BULLETIN NO.: MGR-97-024 TO: All Reinsured Companies All Risk Management Field Offices FSA Headquarters, Program Delivery and Field Operations FROM: Kenneth D. Ackerman Administrator SUBJECT: Procedure for Transferring Policies from Farm Service Agency County Offices to FCIC Approved Reinsured Companies BACKGROUND: The Federal Agriculture Improvement and Reform Act of 1996, (1996 Act) authorizes the Secretary of Agriculture to continue to offer Catastrophic Risk Protection (CAT) crop insurance coverage directly through Farm Service Agency (FSA) County Offices to the extent that there is an insufficient number of approved insurance providers in a State or a portion of a State. The 1996 Act provides that CAT policies sold by FSA County Offices in a State determined to have sufficient numbers of insurance providers available shall be transferred to private insurance companies reinsured by the Federal Crop Insurance Corporation. In accordance with the standards of the 1996 Farm Bill, the Secretary, in consultation with approved insurance providers, has determined the States in which FSA County Offices will no longer service CAT policies. ACTION: The Secretary has directed that all CAT policies in all States currently serviced by FSA County Offices be transferred to approved insurance providers. This affects all policies with sales closing dates after June 30, which is generally the 1998 crop year. The attachment contains the approved process to be followed by all approved insurance providers to assure the timely and efficient transfer of CAT policies. Attachment 1997 Procedure For Transferring CAT Policies From FSA to Approved Reinsured Companies 1. The Farm Service Agency (FSA) County Executive Directors will send letters by June 20, notifying each insured producer that the FSA County Office will cease selling and servicing Catastrophic (CAT) level crop insurance policies and that the policy renewals will be transferred to private insurers, who are reinsured by the Federal Crop Insurance Corporation. The effective dates are shown in Table No. 1, below. 2. The Risk Management Agency (RMA) will send each policyholder a letter (data mailer) by June 24, stating that: a. the policy has been transferred to a private crop insurance company; b. the name and toll-free telephone number of the company; c. the producer should still go to the County Office for service of policies for the currently insured crop year; d. for the current crop year, producers must file acreage reports, production reports, claims, and other required notice at the County Office by the required deadlines; e. the producer may select any other company or local agent provided it is done by the sales closing date for the insured crop. 3. The transfer begins with crops with sales closing dates occurring after June 30. This will be the 1998 crop year in most cases; but for raisin policies, the sales closing date causes the effective crop year of transfer to be 1997, as shown in Table No. 1. Finally, in the case of citrus fruit and citrus tree policies, 1998 crop-year policies, which are currently active, will also be transferred. In Table No. 1, the terms "active" refers to policies that are currently in the risk period, and "renewal" refers to those for which the coverage period will begin in the future. Table No. 1: Effective Crop Year For Transfers Last Crop Year First Crop Year Policy Serviced By Serviced By Crop Type FSA Reins'd Cos. Citrus Fruit Active 1997 1998 Citrus Tree (TX) Active 1997 1998 Raisins Renewal 1996 1997 All Other Crops Renewal 1997 1998 4. The transfer covers the 36 States identified by the Secretary plus all remaining policies from the 14 States converted to single delivery in 1996. 5. RMA will assign all policies to participating companies as soon as possible. Assignment will take into consideration, to the extent practicable, the availability of active agents and companies in the county and adjoining counties, as well as other factors. 6. If any policy is missed in the transfer process, it will be transferred when identified even if the transfer is after the sales closing date. 7. If a policy covers more than one crop, all crops will be assigned to the same company. 8. CAT policies for producers who already have buy-up coverage on other crops or non-high risk land with private insurance companies will be transferred to those same insurers to the maximum extent practicable. 9. RMA will notify companies of the policy transfers via its electronic listing system. 10. RMA will electronically provide to assuming companies all 1996 and 1997 policy data available at the time of transfer. RMA will update monthly the assuming company policy file as additional 1997 data are received from FSA. 11. Upon receipt of its transferred policies, each company will establish the producer's policy within its data system and transmit applicable policy records to RMA in accordance with the 1998 M-13. 12. Assuming companies will be responsible for the transferred policies beginning with the crop years shown in the "First Crop Year" column of that table. 13. Companies should not contact producers until after the June 20 and 24 mailing dates. 14. For policies with sales closing dates of September 30, 1997, and later, companies will contact producers not later than 60 days prior to the sales closing date for any covered crop. For all other policies, companies will contact producers as soon as possible. 15. Companies and agents are required to service all eligible producers. Companies must accept and service all CAT policies transferred or assigned to them, as well as crop insurance applicants at all levels and for all crops in accordance with the Standard Reinsurance Agreement (SRA). 16. If policy data are not available for RMA to transfer to the company, the County Office will copy needed policy information for either agents or companies (not both) when requested. If companies receive incomplete, incorrect, or out-of-date address information, they should contact the appropriate County Office, which will provide corrected information. 17. Companies may only request information on policies that have been assigned to them. 18. If a producer accidentally transfers a policy twice, not counting RMA's assignment, the first transfer will be binding unless the companies mutually agree otherwise. A change from CAT to buy-up with the same company will count as a transfer for this purpose. 19. RMA will provide FSA with lists for each state of active agents and available companies for posting in the County Offices. 20. RMA will provide FSA with a list indicating companies to which policies are assigned. 21. County Offices must continue to service policies through the crop years shown in the "Last Crop Year" column of Table No. 1, and may not issue any new policies beginning with the crop years shown in the "First Crop Year" column of that table. 22. County Offices will no longer accept policy cancellations. Producers who wish to cancel should be directed to the companies to which their policies have been assigned. 23. RMA will flag data transmissions to show those policies on which producers qualified as limited resource farmers and had their administrative fees waived for that year. 24. Companies are responsible for assuring that all agents are familiar with procedures for waiving the administrative fee for limited resource farmers. Companies will also assure that limited resource certification forms are available to agents. 25. With respect to transferred 1998 crop year citrus policies (i.e., active policies): a. Companies should process acreage reports as soon as possible and FCIC will lift the late-processed acreage report edits on these policies. The company must submit the policy with a late processed flag of '8' on the type-14 record. b. Policies can be designated to the Assigned Risk Fund (1997 SRA) with an assigned risk flag of '5' on the type-14 record if the action is completed by August 11, 1997. c. County Offices will collect and keep the $50 CAT fees. d. Companies will report these policies with an 'M' flag in the "Maximum Fee Cause" field and an 'M' flag in the "Administrative Fee Flag" field on the type-14 record. 26. For all renewal policies, including 1997 crop year raisins, companies should collect the $50 CAT fees from the producers. However, if any producer has already paid this fee to the County Office, the County Office should refund the fee to the producer.