permitted
indemnity payments, FCIC will, in accordance with the terms and conditions of the Escrow
Agreement, cause the Bank to affect a transfer of funds from the Escrow Account to the Loss

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

Escrow Agreement With Reinsured Company (Cont’d)
Federal Crop Insurance Corporation

Company

_____________________________
Signature

______________________________
Signature

_____________________________
Name

______________________________
Name

_____________________________
Title

______________________________
Title

_____________________________
Date

______________________________
Date