2021 Sra

2021 SRA

07-01-20

STANDARD REINSURANCE AGREEMENT
between the
FEDERAL CROP INSURANCE CORPORATION
and the
(Insurance Company Name) (Hereafter “Company”)
(City and State)
This Agreement establishes the terms and conditions under which the Federal Crop Insurance
Corporation (FCIC), supervised by the Risk Management Agency (RMA) as authorized in
section 226A of the Federal Agriculture Improvement and Reform Act of 1996, will provide
subsidy and reinsurance on eligible crop insurance contracts sold by the Company. This
Agreement is authorized by the Federal Crop Insurance Act (Act) and regulations of FCIC
published at 7 C.F.R. chapter IV (regulations).
This is a cooperative financial assistance agreement between FCIC and the Company to deliver
eligible crop insurance contracts under the authority of the Act. The Agreement is not
considered a contract for the purposes of the Federal Acquisition Regulations. For the purposes
of this Agreement, use of the plural form of a word includes the singular and use of the singular
form of a word includes the plural unless the context indicates otherwise. The Table of Contents
and headings in this Agreement are descriptive only and have no legal effect on FCIC or the
Company.
This Agreement becomes effective upon its execution by FCIC and the Company, and the annual
approval of the Company's Plan of Operations by FCIC for the applicable reinsurance year. This
Agreement is a single year agreement.

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TABLE OF CONTENTS

Pages

SECTION I. DEFINITIONS....................................................................................................... 1-9
SECTION II. REINSURANCE
(a)
(b)

General Terms .................................................................................................. 10-13
Reinsurance ...................................................................................................... 13-21

SECTION III. SUBSIDIES, EXPENSES, FEES, AND PAYMENTS
(a)
(b)
(c)

Subsidies and Expenses ................................................................................... 21-27
Administrative Fees ...............................................................................................27
Payments .......................................................................................................... 27-29

SECTION IV. GENERAL PROVISIONS
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)

Collection of Information and Data .......................................................................29
Reports ............................................................................................................. 30-32
Interest....................................................................................................................32
Escrow Account ............................................................................................... 33-34
Supplemental Insurance .........................................................................................34
Insurance Operations ....................................................................................... 34-36
Access to Records and Operations ................................................................... 36-37
Compliance and Corrective Action .................................................................. 37-40
Suspension ....................................................................................................... 40-41
Termination ...................................................................................................... 41-42
Disputes and Appeals .............................................................................................42
Agreement Change Date ........................................................................................42
Funding Contingency .............................................................................................42
Previous Obligations ..............................................................................................42
Preemption of State Law .................................................................................. 42-43
Discrimination........................................................................................................43
Set Off .............................................................................................................. 43-44
Assignment ............................................................................................................44

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SECTION I. DEFINITIONS
Unless otherwise provided, the definitions of terms herein only apply to the terms and
conditions contained in this Agreement and not to FCIC procedures or other documents
related to this Agreement.
To the maximum extent practicable, terms that have been defined in the incorporated
regulations and the Act will be given the same meaning for the purpose of this
Agreement. Since some terms may have more than one definition in the regulations and
the Act, the specific regulation or section of the Act to be used will be specified herein.
“Act” in lieu of the definition in the incorporated regulations, means the Federal Crop
Insurance Act (7 U.S.C. §§ 1501-1524).
“Actuarial data master file” means the electronic data processing (EDP) compatible
information distributed by FCIC that contains premium rates, program dates, and related
information concerning the crop insurance program for a crop year.
“Additional coverage” has the same meaning as the term “additional coverage” in
section 502(b)(1) of the Act (7 U.S.C. § 1502(b)(1)).
“A&O subsidy” means the subsidy for the administrative and operating expenses paid
by FCIC on behalf of the policyholder to the Company for additional coverage level
eligible crop insurance contracts in accordance with section 508(k)(4) of the Act (7
U.S.C. § 1508(k)(4)).
“Administrative fee” means the processing fee the policyholder must pay under an
eligible crop insurance contract.
“Affiliate” means any person, including, but not limited to, a managing general agent,
agent, service provider, and loss adjuster, that: (1) collects premiums, services the policy,
adjusts, or settles claims; (2) collects, processes, manages, and reports electronic data for
the purposes of selling, administering, or servicing eligible crop insurance contracts for
the Company; or (3) directly or indirectly, through one or more intermediaries, has the
authority to control any aspect of the management of the book of business or any other
decision made under this Agreement, without the prior and specific approval from the
Company. This definition excludes commercial reinsurers and PICs if such reinsurers or
PICs do not have the authority to control any aspect of the management of the book of
business or any other decision made under this Agreement, without the prior and specific
approval from the Company.
“Agency” means the person authorized by an AIP, or its designee, to sell and service
eligible crop insurance contracts under the Federal crop insurance program.
“Agent” means any individual who is: (1) licensed by the State in which eligible crop
insurance contracts are sold and serviced for the reinsurance year; and (2) authorized by
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the Company, or the Company’s designee, to sell and service such eligible crop insurance
contracts.
“Agent of record” means, for the purposes of each eligible crop insurance contract, any
agent or subagent who: (1) for a new or revised application, signs the application; and (2)
for any crop year, signs the acreage or similar reports, as applicable. Each eligible crop
insurance contract has at least one, and may have multiple, agents of record. All agents
of record for each eligible crop insurance contract shall be reported by the Company, in
accordance with Appendix III.
“Agreement” means this Standard Reinsurance Agreement, including Appendices, the
Act, and regulations, in effect as of the July 1 start of the reinsurance year, unless
otherwise provided for in the Agreement. An Agreement in effect for a reinsurance year
constitutes a separate and distinct Agreement from any Agreement that may be in effect
for any other reinsurance year, even if the Agreement has been renewed in accordance
with section IV(l). Unless specifically provided for in this Agreement, if there is a
conflict between a provision of the Act, the regulations, or FCIC procedures with the
terms of this Agreement, the order of precedence will be: (1) the provisions of the Act;
(2) the regulations; (3) this Agreement; and (4) FCIC procedures, with (1) controlling (2)
and (2) controlling (3), etc. The Act and regulations are available on the RMA website
(www.rma.usda.gov).
“Agricultural commodity” has the same meaning as the term “agricultural commodity”
in section 518 of the Act (7 U.S.C. § 1518), excluding livestock.
“Annual settlement” means the settlement of accounts between the Company and FCIC
for the reinsurance year, beginning with the October monthly transaction cutoff date
following the end of the subsequent reinsurance year and continuing monthly thereafter,
as necessary.
“Approved insurance provider (AIP)” means a legal entity, including the Company,
which has entered into a Standard Reinsurance Agreement with FCIC for the applicable
reinsurance year.
“Average A&O rate” means the total amount of A&O subsidy paid to all AIPs for the
2008 reinsurance year for all eligible crop insurance contracts divided by total net book
premium earned by all AIPs for the 2008 reinsurance year for all eligible crop insurance
contracts for which A&O subsidy was paid by FCIC, as of the January 2010 monthly
settlement report.
“Billing date” means the date specified in the actuarial data master file as the date by
which policyholders are billed for premium due on eligible crop insurance contracts.
“Book of business” means the aggregation of all eligible crop insurance contracts
between the Company and its policyholders that have a sales closing date within the
reinsurance year and are eligible to be reinsured under this Agreement.
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“Cancellation date” has the same meaning as the term “cancellation date” in the
applicable eligible crop insurance contract.
“Catastrophic risk protection (CAT)” has the same meaning as the term “catastrophic
risk protection” in the applicable eligible crop insurance contract.
“CAT LAE” means the reimbursement paid by FCIC for eligible crop insurance
contracts at the CAT level (as authorized in section 508(b) of the Act) (7 U.S.C. §
1508(b)) in accordance with section 508(b)(11) of the Act (7 U.S.C. § 1508(b)(11)).
“Cede” means to pass to another all or part of the net book premium and associated
liability for ultimate net losses on eligible crop insurance contracts.
“Claim” means a request under an eligible crop insurance contract for an indemnity in an
amount certain on a Company form that meets FCIC’s standards.
“Claims supervisor” means any person having immediate or day-to-day supervisory
control, management or oversight authority of the activities of loss adjusters or other
persons who determine whether an indemnity will be paid and the amount thereof.
“Company payment date” means the last business day of the month.
“Compensation” means, for any reinsurance year, commissions, salary, profit sharing,
and other forms of payment including, but not limited to, transfer or other types of
bonuses, consulting fees, loans, advance payments, deferred payments, cooperative
advertising, and any monetary or non-monetary benefits of value, except for those
benefits required by law, in accordance with FCIC procedures. Compensation does not
include any payments related to a line of insurance not reinsured under this Agreement
unless such payment is made to circumvent the provisions of this Agreement.
“Contract change date” has the same meaning as the term “contract change date” in the
applicable eligible crop insurance contract.
“Controlled Substance” has the meaning provided in 7 C.F.R. § 3021.610.
“Conviction” has the meaning provided in 7 C.F.R. § 3021.615.
“Cooperative association” for the purposes of section 508(b)(5)(B) of the Act (7 U.S.C.
§ 1508(b)(5)(B)) means a member owned and controlled entity that is recognized by the
State in which the entity is doing business as a cooperative related to agriculture.
“Criminal Drug Statute” has the meaning provided in 7 C.F.R. § 3021.625.
“Drug-free Workplace” has the meaning provided in 7 C.F.R. § 3021.635.

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“Earned premium rate (EPR)” means the total net book premium earned by all AIPs
for the 2008 reinsurance year on all eligible crop insurance contracts for which A&O
subsidy was paid by FCIC divided by total liability, as of the January 2010 monthly
settlement report.
“Eligible crop insurance contract” means an insurance contract with an eligible
producer: (1) covering an agricultural commodity authorized to be insured under the Act
and approved for sale by FCIC; (2) with terms and conditions in effect as of the
applicable contract change date; (3) that is sold and serviced in accordance with the Act,
FCIC regulations, FCIC procedures, and this Agreement; and (4) that has a sales closing
date within the reinsurance year.
“Eligible producer” means a person who has an insurable interest in an agricultural
commodity, has not been determined ineligible to participate in the Federal crop
insurance program, and possesses a United States issued social security number (SSN) or
employer identification number (EIN).
“Employee” has the meaning provided in 7 C.F.R. § 3021.640.
“Experienced agent” means an agent who has completed at least one full year of sales
and service, and is current on certification requirements as may be required by FCIC.
“Experienced loss adjuster” means a loss adjuster who has completed at least one full
year of loss adjustment and is current on certifications as may be required by FCIC.
“FCIC payment date” means the first banking day following the 14th calendar day after
FCIC receives the signed, certified monthly or annual settlement report and supporting
data from the Company upon which any payment is based.
“FCIC procedures” means the applicable handbooks, manuals, bulletins, memoranda or
other written directives issued by FCIC related to an eligible crop insurance contract and
this Agreement.
“FSA” has the same meaning as the term “Farm Service Agency” in section 1 of the
Common Crop Insurance Policy Basic Provisions.
“Immediate family” means an individual’s father, mother, stepfather, stepmother,
brother, sister stepbrother, stepsister, son, daughter, stepson, stepdaughter, grandparent,
grandson, granddaughter, father-in-law, mother-in-law, brother-in-law, sister-in-law, sonin-law, daughter-in-law, the spouse of the foregoing, and the individual’s spouse.
“Inspection” means verification:
(1)

As to whether the application, production report, acreage report, notice of
claim, or other relevant documents in accordance with FCIC procedures

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(such as a Farm Report for AGR eligible crop insurance contracts) were
timely submitted;
(2)

Of the information reported on the documents:
(A)

Referenced in (1) above, and related to the claim, including
preliminary and final loss adjustment (Verification of the approved
yields will consist of examination of the records supporting the last
three years certified for the crop); and

(B)

Related to pre-harvest, growing season, or pre-acceptance
examination of the crop;

(3)

That policy documents, including, but not limited to, actuarial documents,
have been properly used and applied;

(4)

That the reported practice is being carried out in accordance with good
farming practices;

(5)

That the crop has been planted, or replanted as applicable;

(6)

That the policy constitutes an eligible crop insurance contract;

(7)

That the producer qualifies as an eligible producer; and

(8)

That the agent or loss adjuster has complied with FCIC procedures.

“Insurable interest” has the same meaning as the term “share” in the applicable eligible
crop insurance contract.
“Loan” for purposes of the definition of compensation means a lending agreement that
transfers money or other items of value from the Company, or its MGA, to a person on
the condition that it will be paid back later. Loans are considered compensation unless:
(1)

Such lending agreement was entered into before July 1, 2010; or

(2)

The terms of such lending agreement are commercially reasonable and the
Company annually until the loan has been fully repaid, in the Plan of
Operations, certifies that the terms of each lending agreement have not
been breached and have not and will not be forgiven.

“Loss adjuster” means an individual who is licensed by a State, or has passed a
proficiency testing program approved by FCIC, as applicable, and who verifies
information affecting the coverage and makes factual determinations regarding the
existence or amount of loss under an eligible crop insurance contract.

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“Loss ratio” means the ratio calculated by dividing the ultimate net loss by the net book
premium, expressed as a percentage. For example, if $1 ultimate net loss is paid and 50
cents net book premium is received, this would be expressed as a 200 percent loss ratio.
“Managing General Agent (MGA)” means an entity that meets the definition of
managing general agent under the laws of the State in which such entity is incorporated
and in every other state in which it operates, or in the absence of such State law or
regulation, meets the definition of a managing general agent or agency in the National
Association of Insurance Commissioners Managing General Agents Act, or a successor
Act.
“Material” means an act or omission that, as determined by FCIC, would: (1) cause
FCIC to assume a significant additional risk that it would not otherwise have assumed but
for the act or omission; (2) cause the amount paid by or to FCIC to significantly differ
from the amount that would otherwise be paid or owed but for the act or omission; (3)
likely preclude or make it substantially more difficult to carry out the requirements of the
Agreement and FCIC procedures; or (4) create a program vulnerability that could cause a
payment to be made that would be significantly different than would otherwise be made
if the act or omission had not occurred.
“Net book premium” means the premium amount established by FCIC for eligible crop
insurance contracts in accordance with section 508(d)(2) of the Act (7 U.S.C. §
1508(d)(2)), less any amount for A&O subsidy.
“New agent” means an agent who has not completed one full year of sales and service.
“New loss adjuster” means a loss adjuster who has not completed one full year of loss
adjustment.
“Person” means an individual or legal entity.
“Personally Identifiable Information” means any information about an individual
maintained by the Company and its affiliates, including but not limited to, education,
financial transactions, medical history, and criminal or employment history and
information which can be used to distinguish or trace an individual’s identity, such as
name, social security number, date and place of birth, mother’s maiden name, biometric
records, etc., including any other personal information which is linked or linkable to an
individual.
“Plan of insurance” means a broad category of crop insurance contracts such as actual
production history (APH), yield protection, revenue protection, etc. that has been
designated by FCIC as a separate plan of insurance.
“Plan of Operations” means the documents and information the Company shall submit
in accordance with section IV(f)(2), Appendix II, and applicable FCIC procedures.

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“Policy Acceptance and Storage System (PASS)” means any RMA or FCIC approved
electronic data processing (EDP) system that receives and accepts or rejects Companysubmitted data for eligible crop insurance contracts.
“Policy Issuing Company (PIC)” means an insurance company that issues eligible crop
insurance contracts reinsured under this Agreement on behalf of the Company and cedes
100 percent of the premiums and associated losses to the Company.
“Policyholder” means an eligible producer who has been issued one or more eligible
crop insurance contracts.
“Producer premium” means that portion of the premium for an eligible crop insurance
contract payable by the policyholder.
“Protected Information” means any Personally Identifiable Information about a
policyholder, or information about the policyholder’s farming operation or insurance
policy, acquired from the policyholder, USDA, the Comprehensive Information
Management System, or the policyholder’s previous or current approved insurance
provider or agent that is protected from disclosure by the Privacy Act of 1974 (5 U.S.C. §
552a), section 502(c) of the Act (7 U.S.C. § 1502(c)), or any other applicable Federal
statute. This definition includes all hard copy or electronic information.
“Rebate” means to pay, allow, or give, or offer to pay, allow or give, directly or
indirectly, either as an inducement to procure insurance or after insurance has been
procured, any benefit (including money, goods or services for which payment is usually
made [except any service provided to fulfill an obligation of the Company under this
Agreement]), discount, abatement, credit, or reduction of the premium named in the
insurance policy and any other valuable consideration or inducement not specified in the
policy.
“Records” means documentation in any form that relates to an eligible crop insurance
contract or this Agreement. Such documentation includes original signed documents, or
legible electronic images of the original signed documents, any other documents, or
legible electronic images of any other documents, and electronic information either
produced by the Company or an affiliate or obtained from outside sources or the
policyholder that are utilized by the Company or an affiliate to establish, calculate, verify
or determine a policyholder’s program eligibility, insurance coverage, APH yields,
premium, liability, or indemnity.
“Reinsurance year” means the term of this Agreement beginning July 1 and ending on
June 30 of the following year and, for reference purposes, identified by reference to the
year containing June.
“Relative” means an individual who: (1) is immediate family; (2) resides in the
household of; or (3) engages in business with respect to, a farming operation with the
person in question, regardless of whether or not the individual is immediate family.
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“Retained” as applied to ultimate net losses, net book premium, or book of business,
means the remaining liability for ultimate net losses and the right to associated net book
premiums after all reinsurance ceded to FCIC under this Agreement.
“Risk subsidy” means that portion of the premium for an eligible crop insurance contract
paid by FCIC on behalf of the policyholder.
“Sales closing date” has the same meaning as the term “sales closing date” in the
applicable eligible crop insurance contract.
“Sales supervisor” means any person having immediate or day-to-day supervisory
control, management or oversight authority of the activities of sales agents or sales
agency employees on behalf of the Company.
“Satisfactory performance record” means a record of performance that demonstrates
substantial conformity with applicable requirements, as specified in section II(a)(9).
“Satisfactory work performance” means the work of the agent, loss adjuster, or other
affiliate that is evaluated annually and found to be in compliance with the requirements of
this Agreement.
“Service provider” means managing general agents, and any other entity (other than an
agent or agency) who issues or services eligible crop insurance contracts; develops,
operates or maintains the Information Technology systems or prepares or transmits data;
or, who on a regional, State or other area basis, provides loss adjustment services.
Regardless of any other factor, a service provider is an affiliate.
“Signature” means the affixing of a person's name in a distinctive way as a form of
identification or authorization, including in an electronic or digital form as approved by
FCIC.
“State Group 1” means Illinois, Indiana, Iowa, Minnesota, and Nebraska.
“State Group 2” means Alabama, Arizona, Arkansas, California, Colorado, Florida,
Georgia, Idaho, Kansas, Kentucky, Louisiana, Michigan, Missouri, Mississippi, Montana,
North Carolina, North Dakota, New Mexico, Ohio, Oklahoma, Oregon, South Carolina,
South Dakota, Tennessee, Texas, Virginia, Washington, and Wisconsin.
“State Group 3” means Alaska, Connecticut, Delaware, Hawaii, Maine, Massachusetts,
Maryland, Nevada, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, Utah, Vermont, West Virginia, and Wyoming.
“Subagent” means any individual: (1) licensed by a State in which an eligible crop
insurance contract is sold and serviced for the reinsurance year; and (2) who provides on
behalf of an Agent any sales or service, or assistance with sales and service, for some or
all of the Agent’s eligible crop insurance contract(s).
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“Total liability” means the amount of liability for all eligible crop insurance contracts
written by all AIPs for the 2008 reinsurance year for which A&O subsidy was paid by
FCIC, as of the January 2010 monthly settlement report.
“Trade association” means an entity recognized by the State in which the entity is doing
business as a trade association and shall not include an organization that is formed for the
purposes of providing insurance.
“Transaction cutoff date” for weekly data reporting is 8 p.m. Central time on Friday of
each week and for monthly data reporting is 8 p.m. Central time on Friday after the first
Sunday of the month.
“Ultimate net loss” means the amount paid by the Company under any eligible crop
insurance contract reinsured under this Agreement in settlement of any claim and in
satisfaction of any judgment, arbitration award, or mediation (including any interest
awarded as specified in section XI(e)(1) of Appendix I) rendered on account of a claim
under an eligible crop insurance contract, less any recovery or salvage by the Company.
“Underwriting” means the determination by the Company that all terms and conditions
of eligibility and coverage have been met to qualify the policy as an eligible crop
insurance contract.
“Underwriting Capacity Manager (UCM)” means an FCIC system that monitors the
amount of insurance authorized to be insured or reinsured, and accepts or rejects the
application of an eligible producer based on the availability of such amount of insurance,
if limits have been placed by Federal legislation or FCIC on the amount of insurance
authorized to be insured or reinsured.
“Underwriting gain” means the amount by which the Company’s share of retained net
book premium exceeds its share of retained ultimate net losses.
“Underwriting loss” means the amount by which the Company’s share of retained
ultimate net losses exceeds its share of retained net book premium.
“Verification” means the determination of whether information submitted is true and
accurate through independent third parties or independent documentation in accordance
with FCIC procedures. With respect to certifications, asking the policyholder whether the
information is true and accurate does not constitute verification.
“Written Agreement” has the same meaning as the term “written agreement” in the
applicable eligible crop insurance contract.

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SECTION II. REINSURANCE
(a)

General Terms
(1)

For the Company to receive reinsurance, A&O subsidy, CAT LAE, and
risk subsidy under this Agreement, an insurance contract must qualify as
an eligible crop insurance contract, except as otherwise specified in this
Agreement.

(2)

Notwithstanding paragraph (3), applications for eligible crop insurance
contracts that are rejected by the UCM, as applicable, will not be eligible
for reinsurance, A&O subsidy, CAT LAE, or risk subsidy.

(3)

Except as specified below, the Company shall offer and market all plans
of insurance for all crops in any State where actuarial documents are
available in which it writes an eligible crop insurance contract and shall
accept and approve applications from all eligible producers. The Company
may not cancel an eligible crop insurance contract held by a policyholder
so long as the policyholder remains an eligible producer and the Company
continues to write eligible crop insurance contracts within the State,
except as authorized by FCIC. The Company is not required to offer such
plans of insurance as may be approved by FCIC under the authority of
section 508(h) of the Act. (7 U.S.C. § 1508(h)). However, if the Company
chooses to offer any such plan, it shall offer the plan in all approved states
in which it writes an eligible crop insurance contract where such plan is
made available and it shall comply with all provisions of this paragraph as
to such plan.

(4)

In exchange for premiums ceded by the Company to FCIC under this
Agreement, FCIC will provide reinsurance to the Company with respect to
such contracts in accordance with the provisions of this Agreement.

(5)

A Company and its affiliates are prohibited from providing a rebate except
as authorized in section 508(a)(9)(B) of the Act (7 U.S.C. §
1508(a)(9)(B)).

(6)

A violation of paragraph (5) will result in the denial of reinsurance, A&O
subsidy, CAT LAE, and risk subsidy, for all eligible crop insurance
contracts for which such violation occurred, and may subject the person
who committed or authorized the violation to administrative sanctions,
including, but not limited to, disqualification under the Act or applicable
regulations.

(7)

Only the amount of net book premium authorized by FCIC in the
approved Plan of Operations, including any amendments under Appendix
II, shall be reinsured and subsidized under this Agreement.
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(8)

The Company shall have the financial and operational resources,
organization, experience, internal controls, and technical skills to meet the
requirements, including addressing reasonable risks, associated with the
Agreement, including 7 C.F.R. part 400, subpart L, as determined by
FCIC.
(A)

The Company shall provide information necessary to evaluate
compliance with this paragraph as often as required by FCIC.

(B)

The Company shall provide written notice to FCIC of any
anticipated change in:

(C)

(i)

Its service providers or the services they provide (e.g.,
software, software agreements, service agreements, etc.); or

(ii)

Its, or its affiliates’, business organization, operations,
finances or the sales expectations of the Company, if such
change:
(I)

Is at variance with the Company’s Plan of
Operations; or

(II)

Could affect the Company’s ability to perform
under the Agreement.

If any change referenced in subparagraph (B) occurs, whether
FCIC learns of the change by notice from the Company or
otherwise:
(i)

FCIC may require the Company to amend its Plan of
Operations; or

(ii)

The Company may submit to FCIC in writing a request to
amend the Plan of Operations.
(I)

The request must be approved by FCIC in writing
before the amended Plan of Operations can become
a part of this Agreement.

(II)

The request will be evaluated in accordance with
the FCIC procedures applicable to the original Plan
of Operations, except that FCIC will also consider
whether FCIC’s risk is materially increased.

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(D)

(9)

(III)

FCIC will not approve a request to amend the Plan
of Operations if such amendment would materially
increase the risk of loss to FCIC unless FCIC, at its
sole discretion, determines that the amendment
arises from an action of FCIC or the U.S.
Department of Agriculture that substantially
increases the risk of underwriting loss on eligible
crop insurance contracts written by the Company.

(IV)

Changes to eligible crop insurance contracts made
in accordance with the terms of such contract are
not a basis for an amendment to the Plan of
Operations.

If at any time during the reinsurance year FCIC cannot determine
that the Company is in compliance with the requirements of this
paragraph or FCIC learns that the Company may be in substantial
risk for failure to comply with the requirements of this paragraph,
the Company shall take corrective actions acceptable to FCIC in
accordance with section IV(h)(4), or be subject to the remedies
provided for in this Agreement.

The Company shall demonstrate a satisfactory performance record to
obtain an Agreement and continue to hold an Agreement for the
reinsurance year. The following will be reviewed to determine whether
there is a satisfactory performance record:
(A)

In the most recent five reinsurance years, the Company and service
providers shall demonstrate:
(i)

There is substantial conformity with the requirements of
this Agreement, the regulations and FCIC procedures, as
applicable;

(ii)

Any material deficiency was caused by circumstances
beyond the Company’s control, and that, as soon as the
Company discovered the deficiency, the Company took
timely and appropriate corrective action;

(iii)

There was no material misconduct on the part of the
Company or its service providers; and

(iv)

To the satisfaction of FCIC, any other mitigating factors
that would prove, notwithstanding any identified
deficiency, the Company has a satisfactory performance
record;
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(B)

Whether the Company can, to the satisfaction of FCIC,
demonstrate the ability to comply with the requirements of
paragraph (8);

(C)

Whether the Company can demonstrate the ability to fulfill the
requirements under this Agreement under various risk assessment
scenarios, including, but not limited to, significant nationwide
losses, the loss or failure of a service provider, the threats and risks
outlined in section VI of Appendix II, or other risks as identified
by FCIC; and

(D)

Whether FCIC or a State has identified any material deficiencies
that may raise questions or concerns regarding the Company’s
ability to meet the requirements of this Agreement.

(10)

If the Company previously has not been an AIP, the Company and its
service providers shall demonstrate to the satisfaction of FCIC that it can
achieve and maintain a satisfactory performance record consistent with
paragraph (9).

(11)

Failure to meet the conditions stated in paragraphs (8), (9), or (10), may
subject the Company to appropriate remedies in this Agreement,
including, but not limited to, denial of an Agreement, suspension of the
Agreement or a reduction in the net book premium the Company is
authorized to write.

(12)

Unless otherwise specifically approved by FCIC in advance in writing, the
Company may only delegate its authority or control over the designation
of eligible crop insurance contracts to reinsurance funds to its managing
general agent and the Company shall include the delegation in its Plan of
Operation.

(13)

Failure of the Company to comply with the provisions of this Agreement,
including, but not limited to, timely submission of data and reports, does
not excuse or delay the Company’s requirement to pay any amount due to
FCIC by the dates specified herein.

(14)

Neither the Company nor its affiliates shall assess service fees or
additional charges on eligible crop insurance contracts reinsured and
subsidized under this Agreement except as authorized by the Act or
approved by FCIC in writing.

Reinsurance

13

2021 SRA

07-01-20
(1)

The Company, in accordance with its Plan of Operations, may designate
an eligible crop insurance contract to the Assigned Risk Fund by State.
Any eligible crop insurance contract not specifically designated by the
Company to the Assigned Risk Fund will automatically be assigned to the
Commercial Fund by State.

(2)

Unless otherwise specified in Appendix III, if the Company elects to
designate eligible crop insurance contracts to the Assigned Risk Fund, it
shall do so not later than the transaction cutoff date for the week
containing the 30th calendar day after the sales closing date for the eligible
crop insurance contract, except:

(3)

(A)

In the case of written agreements requiring annual FCIC approval
or for the initial year of an eligible crop insurance contract
associated with a written agreement only (excluding written
agreements specified in Appendix III), not later than the
transaction cutoff date for the week containing the 30th calendar
day after FCIC approval;

(B)

For the initial year of application for any agricultural commodity
without a fixed sales closing date, the later of the transaction cutoff
date for the week containing the 30th calendar day after the eligible
producers signature date on the application, or the transaction
cutoff date for the week containing the 30th calendar day prior to
the cancellation date; and

(C)

For the subsequent year of insurance for any agricultural
commodity without a fixed sales closing date, the transaction
cutoff date for the week containing the 30th calendar day prior to
the cancellation date for the previous year.

Assigned Risk Fund Retention
(A)

The Company shall retain a 20 percent interest in premium and
associated ultimate net losses in the Assigned Risk Fund in each
State. The remainder is ceded to FCIC.

(B)

The associated net book premium of eligible crop insurance
contracts assigned to the Assigned Risk Fund shall not exceed 75
percent of the Company’s net book premium in each State.

(C)

Unless otherwise specified in the Agreement, in the event the
percentage of net book premium for eligible crop insurance
contracts in the Assigned Risk Fund exceeds 75 percent of the
aggregate net book premium for any State, the amount of
premiums and associated liabilities in the Assigned Risk Fund will
14

2021 SRA

07-01-20

(4)

(5)

be reduced pro-rata to 75 percent and the excess will be assigned
by FCIC to the Commercial Fund for that State.
Commercial Fund Retention
(A)

The Company shall retain at least a 35 percent interest in premium
and associated ultimate net losses in the Commercial Fund in each
State. The remainder shall be ceded to FCIC.

(B)

The retention percentage for the Commercial Fund in each State
shall be made in 5 percent increments and designated in the
Company’s Plan of Operations according to Appendix II.

Underwriting Loss
(A)

Commercial Fund
After the retentions under paragraph (4), the amount of
underwriting loss retained by the Company for the Commercial
Fund will be calculated within each State as the sum of the
following:
(i)

For that portion of the underwriting loss amount for which
the Company’s loss ratio exceeds 100 percent and is less
than or equal to 160 percent, the Company shall retain an
amount of the underwriting loss equal to the product of the
following:
(I)

Its retained net book premium;

(II)

The lesser of the Company’s actual loss ratio or 160
percent, minus 100 percent; and

(III)

The following percentage for the applicable State
Group:
State Group 1
State Groups 2 and 3

(ii)

65.0 percent
42.5 percent

For that portion of the underwriting loss amount for which
the Company’s loss ratio exceeds 160 percent and is less
than or equal to 220 percent, the Company shall retain an
amount of the underwriting loss equal to the product of the
following:
(I)

Its retained net book premium;

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2021 SRA

07-01-20
(II)
(III)

The lesser of the Company’s actual loss ratio or 220
percent, minus 160 percent; and
The following percentage for the applicable State
Group:
State Group 1
State Groups 2 and 3

(iii)

For that portion of the underwriting loss amount for which
the Company’s loss ratio exceeds 220 percent and is less
than or equal to 500 percent, the Company shall retain an
amount of the underwriting loss equal to the product of the
following:
(I)

Its retained net book premium;

(II)

The lesser of the Company’s actual loss ratio or 500
percent, minus 220 percent; and

(III)

The following percentage for the applicable State
Group:
State Group 1
State Groups 2 and 3

(iv)

(B)

45.0 percent
20.0 percent

10.0 percent
5.0 percent

FCIC will assume 100 percent of that portion of the
underwriting loss amount for which the Company’s loss
ratio exceeds 500 percent.

Assigned Risk Fund:
After the retentions under paragraph (3), the amount of the
underwriting loss retained by the Company for the Assigned Risk
Fund will be calculated within each State as the sum of the
following:
(i)

For that portion of the underwriting loss amount for which
the Company’s loss ratio exceeds 100 percent and is less
than or equal to 160 percent, the Company shall retain an
amount of the underwriting loss equal to the product of the
following:
(I)

Its retained net book premium;

(II)

The lesser of the Company’s actual loss ratio or 160
percent, minus 100 percent; and
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2021 SRA

07-01-20

(ii)

(iii)

(iv)

(6)

(III) 7.5 percent.
For that portion of the underwriting loss amount for which
the Company’s loss ratio exceeds 160 percent and is less
than or equal to 220 percent, the Company shall retain an
amount of the underwriting loss equal to the product of the
following:
(I)

Its retained net book premium;

(II)

The lesser of the Company’s actual loss ratio or 220
percent, minus 160 percent; and

(III)

6.0 percent.

For that portion of the underwriting loss amount for which
the Company’s loss ratio exceeds 220 percent and is less
than or equal to 500 percent, the Company shall retain an
amount of the underwriting loss equal to the product of the
following:
(I)

Its retained net book premium;

(II)

The lesser of the Company’s actual loss ratio or 500
percent, minus 220 percent; and

(III)

3.0 percent.

FCIC will assume 100 percent of that portion of the
underwriting loss amount for which the Company’s loss
ratio exceeds 500 percent.

Underwriting Gain
(A)

Commercial Fund
After the retentions under paragraph (4), the amount of
underwriting gain retained by the Company for the Commercial
Fund will be calculated within each State as the sum of the
following:
(i)

For that portion of the underwriting gain amount for which
the Company’s loss ratio is less than or equal to 100
percent but is greater than or equal to 65 percent, the
Company shall retain an amount of the underwriting gain
equal to the product of the following:
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2021 SRA

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(I)
(II)

Its retained net book premium;
100 percent minus [the greater of the Company’s
actual loss ratio or 65 percent]; and

(III)

The following percentage for the applicable State
Group:
State Group 1
State Groups 2 and 3

(ii)

For that portion of the underwriting gain amount for which
the Company’s loss ratio is less than 65 percent but is
greater than or equal to 50 percent, the Company shall
retain an amount of the underwriting gain equal to the
product of the following:
(I)

Its retained net book premium;

(II)

65 percent minus [the greater of the Company’s
actual loss ratio or 50 percent]; and

(III)

The following percentage for the applicable State
Group:
State Group 1
State Groups 2 and 3

(iii)

40.0 percent
40.0 percent

For that portion of the underwriting gain amount for which
the Company’s loss ratio is less than 50 percent, the
Company shall retain an amount of the underwriting gain
equal to the product of the following:
(I)

Its retained net book premium;

(II)

50 percent minus the Company’s actual loss ratio;
and

(III)

The following percentage for the applicable State
Group:
State Group 1
State Groups 2 and 3

(B)

75.0 percent
97.5 percent

Assigned Risk Fund

18

5.0 percent
5.0 percent

2021 SRA

07-01-20
After the retentions under paragraph (3), the amount of
underwriting gain retained by the Company for the Assigned Risk
Fund will be calculated within each State as the sum of the
following:
(i)

(ii)

(iii)

(7)

For that portion of the underwriting gain amount for which
the Company’s loss ratio is less than or equal to 100
percent but is greater than or equal to 65 percent, the
Company shall retain an amount of the underwriting gain
equal to the product of the following:
(I)

Its retained net book premium;

(II)

100 percent minus [the greater of the Company’s
actual loss ratio or 65 percent]; and

(III)

22.5 percent.

For that portion of the underwriting gain amount for which
the Company’s loss ratio is less than 65 percent but is
greater than or equal to 50 percent, the Company shall
retain an amount of the underwriting gain equal to the
product of the following:
(I)

Its retained net book premium;

(II)

65 percent minus [the greater of the Company’s
actual loss ratio or 50 percent]; and

(III)

13.5 percent.

For that portion of the underwriting gain amount for which
the Company’s loss ratio is less than 50 percent, the
Company shall retain an amount of the underwriting gain
equal to the product of the following:
(I)

Its retained net book premium;

(II)

50 percent minus the Company’s actual loss ratio;
and

(III)

3.0 percent.

The Company’s cumulative underwriting gain or loss shall be determined
by summing the net underwriting gains or losses for all States for the
Commercial and Assigned Risk Funds.
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2021 SRA

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(8)

(9)

Net Book Quota Share
(A)

The Company shall cede to FCIC 6.5 percent of its cumulative
underwriting gain or loss calculated in paragraph (7) and the
associated premium and losses with such amount.

(B)

After the cession in subparagraph (A):
Any underwriting gain due the Company will be paid by
FCIC to the Company at annual settlement.

(ii)

Any underwriting loss of the Company will be paid to
FCIC on each monthly settlement report for which there is
an underwriting loss.

Disbursement of Gains from the Net Book Quota Share
(A)

(B)
(10)

(i)

If the sum of all AIPs Net Book Quota Share, calculated in
accordance with paragraph (8), results in a net underwriting gain to
be paid to FCIC for the reinsurance year, a portion of any such net
underwriting gain will be disbursed to the Company as a payment
equal to the product of the following:
(i)

The ratio of the Company’s total net book premium for
additional coverage eligible crop insurance contracts for all
funds in State Group 3 relative to total net book premium
for additional coverage eligible crop insurance contracts of
all AIPs for all funds in State Group 3; and

(ii)

1.5 percent of the sum of all underwriting gains and losses
calculated in accordance with paragraph (7) for all AIPs for
the reinsurance year.

Any disbursement under this paragraph will be made at annual
settlement.

Contingency Fund
(A)

The Contingency Fund, which is part of the insurance fund
authorized under section 516(c) of the Act (7 U.S.C. § 1516(c)), is
used to offset expenses incurred by FCIC to administer a
Company’s book of business in the event of Company supervision,
rehabilitation, insolvency or operational deficiency, or an

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07-01-20
equivalent event, as determined by FCIC, or the Agreement is
terminated for cause.
(B)

(11)

(12)

Any amounts owed to FCIC by the Company in accordance with
sections II(a)(6), II(b)(12), IV(b)(7), IV(h), and IV(j)(4) will be
accounted for in the Contingency Fund.

The Company may reinsure its liability for ultimate net losses remaining
after all retentions, designations, and assignments under this Agreement.
Insurance companies that qualify as PICs are not precluded from entering
into reinsurance arrangements with the Company. The Company shall
inform FCIC in writing of all reinsurance arrangements that relate to
eligible crop insurance contracts. Reinsurance arrangements, unless
otherwise specified by FCIC in writing, must meet the definition of, and
the standards applicable to:
(A)

Reinsurance in the National Association of Insurance
Commissioners (NAIC) Credit for Reinsurance Model law, or a
NAIC model successor law;

(B)

Standards for reinsurance under the NAIC Accounting Practices
and Procedures Manual including any revisions or updates; and

(C)

Any other relevant standards developed by the NAIC for credit for
reinsurance.

In addition to other remedies provided in this Agreement, FCIC may, at its
sole discretion, offer additional reinsurance beyond what is otherwise
provided in this Agreement whenever the Company reports an amount of
net book premium greater than the amount FCIC has authorized, in
accordance with Appendix II. FCIC may cause the underwriting gain or
loss after the cession determined in paragraph (8)(A), payable to or by the
Company, to be reduced according to the ratio of the excess net book
premium to the total reported net book premium. The excess will then be
reinsured under this Agreement. The Company agrees to pay FCIC a
reinsurance premium equal to 5 percent of the excess net book premium
whenever this provision applies.

SECTION III. SUBSIDIES, EXPENSES, FEES, AND PAYMENTS
(a)

Subsidies and Expenses
(1)

Risk subsidy shall be determined in accordance with the Act and will be
provided on behalf of policyholders to the Company on the monthly
settlement report specified in paragraph (2)(B) below.
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2021 SRA

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(2)

A & O Subsidy and CAT LAE
(A)

Notwithstanding the provisions of this section, under no
circumstances will A&O subsidy or CAT LAE be paid in excess of
the amounts authorized by the Act.

(B)

A&O subsidy and CAT LAE will be paid to the Company after the
Company submits, and FCIC accepts, acreage reports, or other similar
reports (e.g., preliminary tonnage report for eligible raisin crop
insurance contracts, or inventory value reports for nursery and clam
crop insurance contracts, annual farm report for eligible AGR crop
insurance contracts). The initial payment to the Company of A&O
subsidy and CAT LAE will be based on information reported on the
September monthly settlement report following the end of the
reinsurance year, and will be adjusted monthly thereafter.

(C)

For any eligible crop insurance contract for CAT coverage, A&O
subsidy will be 0.0 percent of net book premium; for CAT LAE,
6.0 percent of the net book premium.

(D)

For eligible crop insurance contracts with additional coverage that
provide coverage under an area-based, or similar plan of insurance,
the A&O subsidy will be:

(E)

(i)

Except as provided in clause (ii), 12.0 percent of the net
book premium for such eligible crop insurance contracts.

(ii)

For area-based or similar plans of insurance that were not
widely available as of the 2008 reinsurance year, 20.1
percent of the net book premium for such eligible crop
insurance contracts.

For an agricultural commodity in a county for which FCIC did not
establish premium rates in the actuarial data master file for the
2010 reinsurance year and excluding eligible crop insurance
contracts subject to subparagraphs (C) and (D):
(i)

For additional coverage eligible crop insurance contracts
that provide coverage under a revenue plan of insurance
that can increase liability whenever the market price at the
time of harvest exceeds the market price at the time of
planting, 18.5 percent of the net book premium.

(ii)

For all other eligible crop insurance contracts, 21.9 percent
of the net book premium.
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2021 SRA

07-01-20

(F)

(G)

Subject to the limitations provided in subparagraphs (G) and (H)
and excluding eligible crop insurance contracts subject to
subparagraphs (C), (D), and (E), A&O subsidy will be determined
and paid as set forth below.
(i)

For additional coverage eligible crop insurance contracts
that provide coverage under a revenue plan of insurance
that can increase liability whenever the market price at the
time of harvest exceeds the market price at the time of
planting, 18.5 percent of the net book premium.

(ii)

For all other eligible crop insurance contracts, 21.9 percent
of the net book premium.

Notwithstanding the provisions contained in subparagraph (F):
(i)

(ii)

(iii)

If the sum of the A&O subsidies for all AIPs for all eligible
crop insurance contracts subject to subparagraph (F) for the
reinsurance year exceeds the product of the following:
(I)

Total liability;

(II)

EPR;

(III)

Average A&O rate;

(IV)

1.0509; and

(V)

0.615; then

The total A&O subsidy paid to the Company for eligible
crop insurance contracts subject to subparagraph (F) will be
equal to the product of:
(I)

The total A&O subsidy calculated for the Company
according to subparagraph (F); and

(II)

The ratio of clause (i) above divided by the sum of
the A&O subsidies for all AIPs for all eligible crop
insurance contracts calculated according to
subparagraph (F) for the reinsurance year.

Any adjustment to the A&O subsidy amount determined in
accordance with subparagraph (G) will be made on the
monthly settlement report for the applicable reinsurance
23

2021 SRA

07-01-20
year and adjustments will end on the first annual settlement
report for the reinsurance year.
(H)

Notwithstanding the provisions contained in subparagraph (F):
(i)

(ii)

(iii)

(I)

If the sum of the A&O subsidies for all AIPs for all eligible
crop insurance contracts subject to subparagraph (F) for the
reinsurance year is less than the product of the following:
(I)

Total liability;

(II)

EPR;

(III)

Average A&O rate;

(IV)

1.0509; and

(V)

0.489; then

The total A&O subsidy paid to the Company for eligible
crop insurance contracts subject to subparagraph (F) will be
equal to the product of:
(I)

The total A&O subsidy calculated for the Company
according to subparagraph (F); and

(II)

The ratio of clause (i) above divided by the sum of
the A&O subsidies for all AIPs for all eligible crop
insurance contracts calculated according to
subparagraph (F) for the reinsurance year.

Any adjustment to the A&O subsidy amount determined in
accordance with subparagraph (H) will be made on the first
annual settlement report for the reinsurance year.

Notwithstanding subparagraphs (E) through (H), FCIC will pay
additional A&O subsidy for eligible crop insurance contracts in
States in which the loss ratio is greater than 120 percent of the total
net book premium written in the State by all AIPs as follows:
(i)

FCIC will pay an additional A&O subsidy amount equal to
1.15 percent times the net book premium for eligible crop
insurance contracts subject to subparagraphs (E) and (F)
and calculated according to subparagraphs (E) and (F); and

24

2021 SRA

07-01-20
(ii)

Any adjustment to the loss ratio for a State will be made on
the monthly settlement report for the applicable reinsurance
year and adjustments will end subject to the limitations for
submitting data through automated systems, in accordance
with Appendix III.

(J)

In addition to other provisions of this Agreement, the amount of
A&O subsidy may be adjusted to a level that FCIC determines to
be equitable if issuing or servicing eligible crop insurance
contracts involves expenses that vary significantly from the basis
used to determine the A&O subsidy under this section.

(K)

The Company, for itself and any persons whose rights are
derivative of the Company (including, but not limited to, assigns,
successors, and representatives) hereby covenants and agrees that
it will not institute or file any judicial or administrative proceeding,
or cause the instituting or filing (directly or indirectly) of any
judicial or administrative proceeding, or assist any third party that
has instituted or filed any judicial or administrative proceeding,
against FCIC, RMA, the United States Department of Agriculture,
or any officer, agent, or director thereof (collectively, “FCIC”),
challenging the legality of the terms and conditions of section
III(a). Nothing in the forgoing precludes the Company from
responding to a court order. This covenant and agreement may be
pleaded by FCIC as a bar or release in the event any such judicial
or administrative proceeding is instituted or filed. The Company
and FCIC, prior to execution of this Agreement, had disputed the
provisions of section III(a). That dispute now has been
compromised in a manner mutually acceptable to the Company
and FCIC, and, in consideration of that compromise, the Company
agrees and covenants as set forth above. The Company shall
require its agents to acknowledge in writing that the agents agree
to and are bound by the same covenant not to sue contained in this
paragraph. Such acknowledgement may be contained in an agent
or other agreement.

(3)

The SSNs of all agents and loss adjusters, as applicable, who perform any
service or related activity under an eligible crop insurance contract, shall
be provided to FCIC in accordance with FCIC procedures. If the
applicable SSN is not provided for an eligible crop insurance contract, the
Company shall not receive any reinsurance for that eligible crop insurance
contract until the appropriate SSN is provided.

(4)

Compensation to persons involved in the direct sale and service of any
eligible crop insurance contract under this Agreement, in accordance with
FCIC procedures, shall only be paid or provided as follows:
25

2021 SRA

07-01-20

(A)

All compensation paid by the Company or its MGA shall be in
writing, and provided to FCIC upon request.

(B)

Except as provided in subparagraph (C), in any State in which the
Company is doing business, the Company, its MGA, or any
affiliate shall not pay total compensation in excess of 80 percent of
the total amount of A&O subsidy and CAT LAE calculated in
accordance with subsection (a)(2) excluding any amounts paid
under subsection (a)(2)(I), for such State. The calculation of the
80 percent is based on the amount paid by FCIC on the first annual
settlement report for the reinsurance year.

(C)

The Company, its MGA, or any affiliates may only provide
compensation in excess of that permitted in subparagraph (B) if:
(i)

The Company has been paid an underwriting gain under
section II(b)(7) on the first annual settlement report for the
reinsurance year;

(ii)

For any State in which the Company is doing business, the
total amount of all compensation paid under this
subparagraph and subparagraph (B) does not exceed 100
percent of the total amount calculated for A&O subsidy and
CAT LAE in accordance with subsection (a)(2), excluding
any amounts paid under subsection (a)(2)(I), for such State.
The calculation of the 100 percent is based on the amount
paid by FCIC on the first annual settlement report for the
reinsurance year; and

(iii)

The total amount of compensation paid under this
subparagraph to all persons in all States for the reinsurance
year does not exceed:
(I)

The underwriting gain paid to the Company under
section II(b)(7) on the first annual settlement report
for the reinsurance year; less

(II)

Any net book quota share ceded to FCIC by the
Company under section II(b)(8) on the first annual
settlement report for the reinsurance year; plus

(III)

Any disbursement of gains from the net book quota
share received by the Company from FCIC under
section II(b)(9) on the first annual settlement report
for the reinsurance year; less
26

2021 SRA

07-01-20

(E)

(b)

(IV)

Any amounts obligated by the Company under
reinsurance arrangements with entities that are not
owned, in whole or in part, and controlled by the
Company subject to section II(b)(11) for the
reinsurance year; plus

(V)

Any ceding commissions or other amounts received
by the Company for reinsurance arrangements
subject to section II(b)(11) for the reinsurance year.

If FCIC discovers that the Company, its MGA, or affiliate has paid
compensation in excess of the amounts allowed in subparagraphs
(B) or (C), the Company will be subject to any sanction described
in this Agreement or applicable regulations. Any scheme or device
to circumvent the limitations in subparagraphs (B) or (C) will be
considered a violation of this Agreement.

Administrative Fees
The Company shall remit to FCIC all administrative fees collected in accordance
with the applicable eligible crop insurance contract and the following:
(1)

In the event the policyholder is a limited resource farmer as defined in the
regulations, the Company shall submit the required information to FCIC
and FCIC will waive the applicable fees on the monthly settlement report.

(2)

The Company shall terminate eligible crop insurance contracts if
administrative fees are not paid by the date specified in the applicable
eligible crop insurance contract for CAT coverage and report such
termination to FCIC in accordance with FCIC procedures.

(3)

(c)

FCIC will perform debt collection activities for CAT administrative fees
that have not been timely paid, provided the Company has followed FCIC
procedures.

Payments
(1)

With respect to payments due FCIC from the Company:
(A)

Except as provided in subparagraph (B), all payments will be netted
on the monthly and annual settlement reports with amounts due the
Company from FCIC. FCIC will remit amounts due the Company by
electronic funds transfer (EFT) on or before the FCIC payment date.
Any amounts due FCIC or the Company that are not timely remitted
are subject to the interest rate provisions contained in section IV(c),

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2021 SRA

07-01-20
with such interest accruing from the date such payment was due to the
date of payment.
(B)

Amounts due FCIC on the September monthly settlement report
following the end of the reinsurance year will be netted with amounts
due the Company on prior reinsurance year reports. The Company
must remit amounts due no later than the Company payment date for
the September monthly report. The A&O subsidy and CAT LAE
shown on the September monthly settlement report following the end
of the reinsurance year, will not be netted with amounts due from the
Company, but will be paid no later than the third business day of
October. All subsequent monthly or annual settlement reports for the
reinsurance year will be paid as specified in subparagraph (A).

(2)

In the event that FCIC erroneously rejects data that was correctly
submitted by the Company and a payment would be due to the Company
if the data had not been rejected, the Company shall be entitled to interest
accrued on this amount for the period of such delay, at the rate provided in
section IV(c)(1).

(3)

Any funds paid by the Company to FCIC in the compromise and
settlement of any dispute between FCIC and the Company in an amount
less than FCIC claimed was due will be included on the monthly
settlement report without regard to the provisions of section II(b).

(4)

Notwithstanding any other provision of this Agreement, if a review or
examination reveals that the Company or its affiliates have committed an
error or omission or failed to comply with a term of the Act, this
Agreement, regulations, or FCIC procedures, FCIC will provide written
notice to the Company within 3 years of the end of the insurance period
when the error, omission or failure occurred, if the Company owes a debt
to FCIC, unless the error, omission or failure was willful or intentional.
The failure to provide timely notice required herein shall only relieve the
Company from liability for the debt owed and not for other consequences
of the error, omission or failure that address other obligations of the
Company, including maintaining a satisfactory performance record.
Written notice to the Company under this paragraph will:
(A)

Describe the failure regarding compliance with a specified term of
the Act, this Agreement, the regulations, or FCIC procedures;

(B)

State that such failure results in an amount being owed to FCIC;

(C)

Include the crop year and eligible crop insurance contract
number(s) for which such failure occurred; and

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2021 SRA

07-01-20
(D)

(5)

Provide sufficient detail to put the Company on general notice of
the type of error, omission or failure alleged (such as failure to
properly calculate the approved yield or failure to conduct a preacceptance inspection, etc.).

The Company shall provide written notice, in a form similar to the notice
in paragraph (4), to FCIC of any claim that funds may be owed from FCIC
to the Company within 3 years after annual settlement of the reinsurance
year in which such funds are claimed to be owed. Failure to provide such
notice shall relieve FCIC of the obligation to repay any amount that would
be owed to the Company. If an investigation by FCIC determines that
funds may be owed by FCIC to the Company, written notice does not need
to be provided.

SECTION IV. GENERAL PROVISIONS
(a)

Collection of Information and Data
(1)

The Company is required to collect and provide to FCIC all SSNs or EINs
that are required to be submitted by the policyholder under the eligible
crop insurance contract, and the SSNs of all employees, affiliates, and
other persons as required by FCIC procedures. SSNs or EINs shall be
protected, as prescribed in the Privacy Act of 1974 (5 U.S.C. § 552a), by
the Company and all of its affiliates with access to such information.

(2)

In accordance with section 502(c) of the Act (7 U.S.C. § 1502(c)), neither
the Company, nor its personnel, or contractors, or affiliates may disclose
to the public any information provided by the policyholder unless such
disclosure is otherwise required by Federal law.

(3)

All persons who have access to Protected Information or Personally
Identifiable Information, including, but not limited to, personnel,
contractors, service providers and affiliates of the Company, shall sign a
non-disclosure statement, in accordance with reporting and certification
requirements contained in section XV of Appendix I.

(4)

The Company and all of its affiliates shall develop, implement, and
maintain information controls and systems, including those pertaining to
all Protected Information and records, in a manner consistent with the
Federal Information Security Management Act (FISMA) (44 U.S.C. §
3541), or any Federal law covering Federal crop insurance information.
FISMA is based on an on-going, risk-based process to identify, assess,
plan, and strengthen information security. The Company shall make
available audit and assessments examining its Information Technology
security, both internal and external, to FCIC upon request.

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2021 SRA

07-01-20
(5)

(b)

The Company shall report any loss or unauthorized disclosure of Protected
Information or Personally Identifiable Information to FCIC within one
hour of discovery of the loss or unauthorized disclosure of such
information in accordance with Appendix III, and shall not distinguish
between suspected or confirmed losses or disclosures.
Reports
(1)

The Company is required to collect, maintain and submit to FCIC data that
FCIC reasonably determines is necessary to the operation of the Federal
crop insurance program. Data the Company is required to submit to FCIC
shall be certified as accurate, detailed and submitted to FCIC in
accordance with FCIC procedures.

(2)

Unless specifically approved by FCIC in writing, FCIC will reject any
eligible crop insurance contract originally submitted by the Company after
the February monthly transaction cutoff date following the reinsurance
year.

(3)

Producer premiums and administrative fees collected by the Company
shall be reported to FCIC in accordance with Appendix III.

(4)

The Company shall provide information to FCIC relating to eligible crop
insurance contracts of the Company reinsured under this Agreement as
specified herein and in Appendix III.

(5)

In addition to any other reporting requirement, the Company shall report
the following information regarding each eligible crop insurance contract
and have such information be accepted by FCIC not later than the
applicable date specified in paragraph (6):

(6)

(A)

All names, SSNs, and EINs the policyholder is required to report
under the eligible crop insurance contract;

(B)

The agricultural commodity to be insured under the eligible crop
insurance contract;

(C)

The plan of insurance and coverage level, including the price
election, elected by the eligible producer; and

(D)

The actual production history to be used to establish insurable
yields under the applicable eligible crop insurance contract, as
specified in Appendix III.

Information specified in paragraph (5) must be accepted by FCIC not later
than:

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2021 SRA

07-01-20
(A)

For information required by paragraph (5), subparagraphs (A)
through (C):
(i)

In cases of written agreements requiring annual FCIC
approval or for the initial year of a written agreement
(unless otherwise specified in Appendix III), not later than
the transaction cutoff date for the week containing the 30th
calendar day after FCIC approval;

(ii)

For any renewal or multi-year written agreement (unless
otherwise specified in Appendix III), the transaction cutoff
date for the week containing the 30th calendar day after the
sales closing date for the eligible crop insurance contract;

(iii)

For any agricultural commodity without a fixed sales
closing date:

(iv)

(B)

(7)

(I)

For the initial year of application, the later of the
transaction cutoff date for the week containing the
30th calendar day after the eligible producers
signature date, or the transaction cutoff date for the
week containing the 30th calendar day after the
cancellation date;

(II)

For any subsequent year of insurance, the
transaction cutoff date for the week containing the
30th calendar day after the cancellation date; and,

For all other eligible crop insurance contracts not covered
in subparagraphs (i) through (iii), the transaction cutoff
date for the week including the 30th calendar day after the
sales closing date for the eligible crop insurance contract.

For information required by paragraph (5), subparagraph (D), the
transaction cutoff date for the week containing the 30th calendar
day after the production reporting date for the eligible crop
insurance contract, as specified in the actuarial data master file.

The A&O subsidy applicable to the eligible crop insurance contract
determined in accordance with section III(a)(2) will be reduced whenever
the information required by paragraph (5) has not been accepted by FCIC
or such information is revised after the deadlines set forth in
paragraph (6).
(A)

For information required by paragraph (6)(A), the A&O subsidy
for the eligible crop insurance contract will be reduced by:
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2021 SRA

07-01-20

(B)

(i)

1 percentage point if the required information is first
accepted or revised after the transaction cut-off date for the
week containing the 30th calendar day after the sales
closing date (or other cancellation, approval, or signature
date specified in paragraph (6)), but prior to the transaction
cut-off date for the week containing the 60th calendar day;

(ii)

2 percentage points if the required information is first
accepted or revised after the transaction cut-off date for the
week containing the 60th calendar day after the sales
closing date (or other cancellation, approval, or signature
date specified in paragraph (6)), but prior to the transaction
cut-off date for the week containing the 90th calendar day;
or

(iii)

3 percentage points if the required information is first
accepted or revised after the transaction cut-off date for the
week containing the 90th calendar day after the sales
closing date (or other cancellation, approval, or signature
date specified in paragraph (6)).

For information required by paragraph (6)(B), the A&O subsidy
for the eligible crop insurance contract will be reduced by:
(i)

1 percentage point if the required information is first
accepted after the transaction cut-off date for the week
containing the 30th calendar day after the production
reporting date, but prior to the transaction cut-off date for
the week containing the 60th calendar day;

(ii)

2 percentage points if the required information is first
accepted after the transaction cut-off date for the week
containing the 60th calendar day after the production
reporting date, but prior to the transaction cut-off date for
the week containing the 90th calendar day; or

(iii)

3 percentage points if the required information is first
accepted after the transaction cut-off date for the week
containing the 90th calendar day after the production
reporting date.

(C)

The sanctions under this paragraph may be reduced or waived if
the delay is caused in whole or in part by FCIC.

(D)

If the eligible crop insurance contract or FCIC procedures require
or allow the policyholder to make an election of, or change to, any
32

2021 SRA

07-01-20
information required to be reported under paragraph (5),
subparagraphs (A) through (C), after the applicable deadline
specified in paragraph (6)(A), the A&O subsidy reduction in
paragraph (7)(A) will not apply for that eligible crop insurance
contract until the weekly transaction cutoff date containing the
30th calendar date after the date the policyholder is required to
make such designation, or a determination by the Company in
accordance with FCIC procedures, and the dates in paragraph
(7)(A)(i), (ii), and (iii) are adjusted accordingly.

(8)

(c)

(E)

Nothing in paragraph (7)(B) shall limit the ability of the Company
to correct, without application of reductions within (7)(B), any
error in the information submitted under paragraph (5)(D) after
acceptance of the information by FCIC in accordance with
paragraph (6)(B).

(F)

The total of any A&O subsidy reductions in paragraph 7 for an
eligible crop insurance contract will not exceed 3 percent.

The Summary of Coverage and billing statement provided to the
policyholder shall, at a minimum, prominently display each of the
following:
(A)

The amount of risk subsidy paid by FCIC on behalf of the
policyholder;

(B)

The amount of premium and administrative fees due the Company
from the policyholder;

(C)

The amount of A&O subsidy paid by FCIC to the Company on
behalf of the policyholder, as calculated in accordance with
sections III(a)(2)(D),(E), and (F) and prior to any adjustments
made in accordance with sections III(a)(2)(G), (H), or (I); and

(D)

For purposes of displaying the A&O subsidy adjustment calculated
in accordance with section III(a)(2)(I), a footnote stating: “The
reported A&O subsidy amount may increase by 1.15 percent of the
net book premium, if the loss ratio in the state exceeds 1.20 or may
otherwise change if required by the Standard Reinsurance
Agreement. However, the amount of premium the policyholder is
required to pay will not change.

Interest

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2021 SRA

(d)

07-01-20
(1)

Any interest that the Company is required to pay FCIC under the terms of
this Agreement will be paid at the simple interest rate of 15 percent per
annum.

(2)

The Company will repay with interest any amount paid to the Company by
FCIC that FCIC or the Company subsequently determines was not due.

(3)

FCIC will repay with interest any amount paid by the Company to FCIC,
which FCIC subsequently determines was not due.

(4)

Interest on amounts determined not to be due will begin to accrue on the
31st day after the date that:
(A)

In the case of amounts owed to the Company, a written notification
stating the amount claimed to be owed is provided to FCIC by the
Company, as applicable, and end on the date the amount is paid in
full; or

(B)

In the case of amounts owed to FCIC, the Company receives a
final determination from FCIC or other written statement from
FCIC that a specific amount is owed, as applicable, and end on the
date the overpaid amount is paid in full. Appeal by the Company
under this Agreement or 7 C.F.R. § 400.169 does not delay the
date by which interest starts to accrue.

Escrow Account
(1)

At the Company's request, FCIC will allow the Company to establish an
escrow account in the name of FCIC at a bank designated by the
Company, and approved by FCIC, to reimburse the Company for payment
of indemnities, prevented planting payments or replant payments to
policyholders by the Company. The Company's bank shall pledge
collateral as required by 31 C.F.R. § 202 in the amount determined by
FCIC.

(2)

When an escrow account has been established, the Company may request
FCIC to fund the escrow account by submitting indemnity data to FCIC in
accordance with Appendix III. A request to fund the escrow account shall
be deemed certified by an authorized officer or authorized employee of the
Company that the information establishing the claim is correct and
accurate. If the Company utilizes the escrow process to pay indemnities,
prevented planting, or replant payments, the Company shall issue payment
to the producer within 3 business days of submitting the request for
escrow funding to FCIC.

34

2021 SRA

(e)

(f)

07-01-20
(3)

Any Company that elects not to utilize escrow funding will be reimbursed
for paid losses validated and accepted on the monthly settlement report.

(4)

The Company’s bank may only draw funds from the escrow account when
the instrument or document issued as payment of the indemnity, prevented
planting payment or replant payment has cleared the Company’s bank
account.

(5)

If there is a shortfall of funds in the escrow account, it is the Company’s
responsibility to deposit funds to cover any shortages.

Supplemental Insurance
(1)

The Company shall not sell a contract of insurance or similar instrument,
which is written in conjunction with an eligible crop insurance contract
and not reinsured by FCIC, unless the Company has complied with the
requirements of 7 C.F.R. § 400.713.

(2)

FCIC will not provide reinsurance for an eligible crop insurance contract
if the Company sold a contract of insurance or instrument described in
paragraph (1) that FCIC determines to have shifted risk to, or increases the
risk of, such eligible crop insurance contract reinsured under this
Agreement, or if the Company administers such insurance or instrument in
a manner inconsistent with information submitted in accordance with 7
C.F.R. § 400.713.

(3)

The Company shall maintain, and make available at the request of FCIC,
the underwriting information pertaining to a contract of insurance or
instrument described in paragraph (1), including, but not limited to, the
policy number and all SSNs and EINs related to the eligible crop
insurance contract.

(4)

If the terms of a contract of insurance or instrument described in
paragraph (1) become inconsistent with the terms of the eligible crop
insurance contract causing payments to be made under the eligible crop
insurance contract that would not otherwise be payable, reinsurance will
be denied.

Insurance Operations
(1)

General
(A)

The Company shall verify yields and other information used to
establish insurance guarantees and indemnity payments in
accordance with the regulations and FCIC procedures.

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07-01-20

(2)

(B)

The Company shall use contracts, standards, FCIC procedures,
methods, and instructions as authorized by FCIC in the sale and
service of eligible crop insurance contracts.

(C)

The Company shall comply with standards and FCIC procedures to
create forms used in the sales and service of any eligible crop
insurance contract.

Plan of Operations
(A)

The Company’s complete Plan of Operations shall be submitted to
FCIC by April 1 preceding the reinsurance year, unless otherwise
authorized by FCIC. The Plan of Operations shall meet the
requirements of this Agreement, including, but not limited to, the
format and all requirements specified in Appendix II, to be
considered a complete Plan of Operations.

(B)

The Plan of Operations contains integral terms to this Agreement
so no Agreement exists for a reinsurance year until the Plan of
Operation has been approved by FCIC. Once approved by FCIC,
the Company’s Plan of Operations becomes an Appendix to the
Agreement.

(C)

If the Plan of Operations is not approved by FCIC by the July 1
start of the reinsurance year:
(i)

(ii)

FCIC may, at its sole discretion, provide the Company with
written notice:
(I)

Agreeing to reinsure and pay CAT LAE, A&O
subsidy and risk subsidy for eligible crop insurance
contracts that are renewed or sold by or on behalf of
the Company while FCIC continues its evaluation
of the Plan of Operations: or

(II)

Directing the Company and any of its service
providers and agents to cease the renewal or sale of
eligible crop insurance contracts until FCIC
determines whether to approve or disapprove the
Plan of Operations.

Any eligible crop insurance contract sold or renewed after
FCIC has provided written notice that the Company shall
cease the renewal or sale of eligible crop insurance
contracts until FCIC determines whether to approve or

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07-01-20
disapprove the Plan of Operations will not be provided
reinsurance, A&O subsidy, CAT LAE, or risk subsidy.
(iii)

(D)

(g)

If FCIC authorizes the continued renewal or sale of eligible
crop insurance contracts by or on behalf of the Company
while FCIC completes its evaluation of the Plan of
Operations and:
(I)

Approves the Plan of Operations, the renewed and
sold eligible crop insurance contracts will be
reinsured under the newly approved Plan of
Operations; or

(II)

Disapproves the Plan of Operations, the eligible
crop insurance contracts renewed or sold during the
evaluation period will be transferred to FCIC and
will be processed in accordance with section IX of
Appendix I.

The Company shall be in compliance with the Freedom to E-File
Act and section 508 of the Rehabilitation Act. The Company shall
file its plan for meeting the requirement of these statutory
provisions, in accordance with Appendix II.

Access to Records and Operations
(1)

Upon written request, unless otherwise authorized by the FCIC Manager,
the Company shall provide FCIC reasonable access to its offices,
personnel, and all records that pertain to the business conducted under, or
the requirements contained in, this Agreement, including, but not limited
to, access to records on the operation of the Company, at any time during
normal business hours.

(2)

The Company shall enter into, and enforce agreements to ensure that its
affiliates provide FCIC and the Company with access to its affiliates’
offices, personnel, and all records that pertain to the business conducted
under, or the requirements contained in, this Agreement, including, but not
limited to, access to records on the operation of such affiliate, at any time
during normal business hours.

(3)

The Company shall designate in its Plan of Operations where the records
pertaining to the business conducted under this Agreement are located. In
the case of electronic records, the location of computers or servers may be
deemed the designated location.

37

2021 SRA

(h)

07-01-20
(4)

Records described in this subsection shall be retained until 3 years after
the last day on which records may be submitted through automated
systems in accordance with Appendix III.

(5)

FCIC may require the Company and its affiliates to retain certain specified
records for a longer period than required in paragraph (4) if it so notifies
the Company in writing at any time before the expiration of the applicable
3-year period. If the applicable 3-year period has expired and the
Company or its affiliate still has the records in their possession, FCIC can
require that such records be retained for a longer period by providing
written notice.

(6)

Notwithstanding paragraph (4), records regarding an unsatisfied debt of a
policyholder shall be retained until the debt is satisfied or is discharged
through bankruptcy proceedings.

(7)

For the purpose of this subsection the term "FCIC" includes all U.S.
Government agencies including, but not limited to, USDA Office of
Inspector General, the Government Accountability Office, and the
Department of Labor.

Compliance and Corrective Action
(1)

The Company and its affiliates shall comply with the provisions of this
Agreement, as applicable. The Company is solely responsible for the
conduct and performance of its personnel and affiliates with respect to the
obligations imposed by this Agreement and FCIC procedures. Liability for
damages incurred, to the extent it is caused by an error or omission or
failure to comply with this Agreement or applicable FCIC procedures, is
the sole responsibility of the Company. The assumption of liability under
this section is only for the purpose of this Agreement and may not be
relied upon by any person or entity not a part to this Agreement for any
purpose.

(2)

In addition to paragraph (1), the Company and its affiliates shall comply
with FCIC procedures, and the applicable laws of the States in which the
Company is conducting business under this Agreement, unless preempted
in accordance with section IV(o).

(3)

The Company shall fully cooperate with FCIC in the review or
examination of the Company or its affiliates regarding compliance with
the requirements of the Agreement and FCIC procedures. The Company
shall include in its agreements with its affiliates provisions that ensure that
such affiliates agree to cooperate and assist FCIC in the reviews and
examinations conducted in accordance with this Agreement.

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2021 SRA

07-01-20
(4)

In addition to any other remedies available under this Agreement, if FCIC
finds that the Company has not complied with a provision of this
Agreement, and the Company has not taken appropriate steps to correct
the act of non-compliance, FCIC may, at its sole discretion, require that
the Company take corrective action within 45 days of the date of making a
written demand. The Company shall provide FCIC with satisfactory
documentary evidence of the corrective action taken to address the act of
non-compliance.

(5)

If a State makes a determination that the Company or its affiliates are not
in compliance with state law and FCIC determines such non-compliance is
material to the Company’s obligations under this Agreement, and all
appeals have been exhausted, FCIC will take remedial actions, which may
include suspension or termination of this Agreement in accordance with
section IV(i) and (j), denial of reinsurance, A&O subsidy, CAT LAE, and
risk subsidy, for all eligible crop insurance contracts for which such noncompliance occurred, in whole or in part, depending on the materiality or
severity of the non-compliance.

(6)

In addition to any other remedies in this Agreement, if FCIC determines
that the Company or its affiliate willfully violated the Agreement or FCIC
procedures, FCIC reserves the right to deny reinsurance, A&O subsidy,
CAT LAE, and risk subsidy for any insurance contract that is sold or
serviced in violation of the terms of this Agreement or FCIC procedures.

(7)

Whenever a failure to comply with a provision of this Agreement or FCIC
procedures by the Company or its service providers, agents, and loss
adjusters materially affects the existence or amount of the indemnity,
prevented planting payment, replant payment, or premium for an eligible
crop insurance contract (including, but not limited to, incorrect APH
calculations; improper adjustment of losses; sales agents or sales
supervisors involved in the adjustment of losses; failure to verify
eligibility for insurance, acreage planted or prevented from being planted,
insurable shares, insurable causes of loss, or unit division) and FCIC is:
(A)

Able to determine the correct amount of indemnity, prevented
planting payment, replant payment, or premium, FCIC, except as
provided in paragraph (8)(A), will deny A&O subsidy, CAT LAE,
and risk subsidy or reduce the A&O subsidy or CAT LAE for the
eligible crop insurance contract based on the severity of the failure,
and require the Company:
(i)

To report to FCIC through PASS the correct amount of
indemnity, prevented planting payment, replant payment,
and premium;

39

2021 SRA

07-01-20

(B)

(8)

(ii)

To pay to the policyholder any amount of underpaid
indemnity, prevented planting payment, replant payment,
or overpaid premium; and

(iii)

To pay to FCIC any overpaid indemnity, prevented
planting payment, replant payment, or underpaid premium
and any subsidy that exceeds the amount the Company or
policyholder was entitled to receive.

Unable to determine the correct amount of indemnity, prevented
planting payment, replant payment, or premium that should have
been paid, FCIC shall deny reinsurance, A&O subsidy, CAT LAE
and risk subsidy, in whole or in part, based on the severity of the
failure, unless the Company can provide documentary evidence
satisfactory to FCIC that shows the correct amount of the
indemnity, prevented planting payment, replant payment, or
premium.

The Company provides valuable program delivery services for which
payment is made in the form of A&O subsidy and CAT LAE. FCIC and
the Company agree that FCIC is damaged by a failure of the Company or
its service providers, agents, and loss adjusters to provide services or to
comply with a provision of this Agreement or FCIC procedures, and that
the value of such service or failure to comply is difficult to determine
because the damages are uncertain and the amount of service or failure to
comply is difficult to quantify. FCIC and the Company agree that in view
of the difficulty of determining the value of such service, the amounts
stated below are reasonable estimates of the value. In the event there is a
pattern or practice of failing to comply with the Agreement or FCIC
procedures and FCIC has determined the Company or its service
providers, agents, and loss adjusters have failed to provide services or to
comply with a provision of this Agreement or FCIC procedures and such
failure has occurred:
(A)

During the sales and service, claims, or operations process, the
Company agrees to pay FCIC an amount up to the entire A&O
subsidy or CAT LAE, as applicable, on all crop insurance contracts
affected by the failure based on the materiality or severity of the
failure, as determined by FCIC; and

(B)

If a pattern or practice under this paragraph also involves overpaid
indemnities that may be collected under paragraph (7)(A), any
reduction in A&O subsidies and CAT LAE will be imposed under
this paragraph, not paragraph (7)(A).

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2021 SRA

(i)

07-01-20
(9)

Failure of the Company or its affiliates to cease or desist any activity or to
take a specific action, as required by FCIC in writing, will subject the
Company or its affiliates to the sanctions in section 515(h) of the Act (7
U.S.C. § 1515(h)).

(10)

Any payment due from, or paid by, the Company under this subsection
shall be in addition, and without prejudice, to any other rights of FCIC, or
the United States. FCIC may, at its sole discretion, waive, reduce or delay
repayment if such actions are needed for continued delivery of the
program.

(11)

Failure of the Company to make payment in accordance with the
provisions of this Agreement, or with provisions of any separate written
agreement to make such payment between the Company and FCIC, shall
subject the Company to the remedies available under this Agreement.

(12)

Nothing in this subsection prevents FCIC from suspending or terminating
this Agreement in accordance with section IV(i) and (j).

(13)

Nothing in this Agreement precludes the government from taking any
actions authorized by law relating to fraud, waste, or abuse.

Suspension
In addition to the other remedies available in this Agreement, FCIC may suspend
this Agreement for cause due to a material breach or failure to perform or comply
with obligations under this Agreement. If this Agreement is suspended for cause:
(1)

Except as provided in paragraph (3), the suspension will remain in effect
until FCIC determines that the error or omission has been corrected and
that steps have been taken to prevent its occurrence.

(2)

While suspended, the Company shall not, as determined by FCIC:

(3)

(A)

Sell, or authorize to be sold, any new crop insurance contracts;

(B)

Renew, or authorize the renewal of, existing eligible crop
insurance contracts; or

(C)

Service any eligible crop insurance contracts in effect at the time
of the suspension (A&O subsidy and CAT LAE will continue to be
paid only for those eligible crop insurance contracts that FCIC
requires to be serviced).

If the eligible crop insurance contracts are not serviced as required by
paragraph (2)(C), or errors or omissions are not corrected within the
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2021 SRA

07-01-20
timeframe specified by FCIC, the suspension will remain in effect and this
Agreement will automatically terminate at the end of the reinsurance year,
or an earlier date if notice of termination is provided by FCIC, and A&O
subsidy and CAT LAE will be denied.

(j)

(4)

Notwithstanding any other provision of this Agreement, during the period
of suspension, the Company may submit a request to FCIC for approval
by FCIC to not renew some or all of the existing eligible crop insurance
contracts. Each request shall contain supporting documentation stating the
basis for the request and the proposed implementation of the request.

(5)

Any eligible crop insurance contract that is sold or renewed if precluded
by FCIC, while this Agreement is suspended will not receive reinsurance,
A&O subsidy, CAT LAE or risk subsidy for such eligible crop insurance
contracts.

(6)

Any eligible crop insurance contract not renewed in accordance with this
subsection shall be canceled in accordance with the terms of the eligible
crop insurance contract not later than 15 days before the next applicable
cancellation date.

Termination
(1)

Notwithstanding any other provision of this Agreement, FCIC may
terminate this Agreement for cause due to a material failure to perform or
comply with this Agreement or the FCIC procedures, or for the
convenience of the government.

(2)

Termination will be effective on the date specified by FCIC but under no
circumstances will it be after the last day of the reinsurance year.

(3)

If this Agreement is terminated, FCIC will not provide reinsurance for
eligible crop insurance contracts issued or renewed after the date of the
termination. Except as otherwise provided in this Agreement, FCIC will
provide reinsurance in accordance with the terms of the Agreement, for
eligible crop insurance contracts in effect as of the date of the termination
until the next cancellation date for the eligible crop insurance contract.

(4)

In addition to any other reductions provided in the Agreement, if this
Agreement is terminated by FCIC for cause, the Company shall pay FCIC
an amount not greater than 10 percent of the net book premium for all
eligible crop insurance contracts in its book of business based on the
materiality or severity of the cause. All amounts collected under this
paragraph will be placed in the Contingency Fund.

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2021 SRA

07-01-20
(5)

(k)

(l)

(m)

After termination of this Agreement, unless otherwise specified in this
Agreement, all of the Company’s eligible crop insurance contracts in its
book of business shall be cancelled in accordance with the terms of such
contract not later than 15 days before the next applicable cancellation date.

Disputes and Appeals
(1)

If the Company disputes an action, finding, or decision of FCIC under this
Agreement, the Company shall seek a final administrative decision
regarding such action, finding, or decision in accordance with the
provisions of 7 C.F.R. § 400.169 before seeking judicial review.

(2)

If the Company seeks a final administrative decision or reconsideration in
accordance with 7 C.F.R. § 400.169, FCIC will, in most cases, issue a
fully documented decision within 90 days of the receipt of a notice of
dispute accompanied by all information necessary to render a decision. If a
decision cannot be issued within 90 days, FCIC will notify the Company
within the 90-day period of the reasons why such a decision cannot be
issued and when it will be issued.

Agreement Change Date
(1)

This is a single year Agreement that ends June 30 of the reinsurance year.
The Company can enter into a new Agreement under the terms and
conditions, except for issuances and revisions pertaining to Appendix III,
that exist as of March 15 preceding the reinsurance year by filing a Plan of
Operations and obtaining approval from FCIC.

(2)

If Congress enacts legislation on or before June 30 that will affect the
terms of the Agreement for the next reinsurance year, the Company may,
within 15 days of the date of enactment:
(A)

Withdraw its Plan of Operations; or

(B)

Amend its Plan of Operations, according to FCIC procedures.

Funding Contingency
If Congress makes any change in law that will affect the amount of funds
authorized to be paid under this Agreement, the affected provisions in this
Agreement will be automatically revised to reflect such change in funding. Under
no circumstance may a payment be made under this Agreement that is in excess
of the amount authorized by law at the time such amount may be owed.

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(n)

07-01-20
Previous Obligations
Any obligations continuing under any previous Agreement will remain subject to
the terms and conditions of such previous Agreement.

(o)

(p)

Preemption of State Law
(1)

In accordance with section 506(l) of the Act (7 U.S.C. § 1506(l)), the
provisions of this Agreement that are inconsistent with provisions of State
or local law will supersede such law to the extent of the inconsistency.

(2)

The provisions of 7 C.F.R. part 400, subpart P pertaining to preemption of
State or local laws or regulations are specifically incorporated herein and
made a part hereof.

(3)

No assessment for any guarantee funds or similar programs may be
computed or levied on the Company by any State for or on account of any
premiums payable on eligible crop insurance contracts reinsured under
this Agreement.

(4)

No State or local regulatory authority, including without limitation a
State’s insurance commissioner, department, or comparable public
authority, may enforce or seek to enforce any provision of the Act, the
regulations, this Agreement, or any FCIC procedures, without the prior
written consent of FCIC.

Discrimination
The Company shall not discriminate against any employee, applicant for
employment, insured, applicant for insurance, or potential applicant for insurance
because of race, color, national origin, religion, sex, age, disability, marital status,
or in retaliation for exercising his or her rights under applicable Federal law. The
Company shall be in substantial compliance with all applicable Federal laws
prohibiting discrimination.

(q)

Set Off
(1)

Funds due from the Company may be set off under the provisions of this
Agreement or under the provisions of 31 U.S.C. chapter 37.

(2)

Any amount due the Company under this Agreement is not subject to any
lien, attachment, garnishment, or any other similar process prior to that
amount being paid under this Agreement, unless such lien, attachment, or
garnishment arises under title 26 of the United States Code.

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(r)

07-01-20
(3)

Set off as provided in this section will not deprive the Company of any
right it might otherwise have to contest the indebtedness involved in the
set off action by administrative appeal.

(4)

In the event a Company fails to pay any amount when due under this
Agreement, any further payments to the Company from FCIC will be set
off against any amounts due FCIC regardless of the reinsurance year until
such amounts are paid with appropriate interest.

(5)

Notwithstanding an assignment made in accordance with section IV(r),
FCIC may set off:
(A)

Any amount due FCIC under this Agreement;

(B)

Any amounts for which the Company is indebted to the United
States for taxes for which a notice of lien was filed or a notice of
levy was served in accordance with the provisions of the Internal
Revenue Code of 1986 (26 U.S.C. § 6323), or any amendments
thereto or modifications thereof, before acknowledgment by FCIC
of receipt of the notice of assignment; and

(C)

Any amounts, other than amounts specified in subparagraphs (A)
and (B) due to FCIC or any other agency of the United States, if
FCIC notified the assignee of such amounts to be set off at or
before the time acknowledgment was made of receipt of the notice
of assignment.

Assignment
(1)

(2)

No assignment by the Company shall be made of the Agreement, or the
rights thereunder, unless:
(A)

The Company assigns the proceeds of the Agreement to a bank,
trust company, or other financing institution, including, but not
limited to, any federal lending agency, or to a person or firm that
holds a lien or encumbrance at the time of assignment; and

(B)

The Company receives the prior approval of FCIC to assign the
proceeds of this Agreement to any other person or firm.

Any assignment made under paragraph (1):
(A)

Will be recognized only if and when the assignee thereof files with
FCIC a written notice of the assignment together with a signed
copy of the instrument of assignment;

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07-01-20
(B)

Shall cover all amounts payable and not already paid under the
Agreement;

(C)

Shall not be made to more than one party; and

(D)

Shall not be subject to further assignment, except that any such
assignment may be made to one party as agency or trustee for two
or more parties.

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Certification
The undersigned acknowledges that the Company and its Board of Directors, if applicable, has
authorized the Company to enter into this Agreement for the 2021 reinsurance year. The
undersigned certifies that the information provided by the Company related to this Agreement is
true and accurate and acknowledges that any misrepresentation in the submission of this
Agreement and information provided by the Company related to this Agreement may result in
civil, administrative, or criminal liability against the Company.

APPROVED AND ACCEPTED FOR
THE FEDERAL CROP
INSURANCE CORPORATION

THE COMPANY

___________________________
Signature

________________________________
Signature

___________________________
Name

________________________________
Name

___________________________
Title

________________________________
Title

___________________________
Date

________________________________
Date

47