April 28, 1998 INFORMATIONAL MEMORANDUM: R&D 98-016 TO: All Reinsured Companies FROM: Tim B. Witt Deputy Administrator SUBJECT: Year 2000 Compliance The Risk Management Agency (RMA) has received requests from companies to provide certification that there will be no disruption of RMA's operations through the year 2000. Following is a synopsis of steps that the Agency is taking to assure compliance. Companies maywish to provide a copy of this letter to State insurance departments as needed. Definition: Year 2000 (Y2K) compliant means, with respect to information technology, that the information technology accurately processes date/time data (including, but not limited to, calculating, comparing, and sequencing) from, into and between the 20th and 21st centuries, and the years 1999 and 2000 and leap year calculations, to the extent that other information technology, used in combination with the information technology being acquired, properly exchanges date/time data with it. RMA Responsibility: RMA is participating in Department of Agriculture (USDA) initiatives for Y2K compliance. These efforts include assuring smooth operation of software applications, operating systems, and hardware into the new millennium. Software applications currently operating for Data Acceptance System (DAS) processing are Y2K compliant and any new development will be compliant. Older systems are either being retired, reengineered, or removed from operation. The operating system on the SUN SPARC and Reporting Organization server that is used by RMA to share information with companies is Y2K compliant. Software applications such as DAS, Premium Calculator, Reinsured Accounting System, Actuarial Filing System, and others all have been developed with a 4-digit year in date fields. A contract for independent verification and validation has been awarded. This is scheduled to begin June 1, 1998. Third party certification and validation will be done on both RMA platforms and applications. This process will test date calculations for Y2K compliance and provide required documentation of compliance. Plans are being made to include company INFORMATIONAL MEMORANDUM: R&D 98-016 2 reporting capabilities in future testing. RMA is working with the National Crop Insurance Services (NCIS) Telecommunications Information Processing (TIP) committee to develop a method of reporting compliance of the agency and companies ability to deliver program services in year 2000. Baseline Information Resource Management (IRM) standards are being used in each Y2K project and subproject. Technical managers for each project assure that projects can meet IRM, audit and internal control standards for configuration management, tracking, scheduling, etc. Third-party review by auditors (yearly) and internal controls staff (every other year) provide neutral review and reporting to the agency confirming technical manager's oversight. A high level approach to the overall project was documented and distributed to all RMA personnel and industry data processing managers in a series of Y2K briefings. Included with the plan were impact, time frames, potential problems for systems, subsystems, applications, hardware and personal applications. Mission critical systems and vulnerable non-information technology systems have been inventoried and scheduled for repair, replacement or retirement. RMA core business processes included in this inventory are: 1) Financial Management; 2) Corporate Insurance Information and Interchange; 3) Compliance Tracking; and, 4) Infrastructure. RMA provides monthly reports of Y2K progress to the Office of the Chief Information Officer who is responsible for assuring that all USDA agencies are Y2K compliant. All RMA systems will be completely compliant by March 1999. RMA received certification for Y2K compliance of its facility at 9435 Holmes Road, Kansas City, Missouri, on March 31, 1998. Reinsured Company Responsibility: Each reinsured company is responsible to make any changes, upgrades, or enhancements needed to assure all operational systems used in RMA program delivery are Y2K compliant. A form for companies to certify compliance can be found in the 1998 and 1999 DAS Handbooks (M-13). USDA is requiring reports on the ability of agencies and delivery partners to receive premium payments, issue checks, pay indemnities, and provide services. RMA will continue coordinating reporting requirements through the NCIS TIP committee meetings. 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 DA-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 RMA:KC:RD:AD:DeniseHoffmann:sko:04-28-98:816-926-7394:h:\wpdoc\bulletin\015.98