BULLETIN NO.: MGR-96-065 TO: All Reinsured Companies All Risk Management Field Offices FSA Headquarters, Program Delivery and Field Operations FROM: Kenneth D. Ackerman Acting Administrator SUBJECT: Additional Guidelines Regarding Transfer of CAT Policies BACKGROUND Questions have developed concerning the movement of the Catastrophic Risk Protection (CAT) policies to reinsured companies from Farm Service Agency (FSA) local offices in the 14 states selected by the Secretary. In some instances producers assigned to a reinsured company failed to either respond to company/agent contacts to complete new applications or to sign a cancellation form. Additionally, reinsured companies and the Risk Management Agency (RMA) were unable to contact some insureds due to incorrect addresses or other circumstances. RMA issued Notice RM-185 on September 30, 1996, instructing all FSA county offices to notify all producers, regardless of where they currently were insured, of changes relating to filing FSA-570 and cancellation of CAT policies. Notice RM-185 was also sent to all reinsured companies. Bulletin No. MGR-96-041 established the basic procedures for transferring policies from FSA to reinsured companies. ACTION For the 1997 crop year: A. For all crops with a contract change date of August 20, 1996, or prior (predominantly fall seeded crops) (a list of contract change dates and cancellation dates for effective crops is attached) the following actions must be taken for any assigned policyholder who has not completed an application or canceled his/her policy: 1) Through each crop's acreage reporting date, reinsured companies will take the necessary steps to establish the CAT policy on their books, including obtaining signed applications, completing APH forms, and collecting administrative fees and acreage reports when due. 2) Any assigned policyholders who a) do not sign an application with a reinsured company or b) do not request cancellation with the reinsured company or local FSA office or c) fail pay the administrative fee by the acreage reporting date, will have his/her policy(s) terminated effective on the acreage reporting date in accordance with the CAT endorsement. Reinsured companies must notify policyholders of the termination. 3) Producers whose policies are terminated, will remain eligible for other USDA program benefits provided they sign an FSA-570, Waiver for Emergency Crop Loss Assistance. B. For all other crops with a Contract Change Date later than August 20, 1996, (predominantly spring seeded crops) the following actions must be taken: 1) Through each crop's acreage reporting date, reinsured companies will take the necessary steps to establish the CAT policy on their books, including obtaining signed applications, completing APH forms, and collecting administrative fees and acreage reports when due. 2) Any assigned policyholder who a) does not sign an application with a reinsured company or b) does not notify the reinsured company/agent or the FSA local office of his/her request for cancellation or c) fails to pay the administrative fee will have his/her policy(ies) terminated effective on the acreage reporting date in accordance with the CAT endorsement. Reinsured companies must notify policyholders of the termination. 3) Either the reinsured company or FSA local office must document a policyholder's request for cancellation on a cancellation form or maintain readily accessible documentation that reflects the date and time the insured advised of his/her request for cancellation. 4) Producers who failure to pay the $50 administrative fee or submit an acreage report, when due, will have breached the crop insurance contract and will not be eligible for other USDA program benefits including: a) benefits under the Agricultural Market Transition Act, b) loans, including loans from Farm Credit and c) benefits under Conservation Reserve Program without regard to whether an FSA-570 waiver was signed. 5) Reinsured companies and their agents (with the support of local FSA offices) have an affirmative responsibility to advise policyholders who do not wish to continue their coverage to sign a cancellation form by the cancellation date or otherwise express the desire to cancel assuring other USDA program benefits are not affected. C. Due to incorrect addresses, RMA and reinsured companies were unable to notify some producers of the change in their insurance provider. If any assigned insured requests crop insurance after the sales closing date because he/she was not notified of a change in provider, reinsured companies should document such cases and take the necessary steps to establish the CAT policy on their books of business, including obtaining signed applications, completing APH forms and collecting administrative fees and acreage reports. D Attached, are listings showing the contract change dates and cancellation dates for crops in the 14 states. These may be used in the efforts to transfer CAT. Attachment ============================================================================= Attachment unavailable in ASCII text format. Please refer to the WordPerfect version of this bulletin for the attachment.