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APPENDIX IV

QUALITY ASSURANCE AND PROGRAM INTEGRITY 

SECTION I. GENERAL QUALITY CONTROL PLAN REPORTING REQUIREMENTS

(a) The Company shall provide the following quality control information with its 

annual Plan of Operations, in accordance with section IV(j) of Appendix II:

(1) A detailed description of the Company’s Quality Control Plan that 

demonstrates that it meets or exceeds the following internal control 

elements:

(A) Control Environment. The control environment sets the tone of an 

organization, influencing the control consciousness of its people. 

Factors include the integrity; ethical values and competence of the 

entity’s people; management’s philosophy and operating style; the 

way management assigns authority and responsibility, and 

organizes and develops its people; and the attention and direction 

provided by the Company’s management.

(B) Risk Assessment. A precondition to risk assessment is 

establishment of objectives that shall be identified in the Quality 

Control plan. Risk assessment is the identification and analysis of 

relevant risks to achieve the stated objectives of the Company’s 

Quality Control plan, and form the basis for determining how the 

Company will manage risk to the crop insurance program.

(C) Control Activities. The Company shall identify the way the 

policies and procedures that help ensure management directives are 

carried out. These controls help ensure that necessary actions are 

taken to address risks and limit non-compliance. They include a 

range of activities as diverse as approvals, authorizations, 

verification, reconciliation, reviews of operating performance, 

security of assets and segregation of duties. The Company plan 

will also include under Control Activities all the required reviews 

and obligations required by Appendix IV.

(D) Information and Communication. The Company’s plan shall 

include how pertinent information is identified, captured and 

communicated in a form and timeframe that enables the Company 

and its affiliates to carry out their responsibilities. Include an 

explanation of standard reports containing operational, financial 

and compliance related information that make it possible to run 

and control the business.
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(E) Monitoring. The Company shall articulate the process used to 

monitor their Quality Control Plan. The process will assess the 

quality of the Company’s performance during each reinsurance 

year. This is accomplished through ongoing monitoring activities, 

separate evaluations, or a combination of the two. The process 

will also identify how quality control deficiencies are reported up 

through the chain of command and how the most serious matters 

are reported to the Company’s top management.

(2) Quality control review information:

(A) The name and title of the official in charge of quality control;

(B) The types of reviews that will be conducted and the time period 

when such eligible crop insurance contracts will be selected for 

each review; and

(C) A complete description of the process to be followed by the 

reviewers for conducting each of the reviews.

(b) Approval of the quality control information required in subsection (a) provided by 

the Company in its Plan of Operations is not a determination of the sufficiency of 

the Company’s quality controls. The sufficiency of the Company’s quality 

controls will be determined through compliance reviews that evaluate the 

effectiveness of the Quality Control Plan to ensure compliance with this 

Agreement.

SECTION II. TRAINING OF AGENTS, LOSS ADJUSTERS, AND OTHER PERSONNEL

(a) General Company Responsibilities

(1) The Company is responsible for establishing a “Training and Performance 

Evaluation Plan” (TPEP) and submitting the TPEP in the Company’s Plan 

of Operations, in accordance with Appendix II. Nothing in these 

requirements precludes the Company from providing training that exceeds 

these requirements.

(2) The TPEP shall:

(A) State the measurement standards acceptable for:

(i) Test proficiency; and

(ii) Satisfactory work performance.
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(B) Describe the internal control measures used to assign work and 

track, monitor and evaluate work performance against the 

measurement standards under subparagraph (a)(2)(A);

(C) Describe the additional training and monitoring applicable to any 

individual who fails to meet the measurement standards specified 

in subparagraph (a)(2)(A);

(D) Describe the training curriculum developed from subsections (b) 

and (c) for:

(i) New agents and new loss adjusters;

(ii) Experienced agents and experienced loss adjusters;

(iii) Agents and loss adjusters with deficient work performance 

to meet the standards established in subsection (a)(2)(A); 

and

(iv) Employees performing functions relating to sales and 

service, loss adjustment, and underwriting.

(E) Describe the individual training for employees, agents, loss 

adjusters, or other affiliates with respect to specific crops, areas, 

and plans of insurance serviced by such individuals;

(F) List the names of the individuals responsible for the training under 

the TPEP;

(G) Provide a timeline for training all individuals identified in 

subsection (a)(2)(D)(i-iv) prior to the time the work is performed;

(H) Describe the Company’s plan for taking corrective, follow-up, or 

remedial actions when additional training does not correct the 

identified deficiencies.

(I) Describe the procedure for the Company to maintain, retain, and 

provide to FCIC upon request:

(i) The tracking and evaluations of the historical performance 

of individuals identified in subsection (a)(2)(D); and

(ii) Records of all corrective, follow-up, or remedial actions 

taken with respect to any individual identified in subsection 

(a)(2)(D).
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(J) Contain a provision to conduct such other training that may be 

required by FCIC.

(3) An annual Training and Performance Evaluation Report (TPER) shall be 

submitted with the Company’s Plan of Operations, in accordance with 

Appendix II. The annual TPER shall provide:

(A) An evaluation of each agent and loss adjuster. Such performance 

evaluation shall include a review of the loss ratios associated with 

such agent and loss adjuster and the number and type of any errors 

or omissions related to the compliance with obligations under the 

Agreement; and

(B) A report of any remedial actions taken by the Company to correct 

any error or omission or ensure compliance with the Agreement.

(b) Sales Training Curriculum and Requirements

(1) The sales training curriculum developed by the Company shall include 

those eligible crop insurance contracts the Company will be selling or 

servicing in the States identified in the Company’s Plan of Operations, in 

accordance with Appendix II, and include at a minimum (for new agents 

and employees performing functions relating to sales or service, 

comprehensive information on all of the following, and for experienced 

agents and employees performing functions relating to sales or service, 

comprehensive information on updates or changes in the following), 

sufficient information to make such individuals proficient in:

(A) The meaning of the terms and conditions of the Common Crop 

Insurance Policy, Basic Provisions and applicable Crop Provisions, 

published at 7 C.F.R. part 457, and the other available plans of 

insurance such as the Group Risk Plan published at 7 C.F.R. part 

407, the revenue insurance plans, pilot programs, and other plans 

of insurance found on FCIC’s website at www.rma.usda.gov, and 

any changes thereto;

(B) All applicable endorsements, Special Provisions and options and 

any changes thereto;

(C) The benefits and differences between the applicable plans of 

insurance specified in subparagraph (A) and their suitability to 

farming conditions and operations, including conservation 

activities and agronomic practices (including organic and 

sustainable practices), in the relevant area;

(D) The actuarial documents and their use;
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(E) The procedures applicable to the sales and service of eligible crop 

insurance contracts and any changes thereto;

(F) How to properly fill out and submit all applicable forms, 

documents, notices and reports;

(G) The requirements under applicable Federal civil rights statutes and 

methods to encourage program participation, including, but not 

limited to, participation of limited resource, women, minority, and 

underserved producers or in underserved areas;

(H) How to recognize anomalies in reported information and common 

indicators of misrepresentation, fraud, waste or abuse, the process 

to report such to the Company, and appropriate actions to be taken 

when anomalies or evidence of misrepresentation, fraud, waste or 

abuse exist;

(I) Compliance with applicable laws and regulations governing 

business conduct and ethics, including, but not limited to, rebating 

prohibitions, conflicts of interest, and controlled business, etc.; and

(J) Any other requirements as may be established by FCIC.

(2) The Company shall ensure the following:

(A) Any new agent or other individual who solicits or otherwise 

promotes crop insurance sales on behalf of the Company shall 

participate in a structured training program on all of the items 

listed in paragraph (1) before selling or servicing any eligible crop 

insurance contract.

(B) Any experienced agent shall annually complete structured training, 

on updates or changes specifically related to the items listed in 

paragraph (1), or that are identified by FCIC or the Company 

where errors or omissions were identified during quality control 

reviews or processing of the sales related documents.

(C) All new agents shall pass a basic competency test before they can 

sell or service an eligible crop insurance contract (all testing 

records, including test results, shall be maintained in accordance 

with section IV(g) of the Agreement). Basic competency tests 

shall specifically relate to the items listed in paragraph (1) and 

determine the proficiency of the individual who completed the 

required training. Additionally, the Company shall review the test
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results and document follow-up training for any deficiencies 

identified.

(D) All agents shall retake and pass the basic competency test (in 

accordance with the standard established in subsection 

(a)(2)(A)(i)) every three years.

(E) If the agent was not employed by or did not contract with the 

Company in the previous year(s), the Company shall obtain, and 

make available upon request, documentation that the agent has 

passed the basic competency test within the past 3 years with 

another AIP.

(F) Proficiency is established by passing a written test meeting the 

standards of the TPEP, and maintaining satisfactory work 

performance during the respective crop year measured against the 

measurement standards established under subsection (a)(2)(A).

(G) In addition, the agent is considered to maintain satisfactory work 

performance if the results of reviews to respond to producer 

complaints, State Departments of Insurance or FCIC inquiries, or 

other quality control reviews identify no material errors.

(c) Loss Adjustment Training Curriculum and Requirements

(1) The loss adjustment training curriculum developed by the Company shall 

include those eligible crop insurance contracts which the Company will be 

selling or servicing in the States, identified by the Company in its Plan of 

Operations, in accordance with section V(b) of Appendix II, and include at 

a minimum (for new loss adjusters, or employees performing functions 

related to loss adjustment, all of the following and for experienced loss 

adjusters or employees performing functions related to loss adjustment, 

updates and changes), sufficient information to make such individuals 

proficient in:

(A) The items listed in subsections (b)(1)(A), (B), (C), (D), (F), (H), 

(I), and (J);

(B) The procedures applicable to loss adjustment of eligible crop 

insurance contracts and any changes thereto;

(C) How to properly verify the accuracy of the information contained 

on applicable forms, documents, notices and reports;

(D) How to properly determine the amount of production to be used for 

the purposes of determining losses;
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(E) The requirements under applicable Federal civil rights statutes; and

(F) Any other requirements as may be established by FCIC.

(2) The Company shall ensure the following for loss adjusters or employees 

that adjust or sign any claim for any eligible crop insurance contract:

(A) Any new loss adjuster shall participate in a structured training 

program on all of the items listed in paragraph (1) before signing 

any claim under an eligible crop insurance contract.

(B) Any experienced loss adjuster shall annually complete structured 

training on updates or changes specifically related to the areas 

listed in paragraph (1) or that are identified by FCIC or the 

Company as errors or omissions discovered during quality control 

reviews or processing of the loss related documents.

(C) All new loss adjusters shall pass a basic competency test (all 

testing records, including test results shall be maintained in 

accordance with section IV(g) of the Agreement) before signing 

any claim under an eligible crop insurance contract. Basic 

competency tests shall specifically relate to the areas listed in 

paragraph (1) and determine the proficiency of the individuals who 

completed the required training to accurately and correctly 

determine the amount of the loss and verify applicable information. 

Additionally, the Company shall review the test results and 

document follow-up training initiatives for any deficiency.

(D) All loss adjusters shall retake and pass the competency test every 

three years.

(E) If the loss adjuster was not employed by or did not contract with 

the Company in the previous year(s), the Company shall obtain, 

and make available upon request, documentation that the loss 

adjuster has passed the basic competency test within the past 3 

years with another AIP.

(F) Proficiency is established by passing a written test meeting the 

standards of the TPEP, and maintaining satisfactory work 

performance during the respective crop year measured against the 

measurement standards established under subsection (a)(2)(A).

(G) In addition, the loss adjuster is considered to maintain satisfactory 

work performance if the results of reviews to respond to producer
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complaints, State Departments of Insurance or FCIC inquiries, or 

other quality control reviews identify no material errors.

(d) Minimum Hours of Training for Agents and Loss Adjusters

(1) In order to sell or service any eligible crop insurance contract:

(A) A new agent or other applicable individuals (including any other 

individual who solicits or otherwise promotes crop insurance sales 

on behalf of the Company) must participate in a structured training 

program of at least 12 hours on all of the items listed in subsection 

(b)(1).

(B) An experienced agent or other applicable individual must annually 

complete at least 3 hours of structured training on updates or 

changes specifically related to the items listed in subsection (b)(1), 

or that are identified by FCIC or the Company as deficient during 

the quality control reviews or processing of the sales related 

documents.

(C) All agents and other applicable individuals must pass a basic 

competency test before they can sell or service an eligible crop 

insurance contract (all testing records, including test results, shall 

be maintained in accordance with section IV(g) of the Agreement)

. Basic competency tests must specifically relate to the items listed 

in subsection (b)(1) and determine the proficiency of the individual 

who completed the required training to sell and service eligible 

crop insurance contracts. Additionally, the Company must review 

the test results and document follow-up training initiatives for any 

area of identified weakness on the part of any one or more 

individuals.

(D) All agents and applicable individuals must retake and pass the 

basic competency test every three years.

(E) If the agent or other applicable individual was not employed by or 

did not contract with the Company in previous years, the Company 

must obtain and have available upon request, documentation that 

the agent or other applicable individual has passed the basic 

competency test within the past 3 years with another AIP.

(2) In order to adjust or sign any claim for any eligible crop insurance 

contract:

(A) A new loss adjuster or other applicable individual must participate 

in a structured training program of at least 60 hours on all of the
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items listed in subsection (c)(1) (including at least 24 hours of 

classroom training).

(B) An experienced loss adjuster or other applicable individual must 

annually complete at least 16 hours of structured training 

(including at least 8 hours of classroom training), on updates or 

changes specifically related to the areas listed in subsections(c)(1) 

or that are identified by FCIC or the Company as deficient during 

the quality control reviews or processing of the sales related 

documents.

(C) All loss adjusters and other applicable individuals must pass a 

basic competency test (all testing records, including test results, 

shall be maintained in accordance with section IV(g) of the 

Agreement). Basic competency tests must specifically relate to the 

areas listed in subsection (c)(1) and determine the proficiency of 

the individuals who completed the required training to accurately 

and correctly determine the amount of the loss and verify 

applicable information. Additionally, the Company must review 

the test results and document follow-up training initiatives for any 

area of identified weakness on the part of any one or more new 

loss adjusters or experienced loss adjusters.

(D) All loss adjusters and other applicable individuals must retake and 

pass the competency test every three years.

(E) The Company must obtain and have available upon request, 

documentation for any loss adjuster or other applicable individual 

that has passed the basic competency test within the past 3 years 

with another AIP to fulfill the requirements of this subsection.

SECTION III. QUALITY CONTROL GUIDELINES

(a) General Company Responsibilities 

The Company is responsible for:

(1) Establishing a system of internal controls to meet all FCIC quality control 

guidelines included in this Appendix.

(2) Conducting all quality control reviews using objective and unbiased 

individuals, who were not involved in the sales, supervision of sales, or 

establishment of the guarantee and did not participate in adjusting the loss 

for the eligible crop insurance contract reviewed. Quality control reviews 

shall be independent.
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(3) Conducting an inspection.

(4) Implementing procedures for timely detection and reporting of suspected 

misrepresentation, fraud, waste, or abuse by policyholders, employees or 

affiliates relating to the Federal crop insurance program.

(5) Notifying FCIC of suspected misrepresentation, fraud, waste or abuse in 

accordance with section IV of this Appendix and assisting FCIC in 

subsequent investigations.

(6) Implementing administrative procedures to resolve and correct errors and 

omissions identified during an inspection or review.

(7) Correcting any errors or omissions identified during any inspection or 

review.

(8) Maintaining, in accordance with section IV(g) of the Agreement, all 

documentation related to any inspection or review required by this 

Appendix.

(9) Establishing a process to respond to complaints by policyholders, the 

public, or state insurance departments, or referred to the Company by 

FCIC, documenting the complaint and actions taken by the Company in 

response, and providing such documentation to FCIC upon request.

(10) Ensuring that companion eligible crop insurance contracts in force for 

other individuals sharing in the crop are serviced consistently. Any 

Company procedure for ensuring such consistency shall include a 

mechanism for seeking an interpretation of policy or procedure from FCIC 

in the event that the Company and another AIP disagree.

(11) Taking such actions necessary to correct any non-compliance with the 

Agreement.

(12) Preparing and providing to FCIC within 20 business days of completing 

each review an Electronic Quality Control Review Record (EQCRR) 

detailing the results of the review in accordance with Appendix III.

(13) Retaining all documents, in accordance with section IV(g) of the 

Agreement, obtained in the course of the reviews conducted and all forms 

completed by the quality control reviewer and providing such documents 

to FCIC upon request. All review documentation is considered part of the 

policyholder file.
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(14) Submit an annual Quality Control Report, signed and certified by 

Company’s Chief Financial Officer, or individual with similar 

responsibilities, by April 30 following the reinsurance year, describing the 

overall results of the Company’s reviews and any corrective actions taken, 

and confirming the Company has performed sufficient reviews to provide 

a reasonable assurance that the requirements of the Agreement have been 

met.

(b) Review Requirements

The Company is required to identify and conduct the following reviews on a 

reinsurance-year basis unless otherwise specified herein and report the results to 

FCIC. A review that meets the criteria for more than one review requirement will 

count toward all such review requirements.

(1) Data Mining Reviews. Unless FCIC provides specific review requirements 

that are to be implemented, the Company shall conduct an inspection of 

eligible crop insurance contracts for which anomalies have been identified 

by FCIC. These reviews will not exceed three percent of eligible crop 

insurance contracts for the reinsurance year, unless FCIC provides notice 

that additional inspections are required to address specific program 

integrity concerns. These reviews will include, but are not limited to, 

eligible crop insurance contracts with anomalous actual production history 

(APH) certifications or identified misapplication of policy or FCIC 

procedures. FCIC will meet with AIPs annually to consult on the types 

and scope of data mining reviews to be conducted.

(2) Individual Policy Reviews. The Company shall conduct inspections or 

monitoring programs of eligible crop insurance contracts, entities, agents, 

loss adjusters, or affiliates identified by FCIC as may be determined 

necessary by FCIC to protect program integrity.

(3) Operational Reviews. These reviews are intended to ensure that the 

Company’s internal controls are in place, operational, and provide 

reasonable assurance that the liability and indemnities are properly 

established in accordance with FCIC procedures. At its sole discretion, 

FCIC may elect to require the Company to perform a Data Mining Review 

in lieu of any Operational review if FCIC determines the intent of the 

Operational Review may be more efficiently achieved through data 

mining. FCIC will consult with AIPs on any Data Mining criteria/results 

that may be used in lieu of existing Operational Review criteria in 

accordance with the consultative framework established in subsection 

(b)(1) above. If FCIC elects to require AIPs to perform a Data Mining 

Review in lieu of an Operational Review, FCIC will a Manager’s Bulletin 

or other memorandum specifying the new review criteria and procedures.
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(A) Conflict of Interest Reviews: In accordance with section VI of 

Appendix I, the Company shall, prior to the payment of a claim, 

conduct an inspection for all eligible crop insurance contracts for 

which a conflict of interest has been disclosed or otherwise been 

identified as follows:

(i) A conflict of interest review is mandatory when the 

individual making a disclosure:

(I) Has a share in a crop insured under any eligible 

crop insurance contract insured by the Company, or

(II) Has a relative with a substantial beneficial interest 

in any insurance contract insured by the Company.

(ii) An AIP discretionary review may be conducted on any 

disclosure category not included in subparagraph (i) above, 

as determined by the Company.

(B) Consecutive Loss Adjuster Reviews. The Company shall conduct 

an inspection of at least:

(i) 15 percent of the eligible crop insurance contracts on which 

the same adjuster has signed a claim for indemnity in 

three consecutive crop years for their Company; and

(ii) 15 percent of any additional eligible crop insurance 

contracts, identified by FCIC, on which the same adjuster 

has signed a claim for indemnity in three consecutive crop 

years between multiple AIPs.

(C) $200,000 Indemnity Reviews. The Company shall identify and 

conduct an inspection on any eligible crop insurance contract with 

an indemnity of $200,000 or more, where:

(i) For prevented planting losses:

(I) Any single indemnity exceeding $200,000; and

(II) Any aggregate indemnity, including claims that 

were closed, and subsequent claims exceeding

$200,000.

(ii) For all other losses:

(I) Any single indemnity exceeding $200,000; and
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(II) Any aggregate indemnity, including claims that 

were closed, and subsequent claims exceeding

$200,000.

(D) Rainfall Index Reviews and Vegetation Index Reviews.

(i) The Company shall perform acreage/colony report reviews 

not later than 120-days after the acreage/colony reporting 

date for the crop, as listed in the Special Provisions or after 

an acreage adjustment is completed in the crop year as 

specified in the Rainfall Index and/or Vegetation Index 

Common Policies.

(ii) Acreage/colony report reviews are required for:

(I) All eligible crop insurance contract receiving 

indemnities for which a conflict of interest has been 

reported under the Agreement;

(II) All eligible crop insurance contracts for which a 

written application for acreage reductions are made 

during the insurance year; and

(III) Not less than a 3-percent random sample for all 

Rainfall Index Pasture, Rangeland, Forage and 

Apiculture eligible crop insurance contracts and a 3 

percent random sample for all Vegetation Index 

Pasture, Rangeland, Forage eligible crop insurance 

contracts with reported acreage/colonies.

(iii) Acreage/colony report reviews shall include verification of:

(I) Actual acres (total including insured and uninsured 

acres) versus insured acres;

(II) Actual colonies versus insured colonies (colonies 

can be verified by FSA or other federal or state 

governmental reporting systems/requirements, tax 

records, transportation invoices, purchase 

agreements, bill of sales, etc.);

(III) Insurable interest/share in the crop; and

(IV) Insurability of the insured acreage located within 

the county, and that such acreage was reported on or 

before the acreage reporting date.
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(c) Actual Production History (APH) Verification

The Company is required to review and verify the records used to establish the 

APH for an eligible crop insurance contract in accordance with the eligible crop 

insurance contract and FCIC procedures. APH record reviews are required for all 

eligible crop insurance contracts reviewed under Appendix IV for which APH 

forms the basis for all or part of the guarantee and shall be conducted as follows:

(1) For the first year in which a crop is insured, review all years of records 

used to support the APH to ensure the records are complete and were 

reported and certified as required by FCIC procedure; and

(2) For continuous eligible crop insurance contracts, the reviewer shall:

(i) Review and verify the most recent year of records used to support 

the APH;

(ii) If an error or omission is identified, but when corrected would not 

affect the current crop year’s premium or liability (e.g. correcting 

the error or omission does not change the approved yield for the 

current crop year), determine that the remaining years of records 

required to be maintained by the policyholder exist;

(iii) If an error or omission is identified in the most recent year of 

records used to support the APH that, when corrected, would affect 

the current crop year’s premium or liability, and prior year records 

exist, conduct a review and verification of all records required to 

be available for such review; and

(iv) If records required to be available for review do not exist for any 

year, apply the yield adjustment requirements in 7 C.F.R. part 400, 

subpart G.

SECTION IV. REPORTING SUSPECTED MISREPRESENTATION, FRAUD, WASTE,

AND ABUSE

In all cases where the Company or its affiliates reasonably suspect misrepresentation, 

fraud, waste, or abuse, the Company shall:

(a) Immediately report such cases to FCIC;

(b) Not take any action until the Company and FCIC have agreed to the appropriate 

course, except as necessary to preserve the timely adjustment of the claim or as 

otherwise authorized by FCIC procedures;
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(c) Take any action required by FCIC and, upon completion, forward all information 

and documents in the possession of the Company regarding the required action to 

the appropriate FCIC compliance office for the area; and

(d) If the Company does not find adequate evidence to support a conclusion that a 

misrepresentation, fraud or waste and abuse has occurred, maintain all documents, 

in accordance with section IV(g) of the Agreement, relating to the suspected 

misrepresentation, fraud, waste, or abuse, and any actions taken.