83_FR_51498 83 FR 51301 - General Administrative Regulations; Reinsurance Agreement-Standards for Approval; Regulations for the 2019 and Subsequent Reinsurance Years.

83 FR 51301 - General Administrative Regulations; Reinsurance Agreement-Standards for Approval; Regulations for the 2019 and Subsequent Reinsurance Years.

DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation

Federal Register Volume 83, Issue 197 (October 11, 2018)

Page Range51301-51303
FR Document2018-21699

The Federal Crop Insurance Corporation (FCIC) finalizes 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.

Federal Register, Volume 83 Issue 197 (Thursday, October 11, 2018) 
[Federal Register Volume 83, Number 197 (Thursday, October 11, 2018)]
[Rules and Regulations]
[Pages 51301-51303]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-21699]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

========================================================================


Federal Register / Vol. 83, No. 197 / Thursday, October 11, 2018 / 
Rules and Regulations

[[Page 51301]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 400

[Docket No. FCIC-17-0005]
RIN 0563-AC54


General Administrative Regulations; Reinsurance Agreement--
Standards for Approval; Regulations for the 2019 and Subsequent 
Reinsurance Years.

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 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: This rule is effective November 13, 2018.

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: 

Background

    This rule finalizes changes to the General Administrative 
Regulations; Subpart L--Reinsurance Agreement--Standards for Approval; 
Regulations for the 2019 and Subsequent Reinsurance Years (7 CFR part 
400, subpart L), that were published by FCIC on February 8, 2018, as a 
notice of proposed rulemaking in the Federal Register at 83 FR 5573--
5576. The public was afforded 60 days to submit comments after the 
regulation was published in the Federal Register.
    A total of one comment was received from one commenter. The 
commenter was an insurance company.
    The public comment received regarding the proposed rule and FCIC's 
response to the comment is as follows:
    Comment: One comment was received from an insurance company asking 
for a definition of ``outcome'' which was added to Section 400.169(b).
    Response: FCIC removed the term outcome and returned Section 
400.169(b) to its original language.

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. Executive Order 13771, 
``Reducing Regulation and Controlling Regulatory Costs,'' requires 
that, in order to manage the costs required to comply with Federal 
regulations, that for every new significant or economically significant 
regulation issued, the new costs must be offset by the elimination of 
at least two prior regulations. This rule is not subject to Executive 
Order 13771.

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 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,

[[Page 51302]]

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.

Final Rule

    Accordingly, as set forth in the preamble, FCIC amends 7 CFR part 
400 as follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

0
1. 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.
400.165-400.168 [Reserved]
400.169 Disputes.
400.170-400.177 [Reserved]

    Authority:  7 U.S.C. 1506(l), 1506(o)

Subpart L--Reinsurance Agreement--Standards for Approval; 
Regulations for the 2019 and Subsequent Reinsurance Years.


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 Operations 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 or any other Reinsurance 
Agreement between the Company and FCIC.


Sec.  400.162   Qualification ratios.

    (a) The eighteen qualification ratios include:
    (1) Thirteen National Association of Insurance Commissioner's 
(NAIC) Insurance Regulatory Information System (IRIS) ratios found in 
paragraphs (b)(1) through (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 paragraphs 
(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

[[Page 51303]]

on the annual statutory financial statement.
    (b) The Company shall provide an explanation for any ratio falling 
outside of the following requirements in paragraphs (b)(1) through 
(18):

------------------------------------------------------------------------
                                                               Ratio
                          Ratio                             requirement
------------------------------------------------------------------------
(1) Gross Premium Written to Policyholders Surplus......           <900%
(2) Net Premium Written to Policyholders Surplus........           <300%
(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 Surplus......            <40%
(10) One Year Reserve Development to Policyholders                  <20%
 Surplus................................................
(11) Two Year Reserve Development to Policyholders                  <20%
 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 Surplus........     -10% to 25%
(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, technical skills, positive assessment of the ratio results 
appearing in Section 400.162 as well as meet methodologies, data 
submission requirements and assessment contained 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.  400.165-400.168  [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, permits the Company to respond, and then 
issues a final finding. If the Company believes that the Compliance 
Field Office's final finding 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. The Deputy 
Administrator of Compliance will render the final administrative 
determination of the FCIC with respect to the final finding. All 
requests for a final administrative determination must be in writing 
and submitted within 45 days after receipt of the final finding.
    (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 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.  400.170-400.177  [Reserved]

Martin R. Barbre,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2018-21699 Filed 10-10-18; 8:45 am]
 BILLING CODE 3410-08-P

51301 Rules and Regulations Federal Register Vol. 83, No. 197 Thursday, October 11, 2018 This section of the FEDERAL REGISTER FR 5573—5576. The public was E-Government Act Compliance contains regulatory documents having general afforded 60 days to submit comments applicability and legal effect, most of which FCIC is committed to complying with after the regulation was published in the the E-Government Act of 2002, to are keyed to and codified in the Code of Federal Register. Federal Regulations, which is published under promote the use of the internet and 50 titles pursuant to 44 U.S.C. 1510. A total of one comment was received other information technologies to from one commenter. The commenter provide increased opportunities for The Code of Federal Regulations is sold by was an insurance company. citizen access to Government the Superintendent of Documents. information and services, and for other The public comment received regarding the proposed rule and FCIC’s purposes. DEPARTMENT OF AGRICULTURE response to the comment is as follows: Unfunded Mandates Reform Act of Comment: One comment was received 1995 Federal Crop Insurance Corporation from an insurance company asking for Title II of the Unfunded Mandates a definition of ‘‘outcome’’ which was Reform Act of 1995 (UMRA), Public 7 CFR Part 400 added to Section 400.169(b). Law 104–4, establishes requirements for [Docket No. FCIC–17–0005] Response: FCIC removed the term Federal agencies to assess the effects of RIN 0563–AC54 outcome and returned Section their regulatory actions on State, local, 400.169(b) to its original language. and tribal governments and the private General Administrative Regulations; sector. This rule contains no Federal Reinsurance Agreement—Standards Executive Orders 12866, 13563, and mandates (under the regulatory for Approval; Regulations for the 2019 13771 provisions of title II of the UMRA) for and Subsequent Reinsurance Years. Executive Order 12866, ‘‘Regulatory State, local, and tribal governments or Planning and Review,’’ and Executive the private sector. Therefore, this rule is AGENCY: Federal Crop Insurance Order 13563, ‘‘Improving Regulation not subject to the requirements of Corporation, USDA. and Regulatory Review,’’ direct agencies sections 202 and 205 of UMRA. ACTION: Final rule. to assess all costs and benefits of Executive Order 13132 SUMMARY: The Federal Crop Insurance available regulatory alternatives and, if Corporation (FCIC) finalizes the General It has been determined under section regulation is necessary, to select 1(a) of Executive Order 13132, Administrative Regulations; Subpart L— regulatory approaches that maximize Reinsurance Agreement—Standards for Federalism, that this rule does not have net benefits (including potential sufficient implications to warrant Approval; Regulations for the 2019 and economic, environmental, public health Subsequent Reinsurance Years. The consultation with the States. The and safety effects, distributive impacts, provisions contained in this rule will intended effect of this action is to clarify and equity). Executive Order 13563 and improve Subpart L to better align not have a substantial direct effect on emphasized the importance of States, or on the relationship between with the existing Standard Reinsurance quantifying both costs and benefits, of Agreement (SRA) and Livestock Price the national government and the States, reducing costs, of harmonizing rules, or on the distribution of power and Reinsurance Agreement (LPRA) and to and of promoting flexibility. The Office eliminate language that is no longer responsibilities among the various of Management and Budget (OMB) levels of government. relevant. designated this rule as not significant DATES: This rule is effective November under Executive Order 12866, Executive Order 13175 13, 2018. ‘‘Regulatory Planning and Review,’’ and This rule has been reviewed in FOR FURTHER INFORMATION CONTACT: therefore, OMB has not reviewed this accordance with the requirements of David L. Miller, Director, Reinsurance rule. Executive Order 13771, ‘‘Reducing Executive Order 13175, ‘‘Consultation Services Division, Federal Crop Regulation and Controlling Regulatory and Coordination with Indian Tribal Insurance Corporation, United States Costs,’’ requires that, in order to manage Governments.’’ Executive Order 13175 Department of Agriculture (USDA), the costs required to comply with requires Federal agencies to consult and 1400 Independence Avenue SW, Stop Federal regulations, that for every new coordinate with tribes on a government- 0801, Washington, DC 20250, telephone significant or economically significant to-government basis on policies that (202) 720–9830. regulation issued, the new costs must be have tribal implications, including offset by the elimination of at least two regulations, legislative comments or SUPPLEMENTARY INFORMATION: prior regulations. This rule is not proposed legislation, and other policy Background subject to Executive Order 13771. statements or actions that have This rule finalizes changes to the Paperwork Reduction Act of 1995 substantial direct effects on one or more General Administrative Regulations; Indian tribes, on the relationship khammond on DSK30JT082PROD with RULES Subpart L—Reinsurance Agreement— Pursuant to the provisions of the between the Federal Government and Standards for Approval; Regulations for Paperwork Reduction Act of 1995 (44 Indian tribes or on the distribution of the 2019 and Subsequent Reinsurance U.S.C. chapter 35), the collections of power and responsibilities between the Years (7 CFR part 400, subpart L), that information in this rule have been Federal Government and Indian tribes. were published by FCIC on February 8, approved by the Office of Management FCIC has assessed the impact of this 2018, as a notice of proposed and Budget (OMB) under control rule on Indian tribes and determined rulemaking in the Federal Register at 83 number 0563–0069. that this rule does not, to its knowledge, VerDate Sep<11>2014 19:54 Oct 10, 2018 Jkt 247001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\11OCR1.SGM 11OCR1

51302 Federal Register / Vol. 83, No. 197 / Thursday, October 11, 2018 / Rules and Regulations have tribal implications that require effect. The provisions of this rule will and any other Reinsurance Agreement, tribal consultation under E.O. 13175. If preempt State and local laws to the the following terms as used in this rule a Tribe requests consultation, FCIC will extent such State and local laws are are defined to mean: work with the Office of Tribal Relations inconsistent herewith. Interpretations of Annual statutory financial statement to ensure meaningful consultation is statutory and regulatory provisions are means the annual financial statement of provided where changes, additions and matters of general applicability and, a Company prepared in accordance with modifications identified herein are not therefore, no administrative appeals Statutory Accounting Principles and expressly mandated by Congress. process is available and judicial review submitted to the state insurance may only be brought to challenge the department if required by any state in Regulatory Flexibility Act interpretation after seeking a which the Company is licensed. FCIC certifies that this regulation will determination of appeal ability by the Company means the insurance not have a significant economic impact Director of the National Appeals company that currently has or is on a substantial number of small Division (NAD) in accordance with 7 applying to FCIC for a Reinsurance entities. Program requirements for the CFR part 11. An interpretation of a Agreement. Federal crop insurance program are the policy provision not codified in the FCIC means the Federal Crop same for all producers regardless of the Code of Federal Regulations or any Insurance Corporation as authorized in size of their farming operation. For procedure used in the administration of section 503 of the Federal Crop instance, all producers are required to any Federal crop insurance program are Insurance Act (7 U.S.C. 1503). submit an application and acreage administratively appealable and the MPUL means the maximum possible report to establish their insurance appeal provisions published at 7 CFR underwriting loss that a Company can guarantees and compute premium part 11 must be exhausted before any sustain on policies it intends to reinsure amounts, and all producers are required action for judicial review may be after adjusting for the effect of any to submit a notice of loss and brought against FCIC. Reinsurance Agreement and any private production information to determine the reinsurance, as evaluated by FCIC. amount of an indemnity payment in the Environmental Evaluation Plan of Operations means the event of an insured cause of crop loss. This action is not expected to have a documentation and information Whether a producer has 10 acres or significant economic impact on the submitted by a Company to apply for or 1000 acres, there is no difference in the quality of the human environment, maintain a Reinsurance Agreement as kind of information collected. To ensure health, or safety. Therefore, neither an required by FCIC. crop insurance is available to small Environmental Assessment nor an Quarterly Statutory Financial entities, the Federal Crop Insurance Act Environmental Impact Statement is Statement means the quarterly financial (Act) authorizes FCIC to waive needed. statement of a Company prepared in collection of administrative fees from accordance with Statutory Accounting List of Subjects in 7 CFR Part 400 Principles and submitted to the state beginning farmers or ranchers and limited resource farmers. FCIC believes Administrative practice and insurance department if required by any this waiver helps to ensure that small procedure, crop insurance, reporting state in which the Company is licensed. entities are given the same opportunities and recordkeeping requirements. Reinsurance Agreement means the as large entities to manage their risks Final Rule Standard Reinsurance Agreement, through the use of Federal crop Livestock Price Reinsurance Agreement insurance. A Regulatory Flexibility Accordingly, as set forth in the or any other Reinsurance Agreement Analysis has not been prepared since preamble, FCIC amends 7 CFR part 400 between the Company and FCIC. this regulation does not have an impact as follows: § 400.162 Qualification ratios. on small entities, and, therefore, this PART 400—GENERAL regulation is exempt from the provisions (a) The eighteen qualification ratios ADMINISTRATIVE REGULATIONS include: of the Regulatory Flexibility Act (5 U.S.C. 605). This regulation pertains to (1) Thirteen National Association of ■ 1. Revise subpart L to read as follows: Insurance Commissioner’s (NAIC) all legal entities wanting a Reinsurance Agreement, to insure financial stability Subpart L—Reinsurance Agreement— Insurance Regulatory Information Standards for Approval; Regulations for the System (IRIS) ratios found in paragraphs and capacity under this regulation. 2019 and Subsequent Reinsurance Years (b)(1) through (12) and (17) of this Federal Assistance Program Sec. section and referenced in ‘‘Using the 400.161 Definitions. NAIC Insurance Regulatory Information This program is listed in the Catalog 400.162 Qualification ratios. System’’ distributed by NAIC, 1100 of Federal Domestic Assistance under 400.163 Applicability. No. 10.450. Walnut St., Suite 1500, Kansas City, MO 400.164 Eligibility for a Reinsurance Agreement. 64106–2197; Executive Order 12372 (2) Three ratios used by A.M. Best 400.165–400.168 [Reserved] This program is not subject to the 400.169 Disputes. Company found in paragraphs (b)(13), provisions of Executive Order 12372, 400.170–400.177 [Reserved] (15), and (16) of this section and which require intergovernmental Authority: 7 U.S.C. 1506(l), 1506(o) referenced in Best’s Key Rating Guide, consultation with State and local A.M. Best, Ambest Road, Oldwick, N.J. officials. See the Notice related to 7 CFR Subpart L—Reinsurance Agreement— 08858–0700; part 3015, subpart V, published at 48 FR Standards for Approval; Regulations (3) One ratio found in paragraph khammond on DSK30JT082PROD with RULES 29115, June 24, 1983. for the 2019 and Subsequent (b)(14) of this section which is Reinsurance Years. formulated by FCIC and is calculated Executive Order 12988 the same as the One-Year Change to This rule has been reviewed in § 400.161 Definitions. Surplus IRIS ratio but for a two-year accordance with Executive Order 12988 In addition to the terms defined in the period; and on civil justice reform. The provisions Standard Reinsurance Agreement, (4) One ratio found in paragraph of this rule will not have a retroactive Livestock Price Reinsurance Agreement (b)(18) of this section, which is reported VerDate Sep<11>2014 19:54 Oct 10, 2018 Jkt 247001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\11OCR1.SGM 11OCR1

Federal Register / Vol. 83, No. 197 / Thursday, October 11, 2018 / Rules and Regulations 51303 on the annual statutory financial (b) The Company shall provide an of the following requirements in statement. explanation for any ratio falling outside paragraphs (b)(1) through (18): Ratio Ratio requirement (1) Gross Premium Written to Policyholders Surplus ......................................................................................................................... <900% (2) Net Premium Written to Policyholders Surplus ............................................................................................................................. <300% (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 Surplus ......................................................................................................................... <40% (10) One Year Reserve Development to Policyholders Surplus ......................................................................................................... <20% (11) Two Year Reserve Development to Policyholders Surplus ......................................................................................................... <20% (12) Estimated Current Reserve Deficiency to Policyholders Surplus ................................................................................................ <25% (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 Surplus ............................................................................................................................. ¥10% to 25% (18) Risk Based Capital Ratio ............................................................................................................................................................. > 200% § 400.163 Applicability. (e) The Company shall provide data be in writing and submitted within 45 The standards contained herein shall and demonstrate a satisfactory days after receipt of the final finding. be applicable to a Company applying for performance record to obtain a (c) A Company may also request and those maintaining a Reinsurance Reinsurance Agreement and continue to reconsideration by the Deputy Agreement. hold a Reinsurance Agreement for the Administrator of Insurance Services of a reinsurance year as determined by FCIC. § 400.164 Eligibility for a Reinsurance decision of the FCIC rendered under any Agreement. § 400.165–400.168 [Reserved] FCIC bulletin or directive which FCIC will offer a Reinsurance bulletin or directive does not interpret, § 400.169 Disputes. Agreement to an eligible Company as explain, or restrict the terms of the determined by FCIC. To be eligible and (a) If the Company believes that the Reinsurance Agreement. The Company, qualify initially or thereafter for a FCIC has taken an action that is not in if it disputes the FCIC’s determination, Reinsurance Agreement with FCIC, a accordance with the provisions of a must request a reconsideration of that Company must: Reinsurance Agreement except determination in writing, within 45 (a) Be licensed or admitted in any compliance issues, it may request the days of the receipt of the determination. state, territory, or possession of the Deputy Administrator of Insurance Services to make a final administrative The determination of the Deputy United States; determination addressing the disputed Administrator of Insurance Services will (b) Be licensed or admitted, or use as a policy-issuing company, an insurance action. The Deputy Administrator of be final and binding on the Company. company that is licensed or admitted, in Insurance Services will render the final Such determinations will not be each state where the Company will administrative determination of the appealable to the Board of Contract write policies under a Reinsurance FCIC with respect to the applicable Appeals. Agreement; actions. All requests for a final (d) Appealable final administrative (c) Have surplus, as reported in its administrative determination must be in determinations of the FCIC under most recent Annual or Quarterly writing and submitted within 45 days paragraph (a) or (b) of this section may Statutory Financial Statement, that is at after receipt after the disputed action. be appealed to the Board of Contract least equal to twice the MPUL amount (b) With respect to compliance Appeals in accordance with 48 CFR part for the Company’s estimated retained matters, the Compliance Field Office 6102 and with the provisions 7 CFR part premium submitted in its plan of renders an initial finding, permits the 24. operation. Company to respond, and then issues a (d) The Company shall have the final finding. If the Company believes § 400.170–400.177 [Reserved] financial and operational resources, that the Compliance Field Office’s final including but not limited to, finding is not in accordance with the Martin R. Barbre, organization, experience, internal applicable laws, regulations, custom or Manager, Federal Crop Insurance controls, technical skills, positive practice of the insurance industry, or Corporation. assessment of the ratio results appearing FCIC approved policy and procedure, it [FR Doc. 2018–21699 Filed 10–10–18; 8:45 am] in Section 400.162 as well as meet may request the Deputy Administrator BILLING CODE 3410–08–P methodologies, data submission of Compliance to make a final khammond on DSK30JT082PROD with RULES requirements and assessment contained administrative determination addressing in Appendix II (Plan of Operations) of the disputed final finding. The Deputy the Reinsurance Agreement to meet the Administrator of Compliance will requirements, including addressing render the final administrative reasonable risks, associated with a determination of the FCIC with respect Reinsurance Agreement, as determined to the final finding. All requests for a by FCIC. final administrative determination must VerDate Sep<11>2014 19:54 Oct 10, 2018 Jkt 247001 PO 00000 Frm 00003 Fmt 4700 Sfmt 9990 E:\FR\FM\11OCR1.SGM 11OCR1


Document Created: 2018-10-11 15:37:42
Document Modified: 2018-10-11 15:37:42
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesThis rule is effective November 13, 2018.
ContactDavid 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.
FR Citation83 FR 51301 
RIN Number0563-AC54
CFR AssociatedAdministrative Practice and Procedure; Crop Insurance and Reporting and Recordkeeping Requirements
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