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APPENDIX I

REGULATORY DUTIES AND RESPONSIBILITIES

The Company shall comply with the following regulatory duties and responsibilities.

SECTION I. PROCUREMENT INTEGRITY

(a) During the term of this Agreement, the Company shall not knowingly:

(1) Make, directly or indirectly, any offer or promise of future employment or 

business opportunity to, or engage, directly or indirectly, in any discussion 

of future employment or business opportunity with any FCIC official;

(2) Offer, give, or promise to offer or give, directly or indirectly, any money, 

gratuity, or other thing of value to any FCIC official; or

(3) Solicit or obtain, directly or indirectly, from any FCIC official, prior to 

FCIC's acceptance of this Agreement, any proprietary or source selection 

information regarding the Agreement.

(b) During the term of this Agreement, no FCIC official shall knowingly:

(1) Solicit or accept, directly or indirectly, any promise of future employment 

or business opportunity from, or engage, directly or indirectly, in any 

discussion of future employment or business opportunity with any officer, 

employee, representative, agent, consultant, or affiliate of the Company;

(2) Ask for, demand, exact, solicit, seek, accept, receive, or agree to receive, 

directly or indirectly, any gratuity, gift, favor, entertainment, loan, or 

anything of monetary value from any officer, employee, representative, 

agent, consultant or affiliate of the Company; or

(3) Disclose any proprietary or source selection information regarding the 

Agreement, directly or indirectly, to any person other than a person 

authorized by FCIC to receive such information.

(c) During the term of this Agreement, no person who is given authorized or 

unauthorized access to proprietary information regarding the Agreement shall 

knowingly disclose such information, directly or indirectly, to any person other 

than a person authorized by FCIC to receive such information.

(d) No USDA official or employee who has participated personally and substantially 

in the deliberation of the Agreement with the Company shall:
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(1) Participate in any manner, as an officer, employee, agent, representative, 

or affiliate of another party to this Agreement, in any negotiations 

regarding such an Agreement; or

(2) Participate personally and substantially on behalf of another party to this 

Agreement in the performance of such Agreement, during the period 

ending 2 years after the last date such individual participated personally 

and substantially in the conduct of activities associated with this 

Agreement.

(e) The definitions at 48 C.F.R. § 3.104-1 are incorporated in this Agreement for the 

purposes of this section, unless the term is otherwise defined herein.

(f) If the Company fails to comply with this section, FCIC may terminate this 

Agreement for cause.

(g) For the purpose of this section, the term "FCIC Official" has the same meaning as 

the term "Procurement Official" in section 6 of the Office of Federal Procurement 

Policy Act Amendments of 1988 (Pub. L. 100-679).

SECTION II. DRUG FREE WORKPLACE

(a) The Company shall make a good faith effort, on a continuing basis, to maintain a 

drug-free workplace and identify all known workplaces.

(b) The Company shall, no later than 30 days after the date the Agreement goes into 

effect, complete the following:

(1) Publish a statement that:

(A) Tells the Company’s employees that the unlawful manufacture, 

distribution, dispensing, possession, or use of a controlled 

substance is prohibited in the Company’s workplace;

(B) Specifies the actions that the Company will take against employees 

for violating that prohibition; and

(C) Lets each employee know that, as a condition of employment, he 

or she:

(i) Shall abide by the terms of the statement; and

(ii) Shall notify the Company in writing if he or she is 

convicted for a violation of a criminal drug statute 

occurring in the workplace and shall do so not more than 5 

calendar days after the conviction.
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(2) Provide all employees with a copy of the statement required by subsection 

(b)(1);

(3) Establish an ongoing drug-free awareness program to inform employees 

about:

(A) The dangers of drug abuse in the workplace;

(B) The Company’s policy of maintaining a drug-free workplace;

(C) Any available drug counseling, rehabilitation, and employee 

assistance programs; and

(D) The penalties that the Company may impose upon them for drug 

abuse violations occurring in the workplace.

(c) The Company shall identify all known workplaces and failure to do so is a 

violation of the drug-free workplace requirements.

(1) The Company may provide a list of workplaces at the time of execution of 

the Agreement or maintain a list in the Company offices and make such 

information available for examination upon request by any USDA official 

or designated representatives.

(2) The list of workplaces must include the actual addresses of buildings(or 

parts of buildings) or other sites where work under the Agreement takes 

place. The addresses of all business offices for agents and loss adjusters 

must be included. Address information for agents and loss adjusters 

submitted in accordance with Appendix III will constitute a list of 

workplaces provided to FCIC for such agents and loss adjusters. 

Categorical descriptions may be used for agents, employees, or loss 

adjusters who also work from other multiple locations (e.g. personal 

vehicles, agent residences, and residences and farming operations of 

policyholders). For example, the list of workplaces may include as a 

category: “the personal vehicles of all loss adjusters.”

(3) If the Company provides a list of workplaces to FCIC, the Company must 

inform FCIC of any changes in workplaces during the reinsurance year 

from those workplaces identified at the time of execution of the 

Agreement.

(d) If an employee is convicted of a drug violation in the workplace, the Company 

shall:
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(1) Notify FCIC in writing within 10 days after receiving notice from any 

employee or otherwise learning of such conviction. The notice shall 

include the position/title of the employee; and

(2) Within 30 days after receiving notice from any employee or otherwise 

learning of a conviction, take one of the following actions with respect to 

any employee who is convicted of a drug abuse violation occurring in the 

workplace:

(A) Take appropriate personnel action against such employee, up to 

and including termination; or

(B) Require that such employee satisfactorily participate in a drug 

abuse assistance or rehabilitation program approved for such 

purposes by a Federal, State, or local health, law enforcement, or 

other appropriate agency.

(e) The Company shall not engage in the unlawful manufacture, distribution, 

dispensing, possession, or use of a controlled substance in the performance of this 

Agreement.

(f) The Company shall certify compliance with this section in accordance with 

Appendix II.

SECTION III. ANTI-LOBBYING

The Company shall comply with all provisions and requirements of 2 C.F.R. part 418, 

certify its compliance with such, and provide any required disclosure. This certification 

and any disclosures are material representations of fact upon which FCIC relied when the 

Company entered into the Agreement. Submission of this certification and any 

disclosures are prerequisites for making or entering into this Agreement as imposed by 31

U.S.C. § 1352. Any person who fails to file or amend the disclosure form, as required by 

2 C.F.R. part 418, shall be subject to a civil penalty of not less than $10,000, and not 

more than $100,000, for each such failure.

SECTION IV. LARGE CLAIMS

As a condition of reinsurance and prior to commencing any loss adjustment activity, the 

Company agrees to comply with all provisions of FCIC’s Large Claims Procedures, as 

applicable.
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SECTION V. COMPLIANCE WITH STATE INSURANCE LAWS

(a) Unless preempted in accordance with the Act or section IV(o) of the Agreement, 

the Company and its affiliates shall comply with applicable State law.

(b) If a State insurance department determines that the Company or any of its 

affiliates are in non-compliance with an applicable State law and FCIC 

determines that the non-compliance materially affects the Company’s ability to 

meet its obligations under this Agreement, such non-compliance shall be 

considered a breach of this Agreement unless remedial action by the Company or 

affiliate to correct the non-compliance is approved by FCIC.

(c) Upon the request of FCIC, the Company shall submit to FCIC information or 

documentation the Company is required to submit to a State insurance department 

under applicable State law related to the business conducted under this 

Agreement.

(d) If a State insurance department notifies the Company or its affiliates that it is 

taking, or proposes to take, an action against the Company or its affiliates or 

directs the Company to take an action, the Company must immediately notify 

FCIC of such action and any remedial action proposed by the Company or 

directed by the State insurance department that directly or indirectly affects the 

Company’s ability to perform its obligations under this Agreement.

SECTION VI. CONFLICT OF INTEREST

In this section, any reference to an agent or agents also includes a subagent or subagents.

(a) Loss Adjustment

(1) The Company and its affiliates shall not permit:

(A) Its sales agents, agency employees, or sales supervisors to be 

involved in loss adjustment activities in a county or adjoining 

county where the sales agent, agency employee, or sales supervisor 

performs sales functions (except receipt and transfer to the 

Company of a notice of loss) on behalf of any AIP.

(B) A relative of a sales agent, agency employee, or sales supervisor to 

be involved in loss adjustment activities in a county or adjoining 

county where the sales agent, agency employee, or sales supervisor 

performs sales functions (except receipt and transfer to the 

Company of a notice of loss) on behalf of the Company.
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(2) Prohibited loss adjustment activities for all individuals referenced in 

paragraph (1)(A) and (B) include the following:

(A) The supervision, control, or adjustment of a claim. The Company 

is solely responsible for the supervision and control of the loss 

adjustment process for a loss determination and all loss adjustment 

oversight. The agent’s prohibition in loss adjustment activities is 

not intended to preempt any duty or obligation of the agent to 

provide information to the policyholder on his or her policy 

options, duties, rights, and responsibilities.

(B) Obtaining sales or production records for purposes of loss 

adjustment on behalf of the policyholder (other than simply 

collecting information directly from the policyholder and 

providing it to the Company).

(i) The agent may:

(I) Receive a notice of loss from the policyholder and 

transfer it to the Company;

(II) Provide a copy of the Company’s official file 

folder, as applicable, to the loss adjuster or 

reviewer;

(III) Provide the loss adjuster or reviewer with any 

information provided by the policyholder related to 

the loss;

(IV) Facilitate the loss adjuster’s gathering of 

information directly from other parties; and

(V) Assist the loss adjuster in locating the policyholder 

or vice versa.

(ii) Loss adjusters and reviewers are directly responsible for the 

verification and validation of the information from a third 

party source of such information and nothing in the 

facilitation of such interactions or information gathering 

permits activities that may allow the agent to influence the 

loss adjustment process or the loss adjuster’s or reviewer’s 

independent determination of loss.

(C) A loss adjustment determination or verification required to 

complete a claim or the determination or verification of a cause of 

loss.
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(i) Other than to facilitate the loss adjuster or reviewer’s 

gathering of information from the policyholder, an agent 

shall not influence the policyholder or loss adjuster in:

(I) The preparation or presentation of information 

associated with a claim;

(II) The determination or verification of facts or 

information associated with a claim; or

(III) The determination of the cause of loss or the 

amount of a claim,

(ii) Prohibited agent activities include, but are not limited to:

(I) Riding with the loss adjuster to the field;

(II) Being present with the loss adjuster during the loss 

inspection and related processes;

(III) Accompanying the loss adjuster or reviewer in their 

independent verification and validation of claim 

information from third parties; or

(IV) Allowing a loss adjuster to use the agent’s or 

agency’s office, computer, or other similar 

resources to prepare the claim and related 

documentation.

(iii) Prohibited agent and loss adjuster contact does not include:

(I) Social interactions;

(II) Checking on the status of a claim or claim payment;

(III) Facilitating follow up contact between the 

policyholder and loss adjuster;

(IV) Business contact on other insurance matters not 

related to a specific open claim covered by this 

Agreement; and
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(V) Interaction on a claim after the loss adjuster 

has filed the appropriate claim 

documentation with the Company (the agent 

shall not engage the loss adjuster directly on a 

claim dispute).

(D) Verification of yields for the purpose of validating insurance 

coverage or the guarantee. The agent must not be present during 

any inspections performed by the Company for the purposes of 

determining insurability of the crop or the amount of the crop to be 

insured.

(E) After a notice of loss is filed by the policyholder, advising or 

assisting the policyholder in any manner regarding the preparation 

of the claim and the determination of the indemnity, including, but 

not limited to, whether the loss adjuster correctly applied FCIC 

procedures regarding loss adjustment.

(i) The agent is permitted to consult with the policyholder to 

explain crop insurance terms and conditions, insurance 

processes, and the implications of decisions or actions that 

may be taken by the policyholder under the policy. 

However, such consultation shall not include opinions, 

influence, or coercion as to the facts of a claim on policies 

written by the agent or the determinations of the loss 

adjuster on a claim.

(ii) If the agent suspects that a claim has been adjusted 

improperly or contains factual errors, the agent may contact 

the Company’s field supervisor or claims manager for 

review and assistance, but shall not discuss the matter 

directly with the loss adjuster.

(F) Any other function reserved for loss adjusters in FCIC procedures.

(3) The Company and its service providers shall not permit any individual 

involved in the loss adjustment determination or verification required to 

complete a claim, or the determination or verification of a cause of loss, to 

adjust a loss for:

(A) A policyholder with whom the individual referred to in paragraph

(3) above has a business, financial or legal relationship including, 

but not limited to, lending money, custom farming, leasing land or 

other property, selling other goods or services besides insurance, or 

activities of a similar nature;
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(B) A policyholder, or an individual with a substantial beneficial 

interest in the policyholder, whose eligible livestock price

insurance contract was sold by a relative of the individual referred to 

in paragraph (3) above; or

(C) A relative of the individual referred to in paragraph (3) above.

(4) If a claims supervisor adjusts a loss in any county in which loss 

adjustment is subject to his or her supervision, and if the claim is one 

subject to review in accordance with Appendix IV, the review shall be 

performed by an individual who is not under the direct supervision of the 

supervisor.

(b) Sales, Solicitation and Brokering

(1) The Company and its affiliates shall not permit any individual involved in 

the loss adjustment determination or verification required to complete a 

claim or the determination or verification of a cause of loss to be involved 

with the sales, solicitation or brokering of an eligible livestock price

insurance contract or with any other function reserved for the agent in 

FCIC procedures in a county or adjoining county where such individual 

performs claims functions on behalf of any AIP.

(2) The Company and its affiliates shall not permit a relative of any individual 

involved in the loss adjustment determination or verification required to 

complete a claim or the determination or verification of a cause of loss to 

be involved with the sales, solicitation or brokering of an eligible 

livestock price insurance contract or with any other function reserved for 

the agent in FCIC procedures in a county or adjoining county where such 

individual performs claims functions on behalf of the Company.

(c) Underwriting

The Company and its service providers shall not permit their sales agents, the 

owners or employees of their sales agencies, their sales supervisors, or any 

relative of the aforementioned individuals to be involved in the acceptance and 

verification of underwriting data relating to eligibility and coverage for an eligible 

livestock price insurance contract written by such individuals. This prohibition 

shall not apply to the routine transmission of information provided by applicants 

or policyholders that is necessary to issue eligible livestock price insurance 

contracts or coverage.
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(d) Supervision

An individual employed by the Company or its service provider for the general 

supervision of the sales and service of eligible livestock price insurance 

contracts, as identified by the Company in section IV(e) of Appendix II may 

supervise those activities associated with the general administration of such 

contracts, which may include the management of service, underwriting, and 

loss adjustment.

(e) Disclosure

(1) In accordance with FCIC procedures, the Company must notify all of its 

employees and affiliates, including, but not limited to, agents, agencies, 

and loss adjusters, in writing, of the conflict of interest requirements, 

including their requirement to disclose to the Company, and the 

Company’s obligation to disclose to FCIC:

(i) Any business, financial, or legal relationship that any such person 

has with a policyholder;

(ii) Whether any employee or affiliate is a relative of the policyholder; 

or

(iii) Whether any employee or affiliate has a substantial beneficial 

interest in the policyholder.

(2) In addition to any other sanctions in this Agreement, if the Company fails 

to follow the provisions of this section and FCIC procedures, eligible 

livestock price insurance contracts sold or serviced by the person who 

failed to disclose a business, financial, or legal relationship with a 

policyholder or is a relative of the policyholder may not, at FCIC’s 

discretion, be reinsured or receive A&O subsidy, CAT LAE, or risk 

subsidies for the reinsurance year for which such disclosure was not

provided.

(A) Disclosure and Notification Requirements

(i) Applicable employees and affiliates will be required each 

year to submit a signed statement that verifies awareness of 

the conflict of interest rules and an agreement to abide by 

them.

(ii) Applicable employees and affiliates must annually disclose 

the required information by the applicable acreage 

reporting date. Such disclosure must include the name of 

the policyholder or person with a substantial beneficial 

interest in the policyholder, and the type of relationship.
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(iii) If the applicable employee or affiliate enters into a 

business, financial, or legal -relationship or becomes a 

relative with the policyholder after the annual

disclosure, the applicable employee or affiliate must 

disclose the information required in paragraph (1) within 

15 days of entering the relationship.

(iv) The Company must evaluate the business, financial or legal 

relationship or the relationship with the relative to 

determine whether the applicable employee or affiliate is in 

violation of subsection (a), (b), or (c) or whether a conflict 

of interest review is necessary to determine if such 

violation has occurred. At a minimum, such reviews will 

be necessary when:

(I) The applicable employee or affiliate is in the 

immediate family of the policyholder or is a person 

with a substantial beneficial interest in the 

policyholder; or

(II) The business, financial or legal relationship with the 

policyholder has the potential to produce an 

incentive to create or inflate a loss because the 

applicable employee or affiliate, or a relative of the 

employee or affiliate, is entitled to a portion of the 

proceeds of the crop or the crop insurance payment 

or would otherwise receive a benefit from the 

policyholder based on the existence of crop 

insurance and their relationship.

(f) Notification

The Company shall notify FCIC within 3 business days in writing when it 

discovers that a Company employee or affiliate of the Company has violated the 

requirements of this section.

SECTION VII. CONTROLLED BUSINESS

(a) No individual (including a subagent) may receive directly, or indirectly through a 

Company or its affiliates, any compensation (including, but not limited to, any 

commission, profit sharing, bonus, or any other direct or indirect benefit) for the 

sale and service of an eligible livestock price insurance contract if:

(1) The individual has a substantial beneficial interest, or a member of the 

individual’s immediate family has a substantial beneficial interest, in the 

eligible livestock price insurance contract; and
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(2) The total compensation to be paid to the individual with respect to the sale 

or service of the eligible livestock price insurance contract that meets the

condition described in paragraph 1 exceeds 30 percent, or the percentage 

specified in State law, whichever is less, of the total of all compensation 

received directly or indirectly by the individual for the reinsurance year.

(b) Not later than 90 days after the first annual settlement for the reinsurance year, 

any individual that received directly or indirectly any compensation through a 

Company or its affiliates for the service or sale of any eligible livestock price

insurance contract in the prior reinsurance year shall certify to the applicable 

Company, in format approved by FCIC, that the compensation that the individual 

received was in compliance with this paragraph.

(c) Not later than 120 days after the first annual settlement for the reinsurance year, 

the Company shall provide FCIC a list of individuals who either failed to timely 

provide the required certification or whose certification demonstrated noncompliance with the requirements of this paragraph. If the Company fails to 

comply with this provision, FCIC may deny all or a portion of A&O subsidy or 

CAT LAE.

(d) Non-compliance

(1) The following individuals are subject to disqualification and civil fines 

under FCIC procedures implementing section 515(h) of the Act (7 U.S.C.

§ 1515(h)) and any other FCIC procedures implementing section 515(h):

(A) Individuals who failed to timely provide the required certification;

(B) Individuals who certified non-compliance with the requirements of 

this paragraph, except where non-compliance results from 

circumstances beyond the control of the individual; or

(C) Individuals who certified compliance but who have been 

determined to not be in compliance.

(2) Reinsurance will not be denied for the eligible livestock price

insurance contracts associated with any violation with respect to 

paragraph (1).

(e) If the amount of compensation to which the individual is entitled under its 

contract with the Company or affiliate would result in the agent receiving more 

than 30 percent from immediate family policies, the individual is in violation and 

the violation must be disclosed. An individual cannot (1) pay back an amount 

necessary to be compliant; (2) defer payments to determine whether the individual 

will violate the provision; or (3) take any other action to adjust the individual’s 

compensation owed under the contract with the Company or affiliate. The gravity 

of the violation will be taken into consideration before imposing any sanctions.
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SECTION VIII. TRAINING REQUIREMENTS

The Company shall ensure that all of its employees, agents, agency employees, loss 

adjusters, and contractors that act on behalf of the Company with respect to the selling, 

servicing, and adjusting of eligible livestock price insurance contracts meet all the 

requirements contained in the Appendices and FCIC procedures.

(a) All applicable employees, agents, agency employees, loss adjusters, and 

contractors must be trained in accordance with Appendix IV.

(b) All employees, agents, and agency employees, who are involved in the selling and 

servicing (except loss adjustment) of eligible livestock price insurance contracts, 

must be licensed in the State in which they are doing business if required by the 

State; and

(c) All loss adjusters adjusting eligible livestock price insurance contracts must be 

certified by FCIC before they can conduct any loss adjustment. Certification of 

loss adjusters may be obtained by completing the training requirements in 

subsection (a) and:

(1) If any State in which the loss adjuster performs loss adjustment activities 

requires the loss adjuster to take a test which is directly related to 

livestock price insurance to obtain a license to adjust an eligible 

livestock price insurance contract, taking and passing the State test and 

obtaining the license required by the State;

(2) If any State in which the loss adjuster performs loss adjustment activities 

does not require the loss adjuster to obtain a license to adjust an eligible 

livestock price insurance contract (including those cases where the loss 

adjuster is a company employee and the State excludes company 

employees from licensing requirements), taking and completing with a 

passing grade a proficiency testing program developed, approved, and 

implemented under FCIC procedures or, if such FCIC-approved 

proficiency testing program is not available in the State, completing the 

training required by the Company under Appendix IV; or

(3) If any State in which the loss adjuster performs loss adjustment activities 

requires a test which is not livestock price insurance-specific (as determined 

by FCIC) to obtain a license to adjust an eligible livestock price insurance 

contract, taking and completing with a passing grade a proficiency testing 

program developed, approved, and implemented under FCIC procedures in 

lieu of obtaining a license in such State, or, if such FCIC-approved 

proficiency testing program is not available in the State, taking and passing 

the State test and obtaining the license required by the State.
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(d) The Company shall not permit a loss adjuster to conduct any loss adjustment 

activity for the reinsurance year until he or she has been certified. FCIC will 

consider the loss adjuster to be certified after:

(1) The loss adjuster provides to the Company verifiable documentation 

showing that he or she has completed the required training, obtained the 

proper license or has taken and completed with a passing grade the 

applicable test or testing program specified in subsection (c); and

(2) The Company submits proper written or electronic verification to FCIC, as 

directed by FCIC.

(e) Loss adjusters shall be required to retake the required FCIC-approved proficiency 

testing program referenced in subsections (c)(2) and (3) as required by the 

Company or FCIC.

(f) Any person who has been found in material noncompliance with any loss 

adjustment policy, FCIC procedure, or training requirement approved by FCIC 

shall be de-certified by FCIC. In such case, FCIC will provide written 

notification to the Company, and the Company shall not permit that person to 

perform loss adjustment activities until he or she has received the training 

specified by FCIC, has retaken and completed with a passing grade the required 

proficiency testing program, and has been certified by FCIC. A listing of persons 

decertified will be available to the Company.

(g) Allowing a loss adjuster to conduct any loss adjustment activity on a policy 

before he or she is properly certified or after he or she has been de-certified shall 

result in the denial of reinsurance, A&O subsidy, CAT LAE, or risk subsidy for 

all policies upon which such activity occurred.

SECTION IX. OVERSIGHT AND CUT-THROUGH

(a) Whenever FCIC determines that the Company is unable to substantially fulfill an 

obligation that materially affects its performance under this Agreement with 

respect to some or all of the eligible livestock price insurance contracts it has in 

its book of business, FCIC may impose one or more of the following on the

Company:

(1) Require additional reporting to FCIC of financial or operational 

information related to business conducted under the Agreement.

(2) Allow the placement of representatives of FCIC at any location of the 

Company and its service providers to monitor activities that directly or 

indirectly affect the performance of the Company’s obligations under this 

Agreement.
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(3) Require the Company to obtain approval from FCIC of some or all 

decisions or actions (including, but not limited to, any transaction, 

payment, agreement, and servicing of eligible livestock price insurance 

contracts) taken or contemplated by the Company or its service providers 

that could directly or indirectly affect the performance of the Company’s 

obligations under this Agreement.

(4) Take all reasonable steps to preserve the assets and financial and operating 

capabilities of the Company to perform its obligations under this 

Agreement.

(5) Transfer to FCIC, or its designee, without further action of the Company, 

any or all eligible livestock price insurance contracts. With respect to 

any eligible livestock price insurance contract transferred to FCIC:

(A) FCIC will assume all obligations for unpaid losses whether 

occurring before or after the date of transfer regarding such eligible 

livestock price insurance contracts, and the Company must pay 

FCIC all funds in possession of the Company and its affiliates with 

respect to all such eligible livestock price insurance contracts 

transferred including, but not limited to, premiums collected or any 

payments from commercial reinsurers related to the book of

business.

(B) FCIC, or its designee, will have the right to conduct all activities 

related to the sale and service of eligible livestock price insurance

contracts.

(C) FCIC has the right to all uncollected premiums on all eligible

livestock price insurance contracts.

(D) Any uncollected debts owed to the Company under an eligible

livestock price insurance contract will become a debt owed to

FCIC.

(E) To the extent that FCIC contracts for an AIP or other entity to 

service the transferred eligible livestock price insurance contracts, 

the AIP or other entity will receive A&O subsidy for service the 

AIP or other entity must perform for such eligible livestock price

insurance contracts in proportion to the amount of service required 

for the remainder of the crop year.

(6) With respect to eligible livestock price insurance contracts that are 

transferred to FCIC and when another AIP agrees to assume the eligible 

livestock price insurance contracts:
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(A) The AIP will assume the obligations for unpaid losses whether 

occurring before or after the date of transfer regarding such eligible 

livestock price insurance contracts, unless otherwise determined by

FCIC;

(B) FCIC will remit to the AIP any premium or any applicable 

payments from commercial reinsurers collected from the 

Company; and

(C) The AIP will receive A&O subsidy for services the AIP must 

perform for such eligible livestock price insurance contracts in 

proportion to the amount of service required for the remainder of 

the crop year.

(b) A Company in supervision, rehabilitation, liquidation, or any equivalent action by 

a State is presumed to be unable to substantially fulfill obligations that materially 

affect its performance under this Agreement with respect to some or all of the 

eligible livestock price insurance contracts it has in its book of business for the 

purposes of subsection (a).

(c) If either subsection (a)(4) or (5) is implemented with respect to another AIP, the 

Company, within the limits of its financial and operational resources, agrees to 

cooperate with FCIC in the transferring and servicing of such eligible livestock 

price insurance contracts.

SECTION X. SUPERVISION, REHABILITATION, AND LIQUIDATION

If the Company is placed in supervision, rehabilitation, liquidation, or any equivalent 

action by a State Insurance Department:

(a) The Company shall take all reasonable steps to facilitate a working relationship 

between FCIC and the State Insurance Department during the period the 

Company is in supervision, rehabilitation, liquidation, or any equivalent action.

(b) The Company shall take all reasonable steps to ensure that FCIC has access to 

information and use of the operating systems, records, equipment, or other 

property used in the administration of the Company’s book of business for as long 

as necessary to service the book of business.
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(c) In liquidation (or equivalent situation):

(1) If FCIC has expended funds to keep the Company operational, including, 

but not limited to, the payment of expenses already included in the A&O 

subsidy, or to pay other expenses not included in the A&O subsidy, when 

the Company was in supervision, rehabilitation liquidation, or any 

equivalent situation, with respect to the repayment of such funds, FCIC 

shall have priority over all other creditors except for expenses of the state 

supervisor, rehabilitator, liquidator, or equivalent person; and

(2) If the Company owes any other funds to FCIC not included in paragraph

(1) with respect to the repayment of such funds, FCIC shall have 

priority over all other non-federal creditors.

(d) FCIC will have the right to conduct all activities related to the sale and service of 

eligible livestock price insurance contracts.

(e) The Company and its affiliates must pay to FCIC all funds in their possession 

with respect to all eligible livestock price insurance contracts including, but not 

limited to, premiums collected or any applicable payments from commercial

reinsurers.

(f) Any uncollected debts or premiums owed to the Company under an eligible

livestock price insurance contract will become a debt owed to FCIC.

(g) The Company and its affiliates shall:

(1) Properly and fully service all eligible livestock price insurance 

contracts until transferred or the applicable cancellation date, 

whichever is the later;

(2) Take all reasonable efforts to ensure that the Company’s commercial 

reinsurance applicable to its book of business remains in effect; and

(3) Not delay any payment to FCIC or the policyholder related to an eligible 

livestock price insurance contract.

(h) Those persons found not in compliance with subsection (g)(3) shall be subject to 

debarment from participating in the programs of FCIC and USDA.

SECTION XI. MEDIATION, ARBITRATION, LITIGATION AND ASSISTANCE

(a) The Company’s expenses incurred as a result of litigation are covered by the 

A&O subsidy. FCIC has no obligation to provide other funds to reimburse the 

Company for litigation costs.
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(b) In accordance with FCIC procedures, the Company may request FCIC to provide 

non-monetary assistance, including, but not limited to, witnesses, documents, and 

direction or such other assistance for mediation, arbitration or litigation. FCIC 

will only consider the Company's request for assistance if the Company:

(1) Reports the matter in accordance with subsection (c);

(2) Immediately notifies FCIC in writing of the requested action setting forth 

the reasons such action would be in the best interests of FCIC;

(3) Presents all legal arguments favorable to its defense which it has a good 

faith basis to assert, including those suggested by FCIC; and

(4) Does not join FCIC as a party to the action unless FCIC agrees in writing 

to be joined as a party, or unless otherwise required by law.

(c) The Company shall report to FCIC in accordance with FCIC procedures, disputes 

with policyholders in mediation, arbitration, litigation or legal action, within 30 

days after the Company has been notified of such dispute.

(d) FCIC will, at its sole discretion, determine if the requested action under this 

section will be granted. The criteria to determine such action will be whether 

such action is in the best interest of FCIC and the Federal crop insurance program.

(e) Unless otherwise provided in this Agreement, FCIC will pay ultimate net losses 

for eligible livestock price insurance contracts of the Company in accordance 

with the provisions of section II(b) of the Agreement:

(1) In addition to the amount of the claim, ultimate net loss may include 

interest owed to policyholders related to the eligible livestock price

insurance contract that is included:

(A) In a final judgment against the Company by an arbitrator or a court 

of competent jurisdiction if FCIC determines that:

(i) Such interest resulted from the Company's substantial 

compliance with all applicable FCIC procedures in the 

selling and servicing of the eligible livestock price

insurance contract; and

(ii) The award of such interest did not involve negligence or 

culpability on the part of the Company or its affiliates; and

(B) In the settlement of any claim if FCIC, in addition to the 

determinations included above, determines that the settlement 

should be approved.
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(2) In all arbitration and mediation cases or any other case that has been 

settled by the Company and policyholder:

(A) The Company must provide to FCIC all written statements from 

the arbitrator describing the issues in dispute, the factual findings, 

the determinations and the amount and basis for any award;

(B) The Company must provide to FCIC all settlement agreementsthat 

contain at a minimum, a statement of the issues in dispute and the 

amount of the settlement;

(C) The Company must provide to FCIC all written opinions of the 

court, all pleadings filed in the case, and other documentation 

requested by FCIC; and

(D) Failure of the Company to provide the required information in this 

subparagraph for an eligible livestock price insurance contract 

will result in denial of reinsurance for such contract.

(f) Under no circumstance are any punitive or consequential damages, attorney fees 

or any other costs, including court costs, included in the calculation of ultimate 

net loss.

(g) For the purposes of this subsection only, the term “settlement” means the 

compromise or resolution of a dispute under an eligible livestock price

insurance contract between the Company and a policyholder.

SECTION XII. SANCTIONED PERSONS

The Company and its affiliates shall not use any person who has been debarred or 

suspended, or voluntarily excluded under 2 C.F.R. part 180, 7 C.F.R. § 400.456 or any 

successor regulation by FCIC or any other U.S. Government Agency or disqualified by 

FCIC under section 515(h) (7 U.S.C. § 1515(h)), as applicable, in any manner which 

involves performance under this Agreement. Use of a disqualified, debarred, suspended 

or voluntarily excluded person or entity may subject the Company and affiliate to 

suspension and debarment in accordance with 2 C.F.R. part 180, 7 C.F.R. § 400.456 or 

any successor regulation.
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SECTION XIII. MEMBER - DELEGATE

No member of or delegate to Congress nor any resident commissioner will be permitted 

to have any share or part of this Agreement or receive any benefit that may arise 

therefrom, except that this provision will not be construed to apply to a benefit from this 

Agreement that accrues to a member of or delegate to Congress or any resident 

commissioner as a result of an interest in a corporation and the benefit is for the 

corporation’s general benefit. Members of or delegates to Congress or any resident 

commissioner are eligible to purchase a crop insurance contract for any crop in which 

they have an insurable interest.

SECTION XIV. DATA COLLECTION

The Company shall fully cooperate with FCIC in the collection of information required 

under section 2501A of the Food, Agriculture, Conservation and Trade Act of 1990.

SECTION XV. NON-DISCLOSURE

(a) The Company shall:

(1) Ensure that all persons having access to Protected Information, who are 

either employed by or have contracted with the Company, sign an 

Individual Non-disclosure Statement (NDS). If a person employed by or 

having a contract with the Company has previously executed a NDS with 

another AIP, that person must either submit a copy of the original NDS to 

the Company or sign and submit a new NDS.

(2) Maintain copies of all NDSs and have them available for examination.

(3) Ensure that its affiliates and contractors are fully aware of the need to 

protect information and the requirement to collect NDSs from all persons 

having access to Protected Information. Affiliates and contractors, in turn, 

must ensure that all persons having access to Protected Information who 

are either employed by or have contracted with them must sign a NDS.

(4) Ensure that all contractors or affiliate of the Company maintain copies of 

all such NDSs and have them available for examination.
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(5) By April 1st of each year, obtain an annual certification from each of its 

contractors and affiliates that the respective contractor or affiliate has 

obtained a NDS from each person who has access to any Protected 

Information and who is employed by or has a contract with the contractor 

or the affiliate. The purpose of the annual certification by the contractor 

or affiliate to the Company is to ensure that the contractor or affiliate 

annually reviews its files to determine that any new employees or other 

persons having access to Protected Information have signed a NDS. The 

written and signed certification must be from an officer of the affiliate or 

contractor to the Company and can state: “I hereby certify that [insert the 

name of the affiliate or contractor] has reviewed its files and, as of [insert 

date review was completed], all employees or other persons having access 

to Protected Information have signed a Non-disclosure Statement.”

(6) Maintain copies of all certifications from contractors or affiliates and have 

them available for examination.

(7) Ensure that all persons who are employed by or have a contract with the 

Company have executed a NDS prior to obtaining access to Protected 

Information.

(8) Notify contractors and affiliates regarding the requirement that all persons 

employed by or having a contract with the contractor or affiliate must sign 

a NDS prior to obtaining access to Protected Information.

(9) Provide an annual certification to FCIC in the Plan of Operations, 

according to section II of Appendix II, that it has obtained a NDS from all 

persons who have access to any protected information and who are 

employed by or have a contract with the AIP; and, in the case of persons 

employed by or having a contract with a contractor or affiliate, has 

obtained a certification from the contractor or affiliate that the contractor 

or affiliate has obtained an Non-disclosure Statement from all such 

persons. The purpose of the annual certification by the Company to FCIC 

is to ensure that the Company annually reviews its files to determine that 

any new employees or other persons having access to Protected 

Information have signed a NDS and that all affiliates and contractors have 

provided an annual certification as to the NDSs signed by their employees. 

The written and signed certification must be from an officer of the 

Company and can state: “I hereby certify that [insert the name of the 

Company] has reviewed its files and as of [insert date review was 

completed], all employees or other persons having access to Protected 

Information have signed a Non-disclosure Statement and all affiliates and 

contractors have certified that their employees and other persons having 

access to Protected Information have signed Non-disclosure Statements.”
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(10) Not provide Comprehensive Information Management System (CIMS) 

information to anyone who has not signed and submitted an individual 

NDS to the Company or the respective contractor or affiliate.

(b) The Company and its contractors and affiliates may use electronic versions of the 

NDS which incorporate either a digital signature or an authentication system to 

properly identify the submitter. Electronic records of signed or authenticated 

NDSs must be retained by the respective contractor, or affiliate and be available 

for examination.