INFORMATIONAL MEMORANDUM: R&D-96-037

TO:      All Reinsured Companies
         All Risk Management Agency Field Offices
         FSA Headquarters, Program Delivery and Field Operations

FROM:    Tim B. Witt
         Director
         Research and Development Division

SUBJECT: Collection of Catastrophic Risk Protection Administrative Fees
         When Transfers Are Involved

BACKGROUND:

Manager Bulletin No. MGR-95-041 issued on July 11, 1995, detailed the 
procedures for transferring Catastrophic Risk Protection (CAT) policies from 
Farm Service Agency (FSA) local offices in a state determined to have a 
sufficient number of insurance providers available.  A question has since 
arisen in the selected states,  "Should the reinsured company collect the 
applicable CAT fee, by the sales closing date or by the acreage reporting 
date?" 

ACTION:

Collection of CAT administrative fees are handled the same in the selected 
states as any other state.  The FCIC 18100, Catastrophic Risk Protection 
(CAT) Handbook provides procedures for the collection of administrative fees.

For carryover insureds/policies, administrative fees are due and must be
paid by the applicable acreage reporting date (See the Sec. 4,  Par. C).  A
carryover insured is defined as "A person or entity who was insured the 
previous year without respect to the carrier or agent and is determined on a 
crop policy (by county) basis (See Sec. 5, Par. B[11]).  If the producer 
(carryover insured) had previously paid the administrative fee for the crop 
and then transferred the policy to a different insurance provider, the ceding 
insurance provider must refund the administrative fee (if a refund is due) to 
the producer.  The assuming insurance provider must collect any applicable 
fee (See Sec. 4, Par. C[2]2nd note)."

For new insureds/policies, administrative fees are due at the time of 
application (See Sec. 4, Par C).