National Flood Insurance Program (NFIP); Assistance to Private Sector Property Insurers, Notice of FY 2022 Arrangement

Published date01 April 2021
Citation86 FR 17173
Record Number2021-06714
SectionNotices
CourtFederal Emergency Management Agency
17173
Federal Register / Vol. 86, No. 61 / Thursday, April 1, 2021 / Notices
for Public Comments’’ or by using the
search function.
Jennifer Wilson,
Budget Analyst.
[FR Doc. 2021–06700 Filed 3–31–21; 8:45 am]
BILLING CODE P
DEPARTMENT OF HOMELAND
SECURITY
Federal Emergency Management
Agency
[Docket ID FEMA–2021–0007]
National Flood Insurance Program
(NFIP); Assistance to Private Sector
Property Insurers, Notice of FY 2022
Arrangement
AGENCY
: Federal Emergency
Management Agency, Department of
Homeland Security.
ACTION
: Notice.
SUMMARY
: The Federal Emergency
Management Agency announces the
Fiscal Year 2022 Financial Assistance/
Subsidy Arrangement for private
property insurers interested in
participating in the National Flood
Insurance Program’s Write Your Own
Program.
DATES
: Interested insurers must submit
intent to subscribe or re-subscribe to the
Arrangement by June 30, 2021.
FOR FURTHER INFORMATION CONTACT
:
Sarah Devaney Ice, Federal Insurance
and Mitigation Administration, FEMA,
400 C St. SW, Washington, DC 20472
(mail); (202) 320–5577 (phone); or
sarah.devaney-ice@fema.dhs.gov
(email).
SUPPLEMENTARY INFORMATION
:
I. Background
The National Flood Insurance Act of
1968 (NFIA) (42 U.S.C. 4001 et seq.)
authorizes the Administrator of the
Federal Emergency Management Agency
(FEMA) to establish and carry out a
National Flood Insurance Program
(NFIP) to enable interested persons to
purchase flood insurance. See 42 U.S.C.
4011(a). Under the NFIA, FEMA may
use insurance companies and other
insurers, insurance agents and brokers,
and insurance adjustment organizations
as fiscal agents of the United States to
help it carry out the NFIP. See 42 U.S.C.
4071. To this end, FEMA may ‘‘enter
into any contracts, agreements, or other
appropriate arrangements’’ with private
insurance companies to use their
facilities and services in administering
the NFIP on such terms and conditions
as they agree upon. See 42 U.S.C.
4081(a).
Pursuant to this authority, FEMA
enters into a standard Financial
Assistance/Subsidy Arrangement
(Arrangement) with private sector
property insurers, also known as Write
Your Own (WYO) companies, to sell
NFIP flood insurance policies under
their own names and adjust and pay
claims arising under the Standard Flood
Insurance Policy (SFIP). Each
Arrangement entered into by a WYO
company must be in the form and
substance of the standard Arrangement,
a copy of which is published in the
Federal Register annually, at least 6
months prior to becoming effective. See
44 CFR 62.23(a). To learn more about
FEMA’s WYO Program, please visit
https://nfipservices.floodsmart.gov/
write-your-own-program.
II. Notice of Availability
Insurers interested in participating in
the WYO Program for Fiscal Year 2022
must contact Sarah Devaney Ice at
sarah.devaney-ice@fema.dhs.gov by
June 30, 2021.
Prior participation in the WYO
Program does not guarantee FEMA will
approve continued participation. FEMA
will evaluate requests to participate in
light of publicly available information,
industry performance data, and other
criteria listed in 44 CFR 62.24 and the
FY 2022 Arrangement, copied below.
FEMA encourages private insurance
companies to supplement this
information with customer satisfaction
surveys, industry awards or recognition,
or other objective performance data. In
addition, private insurance companies
should work with their vendors and
subcontractors involved in servicing
and delivering their insurance lines to
ensure FEMA receives the information
necessary to effectively evaluate the
criteria set forth in its regulations.
FEMA will send a copy of the offer for
the FY 2022 Arrangement, together with
related materials and submission
instructions, to all private insurance
companies successfully evaluated by the
NFIP. If FEMA, after conducting its
evaluation, chooses not to renew a
Company’s participation, FEMA, at its
option, may require the continued
performance of all or selected elements
of the FY 2021 Arrangement for a period
required for orderly transfer or cessation
of the business and settlement of
accounts, not to exceed 18 months. See
FY 2021 Arrangement, Article V.C. All
evaluations, whether successful or
unsuccessful, will inform both an
overall assessment of the WYO Program
and any potential changes FEMA may
consider regarding the Arrangement in
future fiscal years.
Any private insurance company with
questions may contact FEMA at: Sarah
Devaney Ice, Federal Insurance and
Mitigation Administration, FEMA, 400
C St. SW, Washington, DC 20472 (mail);
(202) 320–5577 (phone); or
sarah.devaney-ice@fema.dhs.gov
(email).
III. Fiscal Year 2022 Arrangement
Pursuant to 44 CFR 62.23(a), FEMA
must publish the Arrangement at least
six months prior to the Arrangement
becoming effective. The FY 2022
Arrangement provided below is
substantially similar to the previous
year’s Arrangement, but includes the
following substantive changes:
1. Reframed Article I from a list of
nonbinding recitations to generally
applicable, binding provisions. Some
recitations were incorporated into other
articles that align with the recitation’s
subject-matter.
2. Removed references to ‘‘certified
mail’’ to allow parties greater flexibility
to use other communication methods.
3. In Article II.D.1 (Cancellation by
FEMA), added two additional reasons
that FEMA may cancel the
Arrangement. First, FEMA has grounds
to cancel the Arrangement if a company
fails to maintain compliance with WYO
company participation criteria at 44
CFR 62.24, such as the requirement for
WYO companies to be state licensed
property insurance companies. Second,
FEMA will be able to terminate the
Arrangement for conduct ‘‘so serious or
compelling a nature that it affects the
Company’s present responsibility.’’
4. In Article III.A.4 (Operations Plan),
WYO companies will be required to
submit a Customer Service Plan.
5. In Article III.A.4.e, FEMA is
providing additional guidance on the
expected contents of the previously
required Catastrophic Claims Handling
Plan.
6. In Article III.A.4.h, FEMA is
replacing the requirement for WYO
companies to submit a Technology Plan
with the requirement to submit a
System Security Plan based on either
the National Institute of Standards and
Technology (NIST) Special Publication
(SP) 800–171 ‘‘Protecting Controlled
Unclassified Information in Nonfederal
Information Systems and
Organizations,’’ Revision 2, https://
csrc.nist.gov/publications/detail/sp/800-
171/rev-2/final, ISO/IEC 27001, https://
www.iso.org/isoiec-27001-information-
security.html, or another comparable
standard.
7. In Article III.B (Time Standards),
clarified that not all tasks subject to time
standards requiring mailing a document
and other clarifying changes.
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8. In Article III.E.2, clarified that the
existing clear communication
requirement applies to all non-NFIP
insurance policies that cover flooding,
not just single-peril flood insurance
policies. Also broadened the existing
data protection requirement to prohibit
the use of confidential information for
any purpose outside the scope of the
Arrangement.
9. Added Article III.K (System for
Award Management) to require WYO
companies to register in the System for
Award Management and maintain such
registration.
10. Added Article III.L (Cybersecurity)
to require WYO companies to
implement IT security standards
specified by National Institute of
Standards and Technology (NIST)
Special Publication (SP) 800–171
‘‘Protecting Controlled Unclassified
Information in Nonfederal Information
Systems and Organizations,’’ https://
csrc.nist.gov/publications/detail/sp/800-
171/rev-2/final. In lieu of full
compliance with this standard, WYO
companies may choose to show
compliance with other comparable
standards, such as ISO/IEC 27001,
https://www.iso.org/isoiec-27001-
information-security.html, or to provide
FEMA a plan of action that describes
how unimplemented security
requirements of NIST SP 800–171, rev.
2 will be met and how any planned
mitigations will be implemented.
11. In Article IV.C.3, clarifies that
requests for reimbursement of
subrogation expenses are subject to
guidelines issued by FEMA.
12. In Article IV.D.3 (Oversight of
Litigation), adds statement from Article
I that any litigation resulting from,
related to, or arising from the
Company’s compliance with the written
standards, procedures, and guidance
issued by FEMA arises under the
National Flood Insurance Act of 1968 or
regulations, and such legal issues raise
a Federal question.
13. Adds Article IV.D.3.d (Customary
Business Practices), which makes clear
that WYO companies must oversee
litigation arising under the Arrangement
using the customary business practices
for the oversight of litigation arising
under the Company’s property and
casualty lines of insurance not sold
under the Arrangement, including
billing rates and standards.
14. Adds Article IV.F (Suspension
and Debarment), which prohibits WYO
companies from using the services of
persons suspended or debarred by the
Federal Government.
15. In Article V.A and Article VI.A,
replaces the requirement for FEMA to
establish Letters of Credit that WYO
companies may draw on to a more
flexible requirement requiring FEMA
enable WYO companies to draw on the
National Flood Insurance Fund without
specifying the specific method.
16. Adds Article VI.E, which requires
WYO companies to comply with the
False Claims Act.
17. In Article XI (Equal Opportunity),
conforms the non-discrimination
requirements with the 2020 DHS
Standard Terms and Conditions for
Grants.
18. Adds Article XII.C (Nondisclosure
by Company), which requires WYO
companies to protect the confidentiality
of non-public information.
The Fiscal Year 2022 Arrangement
reads as follows:
Financial Assistance/Subsidy
Arrangement
Article I. General Provisions
A. Parties. The parties to the Financial
Assistance/Subsidy Arrangement are the
Federal Emergency Management Agency
(FEMA) and the Company.
B. Purpose. The purpose of this
Financial Assistance/Subsidy
Arrangement is to authorize the
Company to sell and service flood
insurance policies made available
through the National Flood Insurance
Program and adjust and pay claims
arising under such policies as fiscal
agents of the Federal Government.
C. Authority. This Financial
Assistance/Subsidy Arrangement is
authorized under the National Flood
Insurance Act of 1968 (NFIA) (42 U.S.C.
4001 et seq.), and in particular, section
1345(a) of the NFIA (42 U.S.C. 4081(a)),
as implemented by 44 CFR 62.23 and
62.24.
Article II. Commencement and
Termination
A. The effective period of this
Arrangement begins on October 1, 2021,
and terminates no earlier than
September 30, 2022, subject to
extension pursuant to Articles II.C and
II.G. FEMA may provide financial
assistance only for policy applications
and endorsements accepted by the
Company during this period pursuant to
the Program’s effective date,
underwriting, and eligibility rules.
B. Pursuant to 44 CFR 62.23(a), FEMA
will publish the Arrangement and the
terms for subscription or re-subscription
for Fiscal Year 2023 in the Federal
Register no later than April 1, 2022.
Upon such publication, the Company
must notify FEMA of its intent to re-
subscribe or not re-subscribe to the
WYO Program for the following term
within ninety (90) calendar days.
C. In addition to the requirements of
Article II.B, in order to ensure
uninterrupted service to policyholders,
the Company must notify FEMA within
thirty (30) calendar days of when the
Company elects not to re-subscribe to
the WYO Program during the term of
this Arrangement. If so notified, or if
FEMA chooses not to renew the
Company’s participation, FEMA, at its
option, may require the continued
performance of all or selected elements
of this Arrangement for the period
required for orderly transfer or cessation
of business and settlement of accounts,
not to exceed eighteen (18) months after
the end of this Arrangement (September
30, 2022), and may either require
transfer of activities to FEMA under
Article II.C.1 or allow transfer of
activities to another WYO company
under Article II.C.2:
1. FEMA may require the Company to
transfer all activities under this
Arrangement to FEMA. Within thirty
(30) calendar days of FEMA’s election of
this option, the Company must deliver
to FEMA the following:
a. A plan for the orderly transfer to
FEMA of any continuing responsibilities
in administering the policies issued by
the Company under the Program
including provisions for coordination
assistance.
b. All data received, produced, and
maintained through the life of the
Company’s participation in the Program,
including certain data, as determined by
FEMA, in a standard format and
medium.
c. All claims and policy files,
including those pertaining to receipts
and disbursements that have occurred
during the life of each policy. In the
event of a transfer of the services
provided, the Company must provide
FEMA with a report showing, on a
policy basis, any amounts due from or
payable to policyholders, agents,
brokers, and others as of the transition
date.
d. All funds in its possession with
respect to any policies transferred to
FEMA for administration and the
unearned expenses retained by the
Company.
e. A point of contact within the
Company responsible for addressing
issues that may arise from the
Company’s previous participation under
the WYO Program.
2. FEMA may allow the Company to
transfer all activities under this
Arrangement to one or more other WYO
companies. Prior to commencing such
transfer, the Company must submit, and
FEMA must approve, a formal request.
Such request must include the
following:
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a. An assurance of uninterrupted
service to policyholders.
b. A detailed transfer plan providing
for either: (1) The renewal of the
Company’s NFIP policies by one or
more other WYO companies; or (2) the
transfer of the Company’s NFIP policies
to one or more other WYO companies.
c. A description of who the
responsible party will be for liabilities
relating to losses incurred by the
Company in this or preceding
Arrangement years.
d. A point of contact within the
Company responsible for addressing
issues that may arise from the
Company’s previous participation under
the WYO Program.
D. Cancellation by FEMA.
1. FEMA may cancel financial
assistance under this Arrangement in its
entirety upon thirty (30) calendar days
written notice to the Company stating
one or more of the following reasons for
such cancellation:
a. Fraud or misrepresentation by the
Company subsequent to the inception of
the Arrangement; or
b. Nonpayment to FEMA of any
amount due; or
c. Material failure to comply with the
requirements of this Arrangement or
with the written standards, procedures,
or guidance issued by FEMA relating to
the NFIP and applicable to the
Company.
d. Failure to maintain compliance
with WYO company participation
criteria at 44 CFR 62.24.
e. Any other cause so serious or
compelling a nature that affects the
Company’s present responsibility.
2. If FEMA cancels this Arrangement
pursuant to Article II.D.1, FEMA may
require the transfer of administrative
responsibilities and the transfer of data
and records as provided in Article
II.C.1.a–d. If transfer is required, the
Company must remit to FEMA the
unearned expenses retained by the
Company. In such event, FEMA will
assume all obligations and liabilities
owed to policyholders under such
policies, arising before and after the date
of transfer.
3. As an alternative to the transfer of
the policies to FEMA pursuant to
Article II.D.2, FEMA will consider a
proposal, if it is made by the Company,
for the assumption of responsibilities by
another WYO company as provided in
Article II.C.2.
E. In the event that the Company is
unable or otherwise fails to carry out its
obligations under this Arrangement by
reason of any order or directive duly
issued by the Department of Insurance
of any jurisdiction to which the
Company is subject, the Company
agrees to transfer, and FEMA will
accept, any and all WYO policies issued
by the Company and in force as of the
date of such inability or failure to
perform. In such event FEMA will
assume all obligations and liabilities
within the scope of the Arrangement
owed to policyholders arising before
and after the date of transfer, and the
Company will immediately transfer to
FEMA all needed records and data and
all funds in its possession with respect
to all such policies transferred and the
unearned expenses retained by the
Company. As an alternative to the
transfer of the policies to FEMA, FEMA
will consider a proposal, if it is made by
the Company, for the assumption of
responsibilities by another WYO
company as provided by Article II.C.2.
F. In the event the Act is amended,
repealed, expires, or if FEMA is
otherwise without authority to continue
the Program, FEMA may cancel
financial assistance under this
Arrangement for any new or renewal
business, but the Arrangement will
continue for policies in force that shall
be allowed to run their term under the
Arrangement.
G. If FEMA does not publish the
Fiscal Year 2023 Arrangement in the
Federal Register on or before April 1,
2022, then FEMA may require the
continued performance of all or selected
elements of this Arrangement through
December 31, 2023, but such extension
may not exceed the expiration of the six
(6) month period following publication
of the Fiscal Year 2023 Arrangement in
the Federal Register.
Article III. Undertakings of the
Company
A. Responsibilities of the Company.
1. Policy Issuance and Maintenance.
The Company must meet all
requirements of the Financial Control
Plan and any guidance issued by FEMA.
The Company is responsible for the
following:
a. Compliance with Rating
Procedures.
b. Eligibility Determinations.
c. Policy Issuances.
d. Policy Endorsements.
e. Policy Cancellations.
f. Policy Correspondence.
g. Payment of Agents’ Commissions.
h. Fund Management, including the
receipt, recording, disbursement, and
timely deposit of NFIP funds.
2. Claims Processing.
a. In general. The Company must
process all claims consistent with the
Standard Flood Insurance Policy,
Financial Control Plan, Claims Manual,
other guidance adopted by FEMA, and
as much as possible, with the
Company’s standard business practices
for its non-NFIP policies.
b. Adjuster registration. The Company
may not use an independent adjuster to
adjust a claim unless the independent
adjuster:
i. Holds a valid Flood Control Number
issued by FEMA; or
ii. Participates in the Flood Adjuster
Capacity Program.
c. Claim reinspections. The Company
must cooperate with any claim
reinspection by FEMA.
3. Reports. The Company must certify
its business under the WYO Program
through monthly financial reports in
accordance with the requirements of the
Pivot Use Procedures. The Company
must follow the Financial Control Plan
and the WYO Accounting Procedures
Manual. FEMA will validate and audit,
in detail, these data and compare the
results against Company reports.
4. Operations Plan. Within ninety (90)
calendar days of the commencement of
this Arrangement, the Company must
submit a written Operations Plan to
FEMA describing its efforts to perform
under this Arrangement. The plan must
include the following:
a. Private Flood Insurance Separation
Plan. If applicable, a description of the
Company’s policies, procedures, and
practices separating their NFIP flood
insurance lines of business from their
non-NFIP flood insurance lines of
business, including its implementation
of Article III.E.
b. Marketing Plan. A marketing plan
describing the Company’s forecasted
growth, efforts to achieve that growth,
and ability to comply with any
marketing guidelines provided by
FEMA.
c. Customer Service Plan. A
description of overall customer service
practices, including ongoing and
planned improvement efforts.
d. Distribution Plan. A description of
the Company’s NFIP flood insurance
distribution network, including
anticipated numbers of agents, efforts to
train those agents, and an average rate
of commissions paid to producers by
state.
e. Catastrophic Claims Handling Plan.
A catastrophic claims handling plan
describing how the Company will
respond and maintain service standards
in catastrophic flood events, including:
1. Deploying mobile or temporary
claims centers to provide immediate
policyholder assistance, including
submission of notice of loss and claim
status information.
2. Preparing people, processes, and
tools for claims processing in remote
work scenarios.
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3. Preparing communications in
advance for readiness throughout the
year including a suite of printed and
digital materials (e.g., advertisements,
educational materials, social media
messaging, website blogs and
announcements) that provide key
messaging to stakeholders, including
policyholders, agents, and the public
following a catastrophic flood event.
4. Identifying the core areas of
information technology that need to be
scaled pre-event or are scalable post-
event.
f. Business Continuity Plan. A
business continuity plan identifying
threats and risks facing the Company’s
NFIP-related operations and how the
Company will maintain operations in
the event of a disaster affecting its
operational capabilities.
g. Privacy Protection Plan. A privacy
protection plan that describes the
Company’s standards for using and
maintaining personally identifiable
information.
h. System Security Plan. A system
security plan that describes system
boundaries, system environments of
operation, how security requirements
are implemented, and the relationships
with or connections to other systems,
including plans of action that describe
how unimplemented security
requirements will be met and how any
planned mitigations will be
implemented, prepared in accordance
with either:
National Institute of Standards and
Technology (NIST) Special Publication
(SP) 800–171 ‘‘Protecting Controlled
Unclassified Information in Nonfederal
Information Systems and
Organizations,’’ Revision 2, https://
csrc.nist.gov/publications/detail/sp/800-
171/rev-2/final; or
Another comparable standard deemed
acceptable by FEMA.
B. Time Standards. WYO companies
must meet the time standard provided
below. Time will be measured from the
date of receipt through the date the task
is completed. In addition to the
standards set forth below, all functions
performed by the Company must be in
accordance with the highest reasonably
attainable quality standards generally
used in the insurance and data
processing field. Applicable time
standards are:
1. Application Processing—fifteen
(15) business days (Note: If the policy
cannot be sent due to insufficient or
erroneous information or insufficient
funds, the Company must send a request
for correction or added moneys within
ten (10) business days).
2. Renewal processing—seven (7)
business days.
3. Endorsement processing—fifteen
(15) business days.
4. Cancellation processing—fifteen
(15) business days.
5. File examination—seven (7)
business days from the day the
Company receives the final report.
6. Claims draft processing—seven (7)
business days from completion of file
examination.
7. Claims adjustment—forty-five (45)
calendar days average from the receipt
of Notice of Loss (or equivalent) through
completion of examination.
8. Upload transactions to PIVOT—one
(1) business day.
C. Policy Issuance.
1. The flood insurance subject to this
Arrangement must be only that
insurance written by the Company in its
own name pursuant to the Act.
2. The Company must issue policies
under the regulations prescribed by
FEMA, in accordance with the Act, on
a form approved by FEMA.
3. The Company must issue all
policies in consideration of such
premiums and upon such terms and
conditions and in such states or areas or
subdivisions thereof as may be
designated by FEMA and only where
the Company is licensed by State law to
engage in the property insurance
business.
D. Lapse of Authority or
Appropriation. FEMA may require the
Company to discontinue issuing
policies subject to this Arrangement
immediately in the event Congressional
authorization or appropriation for the
NFIP is withdrawn.
E. Separation of Finances and Other
Lines of Flood Insurance.
1. The Company must separate
Federal flood insurance funds from all
other Company accounts, at a bank or
banks of its choosing for the collection,
retention and disbursement of Federal
funds relating to its obligation under
this Arrangement, less the Company’s
expenses as set forth in Article IV. The
Company must remit all funds not
required to meet current expenditures to
the United States Treasury, in
accordance with the provisions of the
WYO Accounting Procedures Manual.
2. Other Undertakings of the
Company.
a. Clear communication. If the
Company also offers insurance policies
covering the peril of flood outside of the
NFIP in any geographic area in which
Program authorizes the purchase of
flood insurance, the Company must
ensure that all public communications
(whether written, recorded, electronic,
or other) regarding non-NFIP insurance
lines would not lead a reasonable
person to believe that the NFIP, FEMA,
or the Federal Government in any way
endorses, sponsors, oversees, regulates,
or otherwise has any connection with
the non-NFIP insurance line. The
Company may assure compliance with
this requirement by prominently
including in such communications the
following statement: ‘‘This insurance
product is not affiliated with the
National Flood Insurance Program.’’
b. Data protection. The company may
not use non-public data, information, or
resources obtained in course of
executing this Arrangement to further or
support any activities outside the scope
of this Arrangement.
F. Claims. The Company must
investigate, adjust, settle, and defend all
claims or losses arising from policies
issued under this Arrangement.
Payment of flood insurance claims by
the Company bind FEMA, subject to
appeal.
G. Compliance with Agency
Standards and Guidelines.
1. The Company must comply with
the Act, regulations, written standards,
procedures, and guidance issued by
FEMA relating to the NFIP and
applicable to the Company, including,
but not limited to the following:
a. Financial Control Plan.
b. Pivot Use Procedures.
c. Flood Insurance Manual.
d. Claims Manual.
e. National Flood Insurance Program
Litigation Manual.
f. WYO Accounting Procedures
Manual.
g. WYO Bulletins.
2. The Company must market flood
insurance policies in a manner
consistent with marketing guidelines
established by FEMA.
3. FEMA may require the Company to
collect customer service information to
monitor and improve their program
delivery.
4. The Company must notify its agents
of the requirement to comply with State
regulations regarding flood insurance
agent education, notify agents of flood
insurance training opportunities, and
assist FEMA in periodic assessment of
agent training needs.
H. Compliance with Appeals Process.
1. In general. FEMA will notify the
Company when a policyholder files an
appeal. After notification, the Company
must provide FEMA the following
information:
a. All records created or maintained
pursuant to this Arrangement requested
by FEMA; and
b. A comprehensive claim file
synopsis, redacted of personally
identifiable information, that includes a
summary of the appeal issues, the
Company’s position on each issue, and
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any additional relevant information. If,
in the process of writing the synopsis,
the Company determines that it can
address the issue raised by the
policyholder on appeal without further
direction, it must notify FEMA. The
Company will then work directly with
the policyholder to achieve resolution
and update FEMA upon completion.
The Company may have a claims
examiner review the file who is
independent from the original decision
and who possesses the authority to
overturn the original decision if the
facts support it.
2. Cooperation. The Company must
cooperate with FEMA throughout the
appeal process until final resolution.
This includes adhering to any written
appeals guidance issued by FEMA.
3. Resolution of Appeals. FEMA will
close an appeal when:
a. FEMA upholds the denial by the
Company;
b. FEMA overturns the denial by the
Company and all necessary actions that
follow are completed;
c. The Company independently
resolves the issue raised by the
policyholder without further direction;
d. The policyholder voluntarily
withdraws the appeal; or
e. The policyholder files litigation.
4. Processing of Additional Payments
from Appeal. The Company must follow
established NFIP adjusting practices and
claim handling procedures for appeals
that result in additional payment to a
policyholder when FEMA does not
explicitly direct such payment during
the review of the appeal.
5. Time Standards.
a. Provide FEMA with requested files
pursuant to Article III.H.1.a—ten (10)
business days after request.
b. Provide FEMA with comprehensive
claim file synopsis pursuant to Article
III.H.1.b—ten (10) business days after
request.
c. Responding to inquiries from
FEMA regarding an appeal—ten (10)
business days after inquiry.
d. Inform FEMA of any litigation filed
by a policyholder with a current
appeal—ten (10) business days of
notice.
I. Subrogation.
1. In general. Consistent with Federal
law and guidance, the Company must
use its customary business practices
when pursuing subrogation.
2. Referral to FEMA. Pursuant to 44
CFR 62.23(i)(8), in lieu of the Company
pursuing a subrogation claim, WYO
companies may refer such claims to
FEMA.
3. Notification. No more than ten (10)
calendar days after either the Company
identifies a possible subrogation claim
or FEMA notifies the Company of a
possible subrogation claim, the
Company must notify FEMA of its
intent to pursue the claim or refer the
claim to FEMA.
4. Cooperation. Pursuant to 44 CFR
62.23(i)(11), the Company must extend
reasonable cooperation to FEMA’s
Office of the Chief Counsel on matters
related to subrogation.
J. Access to Records. The Company
must furnish to FEMA such summaries
and analysis of information including
claim file information and property
address, location, and/or site
information in its records as may be
necessary to carry out the purposes of
the Act, in such form as FEMA, in
cooperation with the Company, will
prescribe.
K. System for Award Management.
The Company must be registered in the
System for Award Management. Such
registration must have an active status
during the period of performance under
this Arrangement. The Company must
ensure that its SAM registration is
accurate and up to date.
L. Cybersecurity.
1. In general. Unless the Company
uses a compliance alternative pursuant
to Article III.L.2, the Company must
implement the security requirements
specified by National Institute of
Standards and Technology (NIST)
Special Publication (SP) 800–171
‘‘Protecting Controlled Unclassified
Information in Nonfederal Information
Systems and Organizations’’, Revision 2
(https://csrc.nist.gov/publications/
detail/sp/800-171/rev-2/final) for any
system that processes, stores, or
transmits information that requires
safeguarding or dissemination controls
pursuant to and consistent with law,
regulations, this Arrangement, or other
applicable requirements, including
information protected pursuant to
Article XII.C and personally identifiable
information of NFIP applicants and
policyholders. Such implementation
must be validated by a third-party
assessment organization.
2. Compliance alternatives. In lieu of
compliance with Article IV.L.1, the
Company may either:
a. Provide FEMA with documentation
that the Company is securing the
systems subject to the requirements of
Article III.L.1 with either:
1. ISO/IEC 27001, https://
www.iso.org/isoiec-27001-information-
security.html;
2. NIST Cybersecurity Framework,
https://csrc.nist.gov/publications/detail/
sp/800-171/rev-2/final;
3. Cybersecurity Maturity Model
Certification (CMMC), https://
www.acq.osd.mil/cmmc/;
4. Service and Organization Controls
(SOC) 2, https://www.aicpa.org/
interestareas/frc/
assuranceadvisoryservices/
sorhome.html; or
5. Another comparable standard
deemed acceptable by FEMA;
b. Provide a plan of action that
describes how unimplemented security
requirements of NIST SP 800–171, rev.
2, (https://csrc.nist.gov/publications/
detail/sp/800-171/rev-2/final) will be
met and how any planned mitigations
will be implemented as part of the
system security plan required under
Article III.A.4.h.
Article IV. Loss Costs, Expenses,
Expense Reimbursement, and Premium
Refunds
A. The Company is liable for
operating, administrative, and
production expenses, including any
State premium taxes, dividends, agents’
commissions or any other expense of
whatever nature incurred by the
Company in the performance of its
obligations under this Arrangement but
excluding other taxes or fees, such as
municipal or county premium taxes,
surcharges on flood insurance premium,
and guaranty fund assessments.
B. Payment for Selling and Servicing
Policies.
1. Operating and Administrative
Expenses. The Company may withhold,
as operating and administrative
expenses, other than agents’ or brokers’
commissions, an amount from the
Company’s written premium on the
policies covered by this Arrangement in
reimbursement of all of the Company’s
marketing, operating, and
administrative expenses, except for
allocated and unallocated loss
adjustment expenses described in
Article IV.C. This amount will equal the
sum of the average industry expenses
ratios for ‘‘Other Act.,’’ ‘‘Gen. Exp.’’ And
‘‘Taxes’’ calculated by aggregating
premiums and expense amounts for
each of five property coverages using
direct premium and expense
information to derive weighted average
expense ratios. For this purpose, FEMA
will use data for the property/casualty
industry published, as of March 15 of
the prior Arrangement year, in Part III
of the Insurance Expense Exhibit in
A.M. Best Company’s Aggregates and
Averages for the following five property
coverages: Fire, Allied Lines,
Farmowners Multiple Peril,
Homeowners Multiple Peril, and
Commercial Multiple Peril (non-liability
portion).
2. Agent Compensation. The
Company may retain fifteen (15) percent
of the Company’s written premium on
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the policies covered by this
Arrangement as the commission
allowance to meet the commissions or
salaries of insurance agents, brokers, or
other entities producing qualified flood
insurance applications and other related
expenses.
3. Growth Bonus. FEMA may increase
the amount of expense allowance
retained by the Company depending on
the extent to which the Company meets
the marketing goals for the Arrangement
year contained in marketing guidelines
established pursuant to Article III.G.2.
The total growth bonuses paid to
companies pursuant to this
Arrangement may not exceed two (2)
percent of the aggregate net written
premium collected by all WYO
companies. FEMA will pay the
Company the amount of any increase
after the end of the Arrangement year.
4. Reimbursement for Services of a
National Rating Organization. The
Company, with the consent of FEMA as
to terms and costs, may use the services
of a national rating organization,
licensed under state law, to help us
undertake and carry out such studies
and investigations on a community or
individual risk basis, and to determine
equitable and accurate estimates of
flood insurance risk premium rates as
authorized under the Act, as amended.
FEMA will reimburse the Company for
the charges or fees for such services
under the provisions of the WYO
Accounting Procedures Manual.
C. FEMA will reimburse Loss
Adjustment Expenses as follows:
1. FEMA will reimburse unallocated
loss adjustment expenses to the
Company pursuant to a ‘‘ULAE
Schedule’’ coordinated with the
Company and provided by FEMA.
2. FEMA will reimburse allocated loss
adjustment expenses to the Company
pursuant to a ‘‘Fee Schedule’’
coordinated with the Company and
provided by FEMA. To ensure the
availability of qualified insurance
adjusters during catastrophic flood
events, FEMA may, in its sole
discretion, temporarily authorize the
use of an alternative Fee Schedule with
increased amounts during the term of
this Arrangement for losses incurred
during a time frame and geographic area
established by FEMA.
3. FEMA will reimburse special
allocated loss expenses and subrogation
expenses reimbursable under 44 CFR
62.23(i)(8) to the Company in
accordance with guidelines issued by
FEMA.
D. Loss Payments.
1. The Company must make loss
payments for flood insurance policies
from federal funds retained in the bank
account(s) established under Article
III.E.1 and, if such funds are depleted,
from Federal funds withdrawn from the
National Flood Insurance Fund
pursuant to Article V.
2. Loss payments include payments
because of litigation that arises under
the scope of this Arrangement, and the
Authorities set forth herein. All such
loss payments and related expenses
must meet the documentation
requirements of the Financial Control
Plan and of this Arrangement, and the
Company must comply with the
litigation documentation and
notification requirements established by
FEMA. Failure to meet these
requirements may result in FEMA’s
decision not to provide reimbursement.
3. Oversight of Litigation.
a. Any litigation resulting from,
related to, or arising from the
Company’s compliance with the written
standards, procedures, and guidance
issued by FEMA arises under the
National Flood Insurance Act of 1968 or
regulations, and such legal issues raise
a Federal question.
b. The Company must conduct
litigation arising out of the Company’s
participation in the NFIP in accordance
with the National Flood Insurance
Program Litigation Manual.
c. FEMA will not reimburse the
Company for any award or judgment for
damages and any costs to defend
litigation that is either:
1. Grounded in actions by the
Company that are significantly outside
the scope of this Arrangement; or
2. Involves issues of agent negligence.
d. Customary Business Practices.
Unless otherwise directed by FEMA, the
Company must oversee litigation arising
under this Arrangement using its
customary business practices for the
oversight of litigation arising under the
Company’s property and casualty lines
of insurance not sold under this
Arrangement, including billing rates
and standards.
E. Refunds. The Company must make
premium refunds required by FEMA to
applicants and policyholders from
Federal flood insurance funds referred
to in Article II.E.1, and, if such funds
are depleted, from funds derived by
withdrawing from the National Flood
Insurance Fund pursuant to Article V.
The Company may not refund any
premium to applicants or policyholders
in any manner other than as specified
by FEMA since flood insurance
premiums are funds of the Federal
Government.
F. Suspension and Debarment.
1. In general. The Company may not
contract with or employ any person who
is suspended or debarred from
participating in federal transactions
pursuant to 2 CFR part 180 (covering
federal nonprocurement transactions) or
48 CFR part 9, subpart 9.4 (covering
federal procurement transactions) in
relation to this Arrangement.
2. Reimbursement. FEMA will not
reimburse the company for any
expenses incurred in violation of Article
IV.F.1.
3. Compliance. The Company may
ensure compliance with Article IV.F.1
by:
a. Checking the System for Awards
Management at sam.gov;
b. Collecting a certification from that
person; or
c. Adding a clause or condition to the
transaction with that person.
Article V. Undertakings of the
Government
A. FEMA must enable the Company to
withdraw funds from the National Flood
Insurance Fund daily, if needed,
pursuant to prescribed procedures
implemented by FEMA. FEMA will
increase the amounts of the
authorizations as necessary to meet the
obligations of the Company under
Article IV.C–E. The Company may only
request funds when net premium
income has been depleted. The timing
and amount of cash advances must be
as close as is administratively feasible to
the actual disbursements by the
recipient organization for allowable
expenses. Request for payment may not
ordinarily be drawn more frequently
than daily. The Company may withdraw
funds from the National Flood
Insurance Fund for any of the following
reasons:
1. Payment of claims, as described in
Article IV.D;
2. Refunds to applicants and
policyholders for insurance premium
overpayment, or if the application for
insurance is rejected or when
cancellation or endorsement of a policy
results in a premium refund, as
described in Article IV.E; and
3. Allocated and unallocated loss
adjustment expenses, as described in
Article IV.C.
B. FEMA must provide technical
assistance to the Company as follows:
1. NFIP policy and history.
2. Clarification of underwriting,
coverage, and claims handling.
3. Other assistance as needed.
C. FEMA must provide the Company
with a copy of all formal written appeal
decisions conducted in accordance with
Section 205 of the Bunning-Bereuter-
Blumenauer Flood Insurance Reform
Act of 2004, Public Law 108–264 and 44
CFR 62.20.
D. Prior to the end of the Arrangement
period, FEMA may provide the
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Company a statistical summary of their
performance during the signed
Arrangement period. This summary will
detail the Company’s performance
individually, as well as compare the
Company’s performance to the aggregate
performance of all WYO companies and
the NFIP Direct Servicing Agent.
Article VI. Cash Management and
Accounting
A. FEMA must make available to the
Company during the entire term of this
Arrangement the ability to withdraw
funds from the National Flood
Insurance Fund provided for in Article
V. The Company may withdraw funds
from the National Flood Insurance Fund
for reimbursement of its expenses as set
forth in Article V.A that exceed net
written premiums collected by the
Company from the effective date of this
Arrangement or continuation period to
the date of the draw. In the event that
adequate funding is not available to
meet current Company obligations for
flood policy claim payments issued,
FEMA must direct the Company to
immediately suspend the issuance of
loss payments until such time as
adequate funds are available. The
Company is not required to pay claims
from their own funds in the event of
such suspension.
B. The Company must remit all funds,
including interest, not required to meet
current expenditures to the United
States Treasury, in accordance with the
provisions of the WYO Accounting
Procedures Manual or procedures
approved in writing by FEMA.
C. In the event the Company elects
not to participate in the Program in this
or any subsequent fiscal year, or is
otherwise unable or not permitted to
participate, the Company and FEMA
must make a provisional settlement of
all amounts due or owing within three
(3) months of the expiration or
termination of this Arrangement. This
settlement must include net premiums
collected, funds withdrawn from the
National Flood Insurance Fund, and
reserves for outstanding claims. The
Company and FEMA agree to make a
final settlement, subject to audit, of
accounts for all obligations arising from
this Arrangement within eighteen (18)
months of its expiration or termination,
except for contingent liabilities that
must be listed by the Company. At the
time of final settlement, the balance, if
any, due FEMA or the Company must be
remitted by the other immediately and
the operating year under this
Arrangement must be closed.
D. Upon FEMA’s request, the
Company must provide FEMA with a
true and correct copy of the Company’s
Fire and Casualty Annual Statement,
and Insurance Expense Exhibit or
amendments thereof as filed with the
State Insurance Authority of the
Company’s domiciliary State.
E. The Company must comply with
the requirements of the False Claims Act
(31 U.S.C. 3729–3733), which prohibits
submission of false or fraudulent claims
for payment to the Federal Government.
Article VII. Arbitration
If any misunderstanding or dispute
arises between the Company and FEMA
with reference to any factual issue
under any provisions of this
Arrangement or with respect to FEMA’s
nonrenewal of the Company’s
participation, other than as to legal
liability under or interpretation of the
Standard Flood Insurance Policy, such
misunderstanding or dispute may be
submitted to arbitration for a
determination that will be binding upon
approval by FEMA. The Company and
FEMA may agree on and appoint an
arbitrator who will investigate the
subject of the misunderstanding or
dispute and make a determination. If the
Company and FEMA cannot agree on
the appointment of an arbitrator, then
two arbitrators will be appointed, one to
be chosen by the Company and one by
FEMA.
The two arbitrators so chosen, if they
are unable to reach an agreement, must
select a third arbitrator who must act as
umpire, and such umpire’s
determination will become final only
upon approval by FEMA. The Company
and FEMA shall bear in equal shares all
expenses of the arbitration. Findings,
proposed awards, and determinations
resulting from arbitration proceedings
carried out under this section, upon
objection by FEMA or the Company,
shall be inadmissible as evidence in any
subsequent proceedings in any court of
competent jurisdiction.
This Article shall indefinitely succeed
the term of this Arrangement.
Article VIII. Errors and Omissions
A. In the event of negligence by the
Company that has not resulted in
litigation but has resulted in a claim
against the Company, FEMA will not
consider reimbursement of the
Company for costs incurred due to that
negligence unless the Company takes all
reasonable actions to rectify the
negligence and to mitigate any such
costs as soon as possible after discovery
of the negligence. The Company may
choose not to seek reimbursement from
FEMA.
B. If the Company has made a claim
payment to an insured without
including a mortgagee (or trustee) of
which the Company had actual notice
prior to making payment, and
subsequently determines that the
mortgagee (or trustee) is also entitled to
any part of said claim payment, any
additional payment may not be paid by
the Company from any portion of the
premium and any funds derived from
any Federal funds deposited in the bank
account described in Article III.E.1. In
addition, the Company agrees to hold
the Federal Government harmless
against any claim asserted against the
Federal Government by any such
mortgagee (or trustee), as described in
the preceding sentence, by reason of any
claim payment made to any insured
under the circumstances described
above.
Article IX. Officials Not To Benefit
No Member or Delegate to Congress,
or Resident Commissioner, may be
admitted to any share or part of this
Arrangement, or to any benefit that may
arise therefrom; but this provision may
not be construed to extend to this
Arrangement if made with a corporation
for its general benefit.
Article X. Offset
At the settlement of accounts, the
Company and FEMA have, and may
exercise, the right to offset any balance
or balances, whether on account of
premiums, commissions, losses, loss
adjustment expenses, salvage, or
otherwise due one party to the other, its
successors or assigns, hereunder or
under any other Arrangements
heretofore or hereafter entered into
between the Company and FEMA. This
right of offset shall not be affected or
diminished because of insolvency of the
Company.
All debts or credits of the same class,
whether liquidated or unliquidated, in
favor of or against either party to this
Arrangement on the date of entry, or any
order of conservation, receivership, or
liquidation, shall be deemed to be
mutual debts and credits and shall be
offset with the balance only to be
allowed or paid. No offset shall be
allowed where a conservator, receiver,
or liquidator has been appointed and
where an obligation was purchased by
or transferred to a party hereunder to be
used as an offset.
Although a claim on the part of either
party against the other may be
unliquidated or undetermined in
amount on the date of the entry of the
order, such claim will be regarded as
being in existence as of the date of such
order and any credits or claims of the
same class then in existence and held by
the other party may be offset against it.
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Article XI. Equal Opportunity
A. Age Discrimination Act of 1975.
The Company must comply with the
requirements of the Age Discrimination
Act of 1975, Public Law 94–135 (42
U.S.C. 6101 et seq.) which prohibits
discrimination on the basis of age in any
program or activity receiving federal
financial assistance.
B. Americans with Disabilities Act.
The Company must comply with the
requirements of Titles I, II, and III of the
Americans with Disabilities Act, Public
Law 101–336 (42 U.S.C. 12101–12213),
which prohibits recipients from
discriminating on the basis of disability
in the operation of public entities,
public and private transportation
systems, places of public
accommodation, and certain testing
entities.
C. Civil Rights Act of 1964—Title VI.
The Company must comply with the
requirements of Title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d et
seq.), which provides that no person in
the United States will, on the grounds
of race, color, or national origin, be
excluded from participation in, be
denied the benefits of, or be subjected
to discrimination under any program or
activity receiving federal financial
assistance. Department of Homeland
Security implementing regulations for
the Act are found at 6 CFR part 21 and
44 CFR part 7.
D. Civil Rights Act of 1968. The
Company must comply with Title VIII of
the Civil Rights Act of 1968 (42 U.S.C.
3601–3619), which prohibits recipients
from discriminating in the sale, rental,
financing, and advertising of dwellings,
or in the provision of services in
connection therewith, on the basis of
race, color, national origin, religion,
disability, familial status, and sex as
implemented by the U.S. Department of
Housing and Urban Development at 24
CFR part 100.
E. Rehabilitation Act of 1973. The
Company must comply with the
requirements of Section 504 of the
Rehabilitation Act of 1973 (29 U.S.C.
794), which provides that no otherwise
qualified handicapped individuals in
the United States will, solely by reason
of the handicap, be excluded from
participation in, be denied the benefits
of, or be subjected to discrimination
under any program or activity receiving
federal financial assistance.
Article XII. Access to Books and
Records
A. Audits. FEMA, the Department of
Homeland Security, and the
Comptroller General of the United
States, or their duly authorized
representatives, for the purpose of
investigation, audit, and examination
shall have access to any books,
documents, papers and records of the
Company that are pertinent to this
Arrangement. The Company shall keep
records that fully disclose all matters
pertinent to this Arrangement, including
premiums and claims paid or payable
under policies issued pursuant to this
Arrangement. Records of accounts and
records relating to financial assistance
shall be retained and available for three
(3) years after final settlement of
accounts, and to financial assistance,
three (3) years after final adjustment of
such claims. FEMA shall have access to
policyholder and claim records at all
times for purposes of the review,
defense, examination, adjustment, or
investigation of any claim under a flood
insurance policy subject to this
Arrangement.
B. Nondisclosure by FEMA. FEMA, to
the extent permitted by law and
regulation, will safeguard and treat
information submitted or made
available by the Company pursuant to
this Arrangement as confidential where
the information has been marked
‘‘confidential’’ by the Company and the
Company customarily keeps such
information private or closely-held. To
the extent permitted by law and
regulation, FEMA will not release such
information to the public pursuant to a
Freedom of Information Act (FOIA)
request, 5 U.S.C. 552, without prior
notification to the Company. FEMA may
transfer documents provided by the
Company to any department or agency
within the Executive Branch or to either
house of Congress if the information
relates to matters within the
organization’s jurisdiction. FEMA may
also release the information submitted
pursuant to a judicial order from a court
of competent jurisdiction.
C. Nondisclosure by Company.
1. In general. The Company, to the
extent permitted by law, must safeguard
and treat information submitted or made
available by FEMA pursuant to this
Arrangement as confidential where the
information has been marked or
identified as ‘‘confidential’’ by FEMA
and FEMA customarily keeps such
information private or closely-held. The
Company may not disclose such
confidential information to a third-party
without the express written consent of
FEMA or as otherwise required by law.
2. Other protections. Article XII.C.1
shall not be construed as to limit the
effect of any other requirement on the
Company to protect information from
disclosure, including a joint defense
agreement or under the Privacy Act.
Article XIII. Compliance With Act and
Regulations
This Arrangement and all policies of
insurance issued pursuant thereto are
subject to Federal law and regulations.
Article XIV. Relationship Between the
Parties and the Insured
Inasmuch as the Federal Government
is a guarantor hereunder, the primary
relationship between the Company and
the Federal Government is one of a
fiduciary nature, that is, to assure that
any taxpayer funds are accounted for
and appropriately expended. The
Company is a fiscal agent of the Federal
Government, but is not a general agent
of the Federal Government. The
Company is solely responsible for its
obligations to its insured under any
policy issued pursuant hereto, such that
the Federal Government is not a proper
party to any lawsuit arising out of such
policies.
(Authority: 42 U.S.C. 4071, 4081; 44 CFR
62.23)
David I. Maurstad,
Deputy Associate Administrator for Insurance
and Mitigation, Federal Emergency
Management Agency.
[FR Doc. 2021–06714 Filed 3–31–21; 8:45 am]
BILLING CODE 9111–52–P
DEPARTMENT OF HOMELAND
SECURITY
U.S. Citizenship and Immigration
Services
[OMB Control Number 1615–0051]
Agency Information Collection
Activities; Extension, Without Change,
of a Currently Approved Collection:
Monthly Report on Naturalization
Papers
AGENCY
: U.S. Citizenship and
Immigration Services, Department of
Homeland Security.
ACTION
: 30-Day notice.
SUMMARY
: The Department of Homeland
Security (DHS), U.S. Citizenship and
Immigration Services (USCIS) will be
submitting the following information
collection request to the Office of
Management and Budget (OMB) for
review and clearance in accordance
with the Paperwork Reduction Act of
1995. The purpose of this notice is to
allow an additional 30 days for public
comments.
DATES
: Comments are encouraged and
will be accepted until May 3, 2021.
ADDRESSES
: Written comments and/or
suggestions regarding the item(s)
contained in this notice, especially
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