Appendix E - FEMA_Reinsurance_Broker As Fiscal Administrator.docx

Appendix A The broker will conduct premium payments and claim recoveries on FEMA’s behalf. FEMA, not the broker, will decide which reinsurers will be part of the agreement and each reinsurer’s share in the interests and liabilities. FEMA enters into a Reinsurance Agreement and Interests and Liabilities (I&L) Agreement with each incumbent reinsurer. The Reinsurance Agreement and I&L Agreements lay out the terms and conditions of reinsurance between FEMA and each reinsurer.

FEMA will review and oversee all disbursement and collection operations through the controls outlined in Sections 1 and 2 below designed to assure accurate and proper fund handling for the Federal government. The broker will make and collect payments in accordance with the process outlined in Section 1 and 2 and this broker contract. The broker will submit to FEMA for approval and prior to use all forms, notices, and letters to be used in the premium payment and claim recovery processes. The broker will establish a separate fund from all other company accounts, at a bank or banks of its choosing for the collection and disbursement of Federal funds relating to its obligations to handle premium and claims payment under this contract. The funds in this account may not be invested, transferred, or otherwise used except in accordance with Federal law, the process outlined in Sections 1 and 2, and this broker contract.

Section 1. Premium Payments

· Prior to entering into a Reinsurance Agreement and I&L Agreement with each reinsurer, or shortly thereafter, FEMA will create a vendor profile for each reinsurer and verify that each reinsurer is compliant with Federal government standards.

· Each reinsurer’s vendor profile will contain the FEMA vendor number, payment method to be used, banking information, points of contact, and mailing addresses.

· Each reinsurer will send FEMA a premium bill in the timeframe specified in the Reinsurance Agreement. If the broker receives the premium bill from the reinsurer, the broker will immediately forward the invoice to FEMA.

· After placement, FEMA will transfer via Automated Clearing House from the FEMA Treasury account the combined total of all premium amounts due to reinsurers to the designated bank account of the broker. The broker will confirm receipt of funds in writing to FEMA.

· FEMA will specify in writing to the broker the premium amount the broker is authorized to pay to each incumbent reinsurer. The broker will pay to each incumbent reinsurer the amount specified by FEMA within the timeframe specified by FEMA.

· FEMA may override the broker’s actions at any time. The broker will have no authority or discretion to modify the premium amounts paid to the reinsurer without FEMA’s written consent.

· The broker will provide written confirmation to FEMA when each reinsurer receives payment from the broker, and the broker will provide FEMA with a receipt of the payment.

· Payments by FEMA to the broker will be deemed to constitute payment to the reinsurer, unless otherwise specified in the Reinsurance Agreement.

Section 2. Claims Payments

· FEMA will provide in writing to the broker a proof of loss showing FEMA’s actual NFIP policy claims payments or a Monthly Loss Report as defined in the Reinsurance Agreement. FEMA will provide in writing to the broker the claims amount the broker is authorized to collect from each incumbent reinsurer on behalf of FEMA, based on each reinsurer’s share in the interests and liabilities as defined by the I&L Agreement with each incumbent reinsurer. FEMA will typically provide this information and authorization to the broker following an event that triggers liability under the Reinsurance Agreement, each month, or as needed.

· Based on the information provided by FEMA, the broker will create an invoice indicating the claims amount due from each reinsurer. The broker will send the invoice to each reinsurer with the proof of loss or Monthly Loss report within the time frame specified by FEMA and as laid out in the Reinsurance Agreement. The broker will copy FEMA on the correspondence with the reinsurer. The broker will request the reinsurer to confirm receipt of the invoice and proof of loss or Monthly Loss Report.

· FEMA may override the broker’s actions at any time. The broker will have no authority or discretion to modify the claims amounts requested from the reinsurer without FEMA’s written consent.

· The broker will send a reminder to any reinsurer that does not confirm receipt of the invoice within three (3) days with a copy to FEMA.

· The broker will collect from each reinsurer the claims amount due, deposit the funds into the designated bank account, and transfer the funds via an ACH to the FEMA Treasury account on a daily basis or on such frequency as FEMA specifies. With each ACH transfer, the broker will provide in writing to FEMA the details of the amount received from each reinsurer, including the reinsurer’s FEMA vendor number.

· When the reinsurer has not submitted payment within 10 days of the date of the invoice or the time period otherwise specified in the Reinsurance Agreement, the broker will notify FEMA with the name of the reinsurer and the outstanding amount due.

· The broker will follow a process to request any late payments from reinsurers by such means as agreed to with FEMA.

· In the event no loss payment is being requested or all claims covered by the Reinsurance Agreement have been settled and there is an unused portion, the reinsurer will send an invoice to FEMA requesting to be refunded the unused portion. If the broker receives an invoice from the reinsurer, the broker will immediately forward the invoice to FEMA. To refund the reinsurer the unused portion, FEMA and the broker will follow the process outlined under Section 1 to make premium payments.

· Payments made by the reinsurer to the broker will be deemed to constitute payment to FEMA only to the extent that such payments are actually received by FEMA, unless otherwise specified in the Reinsurance Agreement.