BULLETIN NO.: MGR-98-009 TO: All Reinsured Companies All Risk Management Field Offices FROM: Kenneth D. Ackerman Administrator SUBJECT: Duplicate Policies for 1995 and 1996 BACKGROUND: Risk Management Agency's (RMA) Reinsurance Accounting System (RAS) contains a process that detects duplicate insurance policies for the same entity for the same State/county/crop. When a duplicate is detected, the policy appears on a reinsured company's "Duplicate Report" and the company is required to resolve the duplicate policy issue in accordance with existing procedure. On a duplicate policy, RMA withholds from the company any excess administrative fees potentially paid by producers and rejects any claim for indemnity. If an entity paid more than one administrative fee per crop per county, the policyholder will appear on the "Duplicate Report." When duplicate policies have been resolved in accordance with existing procedure, a refund of any excess administrative fees must be returned to the policyholder. Although, in some cases, excess fees have been charged to the policyholder, reinsured companies have advised RMA that some duplicate policies are found to be for the same crop in the same county, but cover different acreage qualifying as a separate unit; therefore, no overpayment of premium or indemnity occurred. Many policies appear as a duplicate with policies issued by the FSA County Offices who no longer have the capability to delete 1995 and 1996 crop year policies. The majority of the FSA duplicate policies have zero acreage reported. Reinsured Companies and RMA have devoted a significant amount of resources (e.g., staff, systems operations, etc.) over the last 3 years reviewing and making corrections to these policies. These corrections have successfully resolved a high percentage of duplicate conditions. ACTION: RMA will suspend its duplicate process for the 1995 and 1996 reinsurance years; however, the duplicate process will remain in effect for 1997 and subsequent years. Reinsured Companies will still be responsible for correcting 1995 and 1996 reinsurance year duplicate conditions as quickly as possible unless both of the following conditions have been met: 1. The reinsured company maintains documentation that the duplicate policies did not cover the same acreage or have conflicting unit determination, such that the insured did not receive any benefits (premium subsidy or indemnity payment) they would not otherwise have been entitled to had only one policy been in effect. 2. The reinsured company has taken action to ensure that the duplicate condition was resolved for 1997 and succeeding reinsurance years. By suspending its duplicate edit process for the 1995 and 1996 reinsurance years, RMA will no longer deduct the excess administrative fees collected due to multiple policies held by the policyholder in the same county for the same crops and will allow payment of an indemnity. Reinsured companies will bear the responsibility to ensure that premiums and/or administrative fees were not charged and indemnities were not paid on two or more policies covering the same crop on the same acreage for the same year. The RMA Office of Compliance may request the duplicate edit process to be run on an ad hoc basis at any time for review purposes; however, it will have no effect on the monthly accounting process. Documentation already forwarded to RMA for approval to allow duplicate conditions to remain for certain policies may be retained by reinsured companies to meet the above criteria. No further action will be taken by RMA on documentation submitted for these policies. RMA/R&D/PDD:DaveWright:jm for emp:3/06/98:816/926-7387:s:/amrd/ud/dupe7.wpd FINAL:Tim Hoffmann/Kansas City:adw:720-5290/4-13-98.b:\mgr98008.wpd CC: RMA COMPLIANCE OFFICES RMA REGIONAL SERVICE OFFICES FSA (ATTN: JOHN STENCEL, FAX: 202-690-2823; PH: (202) 690-2807, RM. 3096 - S MANDY WELTON, FAX: 202-205-2953; PH: (202) 720-6803 DIANE SHARP, FARM PROGRAMS, FAX: (202) 690-2130 NATIONAL CROP INSURANCE SERVICES AMERICAN ASSOCIATION OF CROP INSURERS CROP INSURANCE RESEARCH BUREAU NATIONAL ASSOCIATION OF CROP INSURANCE AGENTS NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS LINDA VICKERS CNA ATTENTION: CINDY ANDERSON COMPLIANCE MANAGER FAX # (913) 661-7667 HAWKINS, HAWKINS, AND BURT ATTN: DAVID BURT - FAX 904-258-1311 501 SOUTH RIDGEWOOD AVENUE DAYTONA BEACH, FL 32114 CC: K. ACKERMAN IS - PLEASE ROUTE MGR/CHRON DAM-RSO SDITTRICH DIRECTOR/FUS - PLEASE ROUTE MMULUGETA DIRECTOR/CS - PLEASE ROUTE HBAKER/RSD - PLEASE ROUTE GWESTMORELAND/COMPLIANCE--PLEASE ROUTE LDITTUS/ENAP - PLEASE ROUTE DMOSLAK/REGULATORY CC: KANSAS CITY OFFICES: TWITT/R&D--PLEASE ROUTE TIM HOFFMANN - PRODUCT DEVELOPMENT DIVISION VONDIE O'CONNER, RESEARCH AND EVALUATION DIVISION ACTUARIAL DIVISION FISCAL OPERATIONS AND SYSTEMS DIVISION AGILMORE/AMC-PLEASE ROUTE LCUSICK/PD/EDB