[Federal Register Volume 83, Number 27 (Thursday, February 8, 2018)]
[Proposed Rules]
[Pages 5573-5576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02489]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 83, No. 27 / Thursday, February 8, 2018 /
Proposed Rules
[[Page 5573]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 400
[Docket No. FCIC-17-0005]
RIN 0563-AC54
General Administrative Regulations; Subpart L--Reinsurance
Agreement--Standards for Approval; Regulations for the 2019 and
Subsequent Reinsurance Years
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to
revise the General Administrative Regulations; Subpart L--Reinsurance
Agreement--Standards for Approval; Regulations for the 2019 and
Subsequent Reinsurance Years. The intended effect of this action is to
clarify and improve Subpart L to better align with the existing
Standard Reinsurance Agreement (SRA) and Livestock Price Reinsurance
Agreement (LPRA) and to eliminate language that is no longer relevant.
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business April 9, 2018 and will be considered
when the rule is made final.
ADDRESSES: FCIC prefers that comments be submitted electronically
through the Federal eRulemaking Portal. You may submit comments,
identified by Docket ID No. FCIC-17-0005, by any of the following
methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
By Mail to: Director, Reinsurance Services Division,
Federal Crop Insurance Corporation, United States Department of
Agriculture (USDA), 1400 Independence Avenue SW, Stop 0801, Washington,
DC 20250.
All comments received, including those received by mail, will be
posted without change to http://www.regulations.gov, including any
personal information provided, and can be accessed by the public. All
comments must include the agency name and docket number or Regulatory
Information Number (RIN) for this rule. For detailed instructions on
submitting comments and additional information, see http://www.regulations.gov. If you are submitting comments electronically
through the Federal eRulemaking Portal and want to attach a document,
we ask that it be in a text-based format. If you want to attach a
document that is a scanned Adobe PDF file, it must be scanned as text
and not as an image, thus allowing FCIC to search and copy certain
portions of your submissions. For questions regarding attaching a
document that is a scanned Adobe PDF file, please contact the RMA Web
Content Team at (816)823-4694 or by email at
[email protected].
PRIVACY ACT: Anyone is able to search the electronic form of all
comments received for any dockets by the name of the person submitting
the comment (or signing the comment, if submitted on behalf of an
association, business, labor union, etc.). You may review the complete
User Notice and Privacy Notice for Regulations.gov at http://www.regulations.gov/#!privacyNotice.
FOR FURTHER INFORMATION CONTACT: David L. Miller, Director, Reinsurance
Services Division, Federal Crop Insurance Corporation, United States
Department of Agriculture (USDA), 1400 Independence Avenue SW, Stop
0801, Washington, DC 20250, telephone (202) 720-9830.
SUPPLEMENTARY INFORMATION:
Executive Orders 12866, 13563, and 13771
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. The Office of
Management and Budget (OMB) designated this rule as not significant
under Executive Order 12866, ``Regulatory Planning and Review,'' and
therefore, OMB has not reviewed this rule. The rule is not subject to
Executive Order 13771, ``Reducing Regulation and Controlling Regulatory
Costs.''
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), the collections of information in this rule
have been approved by the Office of Management and Budget (OMB) under
control number 0563-0069.
E-Government Act Compliance
FCIC is committed to complying with the E-Government Act of 2002,
to promote the use of the internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This rule contains no Federal
mandates (under the regulatory provisions of title II of the UMRA) for
State, local, and tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
UMRA.
Executive Order 13132
It has been determined under section 1(a) of Executive Order 13132,
Federalism, that this rule does not have sufficient implications to
warrant consultation with the States. The provisions contained in this
rule will not have a substantial direct effect on States, or on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175
[[Page 5574]]
requires Federal agencies to consult and coordinate with tribes on a
government-to-government basis on policies that have tribal
implications, including regulations, legislative comments or proposed
legislation, and other policy statements or actions that have
substantial direct effects on one or more Indian tribes, on the
relationship between the Federal Government and Indian tribes or on the
distribution of power and responsibilities between the Federal
Government and Indian tribes.
FCIC has assessed the impact of this rule on Indian tribes and
determined that this rule does not, to its knowledge, have tribal
implications that require tribal consultation under E.O. 13175. If a
Tribe requests consultation, FCIC will work with the Office of Tribal
Relations to ensure meaningful consultation is provided where changes,
additions and modifications identified herein are not expressly
mandated by Congress.
Regulatory Flexibility Act
FCIC certifies that this regulation will not have a significant
economic impact on a substantial number of small entities. Program
requirements for the Federal crop insurance program are the same for
all producers regardless of the size of their farming operation. For
instance, all producers are required to submit an application and
acreage report to establish their insurance guarantees and compute
premium amounts, and all producers are required to submit a notice of
loss and production information to determine the amount of an indemnity
payment in the event of an insured cause of crop loss. Whether a
producer has 10 acres or 1000 acres, there is no difference in the kind
of information collected. To ensure crop insurance is available to
small entities, the Federal Crop Insurance Act (Act) authorizes FCIC to
waive collection of administrative fees from beginning farmers or
ranchers and limited resource farmers. FCIC believes this waiver helps
to ensure that small entities are given the same opportunities as large
entities to manage their risks through the use of Federal crop
insurance. A Regulatory Flexibility Analysis has not been prepared
since this regulation does not have an impact on small entities, and,
therefore, this regulation is exempt from the provisions of the
Regulatory Flexibility Act (5 U.S.C. 605). This regulation pertains to
all legal entities wanting a Reinsurance Agreement, to insure financial
stability and capacity under this regulation.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988 on civil justice reform. The provisions of this rule will not
have a retroactive effect. The provisions of this rule will preempt
State and local laws to the extent such State and local laws are
inconsistent herewith. Interpretations of statutory and regulatory
provisions are matters of general applicability and, therefore, no
administrative appeals process is available and judicial review may
only be brought to challenge the interpretation after seeking a
determination of appeal ability by the Director of the National Appeals
Division (NAD) in accordance with 7 CFR part 11. An interpretation of a
policy provision not codified in the Code of Federal Regulations or any
procedure used in the administration of any Federal crop insurance
program are administratively appealable and the appeal provisions
published at 7 CFR part 11 must be exhausted before any action for
judicial review may be brought against FCIC.
Environmental Evaluation
This action is not expected to have a significant economic impact
on the quality of the human environment, health, or safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
List of Subjects in 7 CFR Part 400
Administrative practice and procedure, Crop insurance, Reporting
and recordkeeping requirements.
Proposed Rule
Accordingly, as set forth in the preamble, FCIC proposes to amend 7
CFR part 400 to read as follows:
PART 400--GENERAL ADMINISTRATIVE REGULATIONS
0
1. The authority citation for 7 CFR part 400 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(o).
0
2. Revise Subpart L to read as follows:
Subpart L--Reinsurance Agreement--Standards for Approval;
Regulations for the 2019 and Subsequent Reinsurance Years
Sec.
400.161 Definitions.
400.162 Qualification ratios.
400.163 Applicability.
400.164 Eligibility for a Reinsurance Agreement.
400.165 [Reserved]
400.166 [Reserved]
400.167 [Reserved]
400.168 [Reserved]
400.169 Disputes.
400.170 [Reserved]
400.171 [Reserved]
400.172 [Reserved]
400.173 [Reserved]
400.174 [Reserved]
400.175 [Reserved]
400.176 [Reserved]
400.177 [Reserved]
Sec. 400.161 Definitions.
In addition to the terms defined in the Standard Reinsurance
Agreement, Livestock Price Reinsurance Agreement and any other
Reinsurance Agreement, the following terms as used in this rule are
defined to mean:
Annual statutory financial statement means the annual financial
statement of a Company prepared in accordance with Statutory Accounting
Principles and submitted to the state insurance department if required
by any state in which the Company is licensed.
Company means the insurance company that currently has or is
applying to FCIC for a Reinsurance Agreement.
FCIC means the Federal Crop Insurance Corporation as authorized in
section 503 of the Federal Crop Insurance Act (7 U.S.C. 1503).
MPUL means the maximum possible underwriting loss that a Company
can sustain on policies it intends to reinsure after adjusting for the
effect of any Reinsurance Agreement and any private reinsurance, as
evaluated by FCIC.
Plan of operation means the documentation and information submitted
by a Company to apply for or maintain a Reinsurance Agreement as
required by FCIC.
Quarterly Statutory Financial Statement means the quarterly
financial statement of a Company prepared in accordance with Statutory
Accounting Principles and submitted to the state insurance department
if required by any state in which the Company is licensed.
Reinsurance Agreement means the Standard Reinsurance Agreement,
Livestock Price Reinsurance Agreement and any other Reinsurance
Agreement between the Company and FCIC.
[[Page 5575]]
Sec. 400.162 Qualification ratios.
(a) The eighteen qualification ratios include:
(1) Thirteen National Association of Insurance Commissioner's
(NAIC's) Insurance Regulatory Information System (IRIS) ratios found in
subsections (b)(1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11),
(12), and (17) of this section and referenced in ``Using the NAIC
Insurance Regulatory Information System'' distributed by NAIC, 1100
Walnut St., Suite 1500, Kansas City, MO 64106-2197;
(2) Three ratios used by A.M. Best Company found in subsections
(b)(13), (15), and (16) of this section and referenced in Best's Key
Rating Guide, A.M. Best, Ambest Road, Oldwick, N.J. 08858-0700;
(3) One ratio found in paragraph (b)(14) of this section which is
formulated by FCIC and is calculated the same as the One-Year Change to
Surplus IRIS ratio but for a two-year period; and
(4) One ratio found in paragraph (b)(18) of this section, which is
reported on the annual statutory financial statement.
(b) The Company shall provide an explanation for any ratio falling
outside of the requirements stated below.
------------------------------------------------------------------------
Ratio Ratio requirement
------------------------------------------------------------------------
(1) Gross Premium Written to Policyholders <900%
Surplus.......................................
(2) Net Premium Written to Policyholders <300%
Surplus.......................................
(3) Change in Net Premiums Writings............ -33% to 33%
(4) Surplus Aid to Policyholders Surplus....... <15%
(5) Two-Year Overall Operating Ratio........... <100%
(6) Change in Policyholders Surplus............ -10% to 50%
(7) Investment Yield........................... 3.0% to 6.5%
(8) Liabilities to Liquid Assets............... <100%
(9) Gross Agents Balances to Policyholders <40%
Surplus.......................................
(10) One Year Reserve Development to <20%
Policyholders Surplus.........................
(11) Two Year Reserve Development to <20%
Policyholders Surplus.........................
(12) Estimated Current Reserve Deficiency to <25%
Policyholders Surplus.........................
(13) Combined Ratio after Policyholder Dividend <115%
(14) Two Year Change in Surplus................ >-10%
(15) Quick Liquidity........................... >20%
(16) Return on Surplus......................... >-5%
(17) Net Change in Adjusted Policyholder -10% to 25%
Surplus.......................................
(18) Risk Based Capital Ratio.................. >200%
------------------------------------------------------------------------
Sec. 400.163 Applicability.
The standards contained herein shall be applicable to a Company
applying for and those maintaining a Reinsurance Agreement.
Sec. 400.164 Eligibility for a Reinsurance Agreement.
FCIC will offer a Reinsurance Agreement to an eligible Company as
determined by FCIC. To be eligible and qualify initially or thereafter
for a Reinsurance Agreement with FCIC, a Company must:
(a) Be licensed or admitted in any state, territory, or possession
of the United States;
(b) Be licensed or admitted, or use as a policy-issuing company an
insurance company that is licensed or admitted, in each state where the
Company will write policies under a Reinsurance Agreement;
(c) Have surplus, as reported in its most recent Annual or
Quarterly Statutory Financial Statement, that is at least equal to
twice the MPUL amount for the Company's estimated retained premium
submitted in its plan of operation.
(d) The Company shall have the financial and operational resources,
including but not limited to, organization, experience, internal
controls, and technical skills, positive assessment of the ratio
results appearing in Section 400.162 as well as meeting methodologies,
data submission requirements and assessment appearing in Appendix II
(Plan of Operations) of the Reinsurance Agreement to meet the
requirements, including addressing reasonable risks, associated with a
Reinsurance Agreement, as determined by FCIC.
(e) The Company shall provide data and demonstrate a satisfactory
performance record to obtain a Reinsurance Agreement and continue to
hold a Reinsurance Agreement for the reinsurance year as determined by
FCIC.
Sec. 400.165 [Reserved]
Sec. 400.166 [Reserved]
Sec. 400.167 [Reserved]
Sec. 400.168 [Reserved]
Sec. 400.169 Disputes.
(a) If the Company believes that the FCIC has taken an action that
is not in accordance with the provisions of a Reinsurance Agreement
except compliance issues, it may request the Deputy Administrator of
Insurance Services to make a final administrative determination
addressing the disputed action. The Deputy Administrator of Insurance
Services will render the final administrative determination of the FCIC
with respect to the applicable actions. All requests for a final
administrative determination must be in writing and submitted within 45
days after receipt after the disputed action.
(b) With respect to compliance matters, the Compliance Field Office
renders an initial finding or outcome, permits the Company to respond,
and then issues a final finding or outcome. If the Company believes
that the Compliance Field Office's final finding or outcome is not in
accordance with the applicable laws, regulations, custom or practice of
the insurance industry, or FCIC approved policy and procedure, it may
request, the Deputy Administrator of Compliance to make a final
administrative determination addressing the disputed final finding or
outcome. The Deputy Administrator of Compliance will render the final
administrative determination of the FCIC with respect to these issues.
All requests for a final administrative determination must be in
writing and submitted within 45 days after receipt of the final finding
or outcome.
(c) A Company may also request reconsideration by the Deputy
Administrator of Insurance Services of a decision of the FCIC rendered
under any FCIC bulletin or directive which bulletin or directive does
not interpret, explain, or restrict the terms of the Reinsurance
Agreement. The Company, if it disputes the FCIC's determination, must
request a reconsideration of that
[[Page 5576]]
determination in writing, within 45 days of the receipt of the
determination. The determination of the Deputy Administrator of
Insurance Services will be final and binding on the Company. Such
determinations will not be appealable to the Board of Contract Appeals.
(d) Appealable final administrative determinations of the FCIC
under paragraph (a) or (b) of this section may be appealed to the Board
of Contract Appeals in accordance with 48 CFR part 6102 and with the
provisions 7 CFR part 24.
Sec. 400.170 [Reserved]
Sec. 400.171 [Reserved]
Sec. 400.172 [Reserved]
Sec. 400.173 [Reserved]
Sec. 400.174 [Reserved]
Sec. 400.175 [Reserved]
Sec. 400.176 [Reserved]
Sec. 400.177 [Reserved]
Signed in Washington, DC, on February 1, 2018.
Heather Manzano,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2018-02489 Filed 2-7-18; 8:45 am]
BILLING CODE 3410-08-P