National Flood Insurance Program; Audit Program Revision

FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 62

RIN 3067-AC40

National Flood Insurance Program; Audit Program Revision

AGENCY: Federal Insurance Administration (FEMA).

ACTION: Proposed rule.

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SUMMARY: The Federal Insurance Administration (FIA) proposes to amend

its regulations regarding the manner in which its audits are conducted

under the National Flood Insurance Program's (NFIP) Write Your Own

(WYO) Program. The intent of the proposed regulations is to develop a

comprehensive, less burdensome, more efficient audit program. FIA

anticipates that these revisions will result in greater economy of

resources and new savings to the NFIP public.

DATES: We invite your comments and ask that you submit them no later

than March 18, 1996.

ADDRESSES: Please submit written comments to the Rules Docket Clerk,

Office of the General Counsel, Federal Emergency Management Agency, 500

C Street, SW., room 840, Washington, DC 20472, (fax) (202) 646-4536.

FOR FURTHER INFORMATION CONTACT: Roland E. Holland, Federal Insurance

Administration, Federal Emergency Management Agency, 500 C Street, SW.,

Washington, DC 20472, (202) 646-3439.

SUPPLEMENTARY INFORMATION: Recently, after reviewing the programs and

services provided to the NFIP public, the Federal Insurance

Administrator concluded that the services currently being provided

could be enhanced and improved by revising the audit procedures. As a

result, FIA intends to discontinue the self-audit program, along with

the triennial claims and underwriting operations reviews. The

``triennial'' audit will be revised to be conducted on a biennial

basis, and expanded to encompass greater claims and underwriting audits

that are to be conducted by Certified Public Accountant (CPA) firms,

selected by the WYO companies, at the companies' expense. These changes

are being made to facilitate improved management control over the audit

process. FIA believes these efforts will result in appreciable program

savings to both the WYO companies and the FIA.

National Environmental Policy Act

This proposed rule is categorically excluded from the requirements

of 44

[[Page 3636]]

CFR Part 10, Environmental Consideration. No environmental impact

assessment has been prepared.

Executive Order 12898, Environmental Justice

The socioeconomic conditions relating to this proposed rule were

reviewed and a finding was made that no disproportionately high and

adverse effect on minority or low income populations result from this

proposed rule.

Executive Order 12866, Regulatory Planning and Review

This proposed rule is not a significant regulatory action within

the meaning of section 2(f) of E.O. 12866 of September 30, 1983, 58 FR

51735, and has not been reviewed by the Office of Management and Budget

(OMB). Nonetheless, this proposed rule adheres to the regulatory

principles set forth in E.O. 12866.

Paperwork Reduction Act

In accordance with the provisions of the Paperwork Reduction Act of

1995, 44 U.S.C. 3501 et seq., the collections of information contained

in this proposed rule have been submitted to and approved by the Office

of Management and Budget. To request additional information or copies

of the OMB submissions, contact the FEMA Informations Collections

Officer, Muriel B. Anderson, by calling (202) 646-2625 or by writing to

FEMA, 500 C Street, SW., Washington, DC 20472. The approved collections

of information are:

OMB Number 3067-0169, Write Your Own (WYO) Program--To maintain

adequate financial control over Federal funds, the National Flood

Insurance Program requires each WYO company to meet the requirements of

the WYO Transaction Record Reporting and Processing Plan and to submit

monthly financial and statistical reports as required in FEMA

regulation 44 CFR Part 62, Appendix B. The number of respondents is

estimated at 105. The burden estimates per respondent are as follows:

Reconciliation Report, 30 minutes; Biennial Audit Administrative Review

Checklist, 1 hour; Monthly Financial and Statistical Reconciliation

Reports Certification Statement, 3 minutes; and Monthly Statistical

Transaction Reports Certification Statement, 3 minutes.

OMB Number 3067-0229, Mortgage Portfolio Protection Program

(MPPP)--Lending institutions, mortgage servicing companies and others

servicing mortgage loan portfolios can bring their mortgage loan

portfolios into compliance with the flood insurance purchase

requirements of the Flood Disaster Protection Act of 1973. The number

of respondents is estimated at 6,526. The burden estimates per

respondent are as follows: 150 hours for WYO companies to set up

initial operations under the MPPP; 30 minutes per lender to sign an

agreement with a WYO company to notify each mortgagor (3 notices at 10

minutes per notice); and 30 minutes for each mortgagor to ask questions

and respond to the notices.

Although the collections of information have been approved by OMB,

FEMA continues to solicit comments on (1) whether the collections of

information are necessary for the proper performance of the functions

of the agency, including whether the information will have practical

utility; (2) the accuracy of the agency's estimates of the burden of

the collections of information; (3) ways to enhance the quality,

utility, and clarity of the information to be collected; and (4) ways

to minimize the burden of the collections of information on those who

are to respond, including through the use of appropriate automated,

electronic, mechanical, or other technological collection techniques or

other forms of information technology.

Submit comments within 60 days of this notice to the Federal

Emergency Management Agency, Attention: Information Collections

Management, 500 C Street S.W., room 311, Washington, D.C. 20472.

Executive Order 12612

This proposed rule involves no policies that have federalism

implications under Executive Order 12612, Federalism dated October 26,

1987.

Executive Order 12778, Civil Justice Reform

This proposed rule meets the applicable standards of 2(b)(2) of

Executive Order 12778.

List of Subjects in 44 CFR Part 62

Flood insurance.

Accordingly, 44 CFR part 62 is proposed to be amended as follows:

PART 62--SALE OF INSURANCE AND ADJUSTMENT OF CLAIMS

1. The authority citation for Part 62 continues to read as follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31,

1979, 44 FR 19367, 3 CFR, 1979 Comp., 376.

Sec. 62.23 [Revised]

2. Section 62.23 is revised to read as follows:

Sec. 62.23 WYO Companies authorized.

(a) Pursuant to section 1345 of the Act, the Administrator may

enter into arrangements with individual private sector property

insurance companies whereby such companies may offer flood insurance

coverage under the Program to eligible applicants for such insurance,

including policyholders insured by them under their own property

insurance business lines of insurance pursuant to their customary

business practices including their usual arrangements with agents and

producers, in any State in which such WYO Companies are licensed to

engage in the business of property insurance. Arrangements entered into

by WYO Companies under this subpart shall be in the form and substance

of the standard arrangement, entitled ``Financial Assistance/Subsidy

Arrangement'', a copy of which is included in Appendix A of this part

and made a part of these regulations.

(b) Any duly licensed insurer so engaged in the Program shall be a

WYO Company.

(c) A WYO Company is authorized to arrange for the issuance of

flood insurance in any amount within the maximum limits of coverage

specified in Sec. 61.6 of this subchapter, as Insurer, to any person

qualifying for such coverage under parts 61 and 64 of this subchapter

who submits an application to the WYO Company; coverage shall be issued

under the Standard Flood Insurance Policy.

(d) A WYO Company issuing flood insurance coverage shall arrange

for the adjustment, settlement, payment and defense of all claims

arising from policies of flood insurance it issues under the Program,

based upon the terms and conditions of the Standard Flood Insurance

Policy.

(e) In carrying out its functions under this subpart, a WYO Company

shall use its own customary standards, staff and independent contractor

resources, as it would in the ordinary and necessary conduct of its own

business affairs, subject to the Act and regulations prescribed by the

Administrator under the Act.

(f) To facilitate the marketing of flood insurance coverage under

the Program to policyholders of WYO Companies, the Administrator will

enter into arrangements with such companies whereby the Federal

Government will be a guarantor in which the primary relationship

between the WYO Company and the Federal Government will be one of a

fiduciary nature, i.e., to assure that any taxpayer funds are accounted

for and appropriately expended. In furtherance of this end,

[[Page 3637]]

the Administrator has established ``A Plan to Maintain Financial

Control for Business Written Under the Write Your Own Program'', a copy

of which is included in Appendix B of this part and made a part of

these regulations.

(g) WYO Companies shall not be agents of the Federal Government and

are solely responsible for their obligations to their insureds under

any flood insurance policies issued under arrangements entered into

with the Administrator.

(h) To facilitate the underwriting of flood insurance coverage by

WYO Companies, the following procedures will be used by WYO Companies:

(1) To expedite business growth, the WYO Company will encourage its

present property insurance policyholders to purchase flood insurance

and to transfer to the WYO Company, at the time of policy renewal,

business placed by its producers with the NFIP Bureau and Statistical

Agent.

(2) To confirm its underwriting practices to the underwriting rules

and rates in effect as to the NFIP, the WYO Company will establish

procedures to carry out the NFIP rating system and to provide its

policyholders with the same coverage as is afforded under the NFIP.

(3) The WYO Company may follow its customary billing practices to

meet the Federal rules on the presentment of premium and net premium

deposits to a Letter of Credit bank account authorized by the

Administrator and reduction of coverage when an underpayment is

discovered.

(4) The WYO Company is expected to meet the recording and reporting

requirements of the WYO Transaction Record Reporting and Processing

Plan. Transactions reported by the WYO Company under the WYO

Transaction Record Reporting and Processing Plan will be analyzed by

the NIP Servicing Agent. A monthly report will be submitted to the WYO

Company and the FIA. The analysis will cover the timeliness of WYO

Company submissions, the disposition of transactions that have not

passed systems edits and the reconciliation of the totals generated

from transaction reports with those submitted on the WYO Company's

reconciliation reports.

(5) If a WYO Company rejects an application from an agent or a

producer, the agent or producer should be notified so that the business

can be placed through the NFIP Servicing Agent, or another WYO Company.

(6) Flood insurance coverage will be issued by the WYO Company on a

separate policy form and will not be added, by endorsement, to the

Company's other property insurance forms.

(7) Premium payment plans can be offered by the WYO Company so long

as the net premium depository requirements specified under the NFIP/WYO

Program accounting procedures are met. A cancellation by the WYO

Company for non-payment of premium will not produce a pro rata return

of the net premium deposit to the WYO Company.

(8) NFIP business will not be assumed by the WYO Companies at any

time other than at renewal time, at which time the insurance producer

may submit the business to the WYO Company as new business. However, it

is permissible to cancel and rewrite flood policies to obtain

concurrent expiration dates with other policies covering the property.

Where the insurance agent or producer of record of a flood insurance

policy issued by the Administrator has authorized the NFIP, in writing,

to release policy information for the conversion of the NFIP coverage

to a designated WYO Company represented by the agent or producer of

record, in order to facilitate policy issuance and reduce

administrative burdens upon the NFIP and WYO Companies and their agents

and producers, countersignature requirements in the several States

shall not apply.

(i) To facilitate the adjustment of flood insurance claims by WYO

Companies, the following procedures will be used by WYO Companies.

(1) Under the terms of the Arrangement set forth at appendix A of

this part, WYO Companies will adjust claims in accordance with general

Company standards, guided by NFIP Claims manuals. The Arrangement also

provides that claim adjustments shall be binding upon the FIA. For

example, the entire responsibility for providing a proper adjustment

for both combined wind and water claims and flood-alone claims is the

responsibility of the WYO Company.

(2) The WYO Company may use its staff adjusters and/or independent

adjusters. It is important that the Company's Claims Department

verifies the correctness of the coverage interpretations and

reasonableness of the payments recommended by the adjusters.

(3) An established loss adjustment Fee Schedule is part of the

Arrangement and cannot be changed during an Arrangement year. This is

the expense allowance to cover costs of independent or WYO Company

adjusters.

(4) the normal catastrophe claims procedure currently operated by a

WYO Company should be implemented in the event of a claim catastrophe

situation. Flood claims will be handled along with other catastrophe

claims.

(5) It will be the WYO Company's responsibility to try to detect

fraud (as it does in the case of property insurance) and coordinate its

findings with FIA.

(6) Pursuant to the Arrangement, the responsibility of defending

claims will be upon the Write Your Own Company and defense costs will

be part of the unallocated or allocated claim expense allowance,

depending on whether a staff counsel or an outside attorney handles the

defense of the matter. Claims in litigation will be reported by WYO

Companies to FIA upon joinder of issue and FIA may inquire and be

advised of the disposition of such litigation.

(7) The claim reserving procedures of the individual WYO Company

can be used.

(8) Regarding the handling of subrogation, if a WYO Company prefers

to forego pursuit of subrogation recovery, it may do so by referring

the matter, with a complete copy of the claim file, to FIA. Subrogation

initiatives may be truncated at any time before suit is commenced

(after commencing an action, special arrangement must be made). FIA,

after consultation with FEMA's Office of the General Counsel (OGC),

will forward the cause of action to OGC or to the NFIP Bureau and

Statistical Agent for prosecution. Any funds received will be

deposited, less expenses, in the National Flood Insurance Fund.

(9) Special allocated loss adjustment expenses will include such

items as: nonstaff attorney fees, engineering fees and special

investigation fees over and above normal adjustment practices.

(10) The customary content of claim files will include coverage

verification, normal adjuster investigations, including statements

where necessary, police reports, building reports and investigations,

damage verification and other documentation relevant to the adjustment

of claims under the NFIP's and the WYO Company's traditional claim

adjustment practices and procedures. The WYO Company's claim examiners

and managers will supervise the adjustment of flood insurance claims by

staff and independent claims adjusters.

(11) The WYO Company will extend reasonable cooperation to FEMA's

Office of the General Counsel on matters pertaining to litigation and

subrogation, under paragraph (i)(8) of this section.

(j) To facilitate establishment of financial controls under the WYO

Program, the WYO Company will:

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(1) Select a Certified Public Accountant (CPA) firm to conduct

biennial audits of the financial, claims and underwriting records of

the company. These audits shall be performed in accordance with the

Government Auditing Standards issued by the Comptroller General of the

United States (commonly known as yellow book). FIA further requires

that pre-selected policy and claims files the CPA firm is asked to

review are in addition to any files that the auditors may select for

their sample. A report of the detailed biennial audit conducted will be

filed with the FIA which, after a review of the audit report, will

convey its determination to the Standards Committee. The CPA firm

chosen to conduct the audit is expected to use qualified, skilled

persons with the requisite background in property insurance and a

knowledge of the NFIP. Persons performing claims audits are expected to

possess claims expertise which would allow them to ascertain whether

the scope of damage was proper, and if all applicable NFIP policy

provisions were properly followed. Persons performing underwriting

audits should be able to ascertain if the risk has been properly rated,

which would necessitate being aware of special NFIP rating situations,

such as elevated buildings.

(2) Meet the recording and reporting requirements of the WYO

Transaction Record Reporting and Processing Plan and the WYO Accounting

Procedures Manual. Transactions reported to the National Flood

Insurance Program's (NFIP's) Bureau and Statistical Agent by the WYO

Company under the WYO Transaction Record Reporting and Processing Plan

and the WYO Accounting Procedures Manual will be analyzed by the Bureau

and Statistical Agent and a monthly report will be submitted to the WYO

Company and the FIA. The analysis will cover the timeliness of the WYO

Company submissions, the disposition of transactions which do not pass

systems edits and the reconciliation of the totals generated from

transaction reports with those submitted on WYO Company reconciliation

reports.

(3) Cooperate with FEMA's Office of Financial Management on Letter

of Credit matters.

(4) Cooperate with FIA in the implementation of a claims

reinspection program.

(5) Cooperate with FIA in the verification of risk rating

information.

(6) Cooperate with FEMA's Office of the Inspector General on

matters pertaining to fraud.

(k) To facilitate the operation of the WYO Program and in order

that a WYO Company can use its own customary standards, staff and

independent contractor resources, as it would in the ordinary and

necessary conduct of its own business affairs, subject to the Act, the

Administrator, for good cause shown, may grant exceptions to and

waivers of the regulations contained in this title relative to the

administration of the NFIP.

(l)(1) WYO Companies may, on a voluntary basis, elect to

participate in the Mortgage Portfolio Protection Program (MPPP), under

which they can offer, as a last resort, flood insurance at special high

rates, sufficient to recover the full cost of this program in

recognition of the uncertainty as to the degree of risk a given

building presents due to the limited underwriting data required, to

properties in a lending institution's mortgage portfolio to achieve

compliance with the flood insurance purchase requirements of the Flood

Disaster Protection Act of 1973. Flood insurance policies under the

MPPP may only be issued for those properties that:

(i) Are determined to be located within special flood hazard areas

of communities that are participating in the NFIP, and

(ii) Are not covered by a flood insurance policy even after a

required series of notices has been given to the property owner

(mortgagor) by the lending institution of the requirement for obtaining

and maintaining such coverage, but the mortgagor has failed to respond.

(2) WYO Companies participating in the MPPP must provide a detailed

implementation package to any lending institution that, on a voluntary

basis, chooses to participate in the MPPP to ensure the lending

institution has full knowledge of the criteria in that program and must

obtain a signed receipt for that package from the lending institution.

Participating WYO Companies must also maintain evidence of compliance

with paragraph (l)(3) of this section for review during the audits and

reviews required by the WYO Financial Control Plan contained in

appendix B of this part.

(3) The mortgagor must be protected against the lending

institution's arbitrary placing of flood insurance for which the

mortgagor will be billed by being sent three notification letters as

described in paragraphs (l)(4) through (6) of this section.

(4) The initial notification letter must:

(i) State the requirements of the Flood Disaster Protection Act of

1973, as amended;

(ii) Announce the determination that the mortgagor's property is in

an identified special flood hazard area as delineated on the

appropriate FEMA map, necessitating flood insurance coverage for the

duration of the loan;

(iii) Describe the procedure to follow should the mortgagor wish to

challenge the determination;

(iv) Request evidence of a valid flood insurance policy or, if

there is none, encourage the mortgagor to promptly obtain a Standard

Flood Insurance Policy (SFIP) from a local insurance agent (or WYO

Company);

(v) Advise that the premium for an MPPP policy is significantly

higher than a conventional SFIP policy and advise as to the option for

obtaining less costly flood insurance; and

(vi) Advise that an MPPP policy will be purchased by the lender if

evidence of flood insurance coverage is not received by a date certain.

(5) The second notification letter must remind the mortgagor of the

previous notice and provide essentially the same information.

(6) The final notification letter must:

(i) Enclose a copy of the flood insurance policy purchased under

the MPPP on the mortgage's (insured's) behalf, together with the

Declarations Page.

(ii) Advise that the policy was purchased because of the failure to

respond to the previous notices, and

(iii) Remind the insured that similar coverage may be available at

significantly lower cost and advise that the policy can be cancelled at

any time during the policy year and a pro rata refund provided for the

unearned portion of the premium in the event the insured purchases

another policy that is acceptable to satisfy the requirements of the

1973 Act. ``(Approved by the Office of Management and Budget under OMB

control number 3067-0229.)''

Appendix B to Part 62 [Revised]

3. Appendix B to Part 62--National Flood Insurance Program, is

proposed to be revised to read as follows:

Appendix B to Part 62--National Flood Insurance Program

A Plan To Maintain Financial Control for Business Written Under the

Write Your Own Program

Under the Write Your Own (WYO) Program, the Federal Insurance

Administrator (Administrator) may enter into arrangements with

individual private sector insurance companies that are licensed to

engage in the business of property insurance, whereby these

companies may offer flood insurance coverage to eligible property

owners using their customary business practices. To facilitate the

marketing of flood

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insurance coverage, the Federal Government will be a guarantor of flood

insurance coverage for WYO Company policies issued under the WYO

Arrangement. To ensure that any taxpayer funds are accounted for and

appropriately expended, the Federal Insurance Administrator (FIA)

and WYO Companies will implement this Financial Control Plan. Any

departures from the requirements of this Plan must be approved by

the Administrator. The authority for the WYO Program is contained in

Sec. 1345 of the National Flood Insurance Act of 1968, 42 U.S.C.

4081, and 44 CFR parts 61 and 62, Secs. 61.13 and 62.23. The WYO

Financial Assistance/Subsidy Arrangement (Arrangement) which is

included in appendix A of this part is hereby made a part of this

Financial Control Plan.

WYO Companies are subject to audit, examination, and regulatory

controls of the various states. Additionally, insurance company

operating departments are customarily subject to examinations and

audits performed by Company internal audit (and/or quality control)

departments and independent CPA firms. It is intended that this Plan

use to the extent possible, the findings of these examinations and

audits as they pertain to business written under the WYO Program

(Parts 3 and 4).

The WYO Financial Control Plan contains several checks and

balances that can, if properly implemented by the WYO Company,

significantly reduce the need for extensive on-site reviews of

Company files by the FIA staff or their designee. Furthermore, we

believe that this process is consistent with customary reinsurance

practices and avoids duplication of examinations performed under the

auspices of individual State Insurance Departments, NAIC Zone

examinations, and independent CPA firms.

The WYO Financial Control Plan requires the WYO Company to meet

the minimum requirements established by the Standards Committee. The

Standards Committee consists of four (4) members from FIA, one (1)

member from the Federal Emergency Management Agency's (FEMA's)

Office of Financial Management, one (1) member designated by the

Administrator who is not directly involved in the WYO Program, and

one (1) member from each of six (6) designated WYO Companies, pools

or other entities.

The WYO Financial Control Plan must require the WYO Company to:

1. Have a biennial audit of the flood insurance financial

statements and claims and underwriting activity conducted by an

independent accounting firm at the Company's expense to ensure that

the financial data reported to FIA accurately represents the flood

insurance activities of the Company. Require that the CPA firm's

audit be performed in accordance with GAO yellow book requirements.

Require that the auditors conduct their own review sample, even if

pre-selected policy and claims files are given to them for review.

2. Meet the recording and reporting requirements of the WYO

Transaction Record Reporting and Processing Plan. Transactions

reported to the National Flood Insurance Program's (NFIP's) Bureau

and Statistical Agent by the WYO Company under the WYO Transaction

Record Reporting and Processing Plan will be analyzed by the Bureau

and Statistical Agent and a monthly report will be submitted to the

WYO Company and the FIA. The analysis will cover the timeliness of

the WYO Company's submissions, the disposition of transactions that

do not pass systems edits, and the reconciliation of the total

generated from transaction reports with those submitted on the WYO

Company's reports (part 1).

3. Cooperate with FEMA's Office of Financial Management on

Letter of Credit matters.

4. Cooperate with FIA in the implementation of a claims

reinspection program (part 2).

5. Cooperate with FIA in the verification of risk rating

information.

6. Cooperate with FEMA's Office of the Inspector General on

matters pertaining to fraud.

The Standards Committee will review and make a recommendation to

the Administrator concerning any adverse action arising from the

implementation of the Financial Control Plan. Adverse actions

include, but are not limited to the FIA Operations Division's

recommendations not to renew a particular Company's WYO arrangement.

This Plan includes the following guidelines:

Part 1--Transaction Record Reporting and Processing Plan

Reconciliation Procedures

Part 2--Claims Reinspection Program

Part 3--Financial Audits, Underwriting Audits, Claims Audits, Audits

For Cause, and State Insurance Department Audits

Part 4--Reports Certifications

Part 5--WYO Financial Assistance/Subsidy Arrangement (Incorporated

by Reference)

Part 6--Transaction Record Reporting and Processing Plan

(Incorporated by Reference)

Part 7--Write Your Own (WYO) Accounting Procedures Manual

(Incorporated by Reference)

Part 1--Transaction Record Reporting and Processing Plan

Reconciliation Procedures

Transaction Record Reporting and Processing Plan Reconciliation

Objectives

The objectives are: To reconcile transaction detail with monthly

financial statements submitted by the WYO Companies; to assess the

quality and timeliness of submitted data; and to provide for the

identification and resolution of discrepancies in the data. The

reliance on computer processing to perform the review of transaction

and financial data will help minimize the necessity for on-site

audits of WYO Companies. Reconciliation of the statistical reports

submitted will be performed by the WYO Companies and independently

by the NFIP Bureau and Statistical Agent.

The Review of monthly financial statements and transaction level

detail will involve five areas:

A. Financial control;

B. Quality control (audit trails);

C. Quality review of submitted data;

D. Policy rating;

E. Timeliness of reporting; and

F. Monthly reports.

A. Financial Control

1. WYO Companies are required to submit a reconciliation report

(Exhibit ``A'') with the submission of transaction level detail.

This report will reconcile the transaction records data to the

financial report, explaining any discrepancies.

2. WYO Companies are required to submit, on a form approved by

the Administrator, a tape transmittal document with the submission

of the statistical tape containing transaction detail. This will be

used to validate record counts and dollar amounts.

3. The NFIP will review, at a minimum, the categories on the

attached format and produce a similar report reconciling the

transaction data to the monthly financial statement submitted by

each WYO Company.

4. To facilitate financial reconciliation, transaction records

which do not pass various edits employed by the NEIP to review the

quality of submitted data will be so identified, but still maintain

whenever possible until the error is corrected by the company in

order to reconcile all financial data submitted to the NFIP.

B. Quality Control

Transaction level detail will be maintained in policy and claim

history files for record-keeping and audit purposes.

C. Quality Review of Submitted Data

1. Transaction records will be edited for correct format and

values.

2. Relational edits will be performed on individual transactions

as well as between policy and claim transactions submitted against

those policies.

3. Record validation will be performed to check that the

transaction type is allowable for the type of policy or claim

indicated.

4. Errors will be categorized as critical or non-critical. The

rate of critical errors in the submission of statistical data will

be the basis by which company performance is reported to the

Standards Committee. Critical errors include those made in required

data elements. Required data elements:

a. Identify the policyholder, the policy, the loss, and the

property location;

b. Provide information necessary to rate the policy;

c. Provide information used in financial control; and

d. Provide information used for actuarial review of NFIP

experience.

5. Non-critical errors are those made in data elements reported

by the WYO Companies at their option.

D. Policy Rating

1. The rating will be validated by the NFIP for all policies for

which the following transactions have been submitted:

a. New Business;

b. Renewals;

c. Endorsements involving type A transaction records; and

d. Corrections of type A transaction records previously

submitted for premium transactions.

2. Incorrect rating will be considered a critical error.

E. Timeliness of Reporting

1. WYO Companies will be expected to submit monthly statistical

and financial

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reports within thirty days of the end of the month of record.

2. The NFIP will provide reports based on review of submitted

data within thirty days after the due date or the first processing

cycle subsequent to the receipt of WYO Company submissions,

whichever is later.

F. Monthly Reports

1. Reports for each WYO Company's data submission will be sent

to the respective WYO Company and the FIA explaining any

discrepancies found by the NFIP review.

2. Reports to WYO Companies. Transaction records that fail to

pass the quality review or policy rating edits will be reported to

the appropriate Company in transaction detail with error codes,

classification of errors as either critical or non-critical and any

codes used by the Company to identify the source of the transaction

data.

3. Report to WYO Companies and the FIA:

a. Summary statistics will be generated for each monthly

submission of transaction data. These will include:

i. Absolute numbers of transactions read and transactions

rejected by transaction type; and

ii. Dollar amounts associated with transactions read and

transactions rejected.

b. Summary statistics for all policy and claim records submitted

to date (which may each be the result of multiple transactions) will

be generated, separately for critical and non-critical errors. These

will include:

i. Absolute number of policy and claim records on file and those

containing errors; and

ii. Relative values for the number of records containing

critical errors.

c. Control totals will be generated for tapes submitted to and

processed by the NFIP. This front-end balancing procedure will

include:

i. Numbers of records submitted according to the NFIP compared

with numbers of records submitted according to the WYO Company

transmittal document; and

ii. Dollar amounts submitted according to the NFIP compared with

dollar amounts submitted according to the WYO Company transmittal

document.

d. If there is any discrepancy between the NFIP reading of

dollar amounts from the tape and the WYO Company tape transmittal

document, then the monthly statistical tape submission will be

rejected and returned to the Company. The rejected tape must be

corrected and resubmitted by the next monthly submission due date.

e. In cases where the NFIP reconciliation of transaction level

detail with the financial statements does not agree with the

reconciliation report submitted by the WYO Company, a separate

report will be generated and transmitted to the Company for

resolution and to the FIA.

Reporting of Company Rating to the Standards Committee and the

Administrator

A. Satisfactory Rating

An annual end of the year report will be submitted to convey the

satisfactory rating of WYO Companies' submission of transaction data

and the reconciliation of this data with financial reports.

B. Unsatisfactory Rating

The report of an unsatisfactory rating will be submitted as soon

as errors and problems reach critical threshold levels. This rating

will be based on: Continuing problems in reconciling transaction

data with financial reports; statistics on the percentage of

transactions submitted with critical errors; the percentage of

policy and claim records on file that contain critical errors; and

late submission of statistical and financial reports.

Exhibit ``A''--WYO Statistical Tape Transmittal Document

Date Sent: ____________

WYOPrefix Code ____________--------------------------------------------

WYO Company Name:------------------------------------------------------

Address:---------------------------------------------------------------

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

Reel Number (S) of Enclosed Tapes:-------------------------------------

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

Density ____________ LRECL ____________

Blocksize ____________

File Name (DSN)--------------------------------------------------------

Contact Person---------------------------------------------------------

Contact Number---------------------------------------------------------

IBU Number ________________ (WYO Use Only

Monthly Reconciliation--Net Written Premiums

Company name-----------------------------------------------------------

Month/year ending------------------------------------------------------

Co. NAIC No------------------------------------------------------------

Date submitted---------------------------------------------------------

Preparer's name--------------------------------------------------------

Telephone No-----------------------------------------------------------

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

Monthly statistical transactions report

Monthly financial report ------------------------------------------------------------------

Trans. code Record count Premium amount

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

Net Written premiums......................... $

(Income statement=Line 100).............. 11 .............. $

15 .............. ..............

17 .............. ..............

Unprocessed statistical:

(+) Prior month's........................ 20 .............. ..............

(-) Current month's...................... 23 .............. ..............

Other--Explain:

(+) Current month's...................... 26 .............. (-)

(-) Prior month's........................ 29 .............. (-)

14 and 81 .............. (+)

Total.................................. Total: Add 11 Through 23 less 26

and 29

Comments:

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

Monthly Reconciliation--Losses

Company name-----------------------------------------------------------

Month/year ending------------------------------------------------------

Co. NAIC No------------------------------------------------------------

Date submitted---------------------------------------------------------

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

Loss/paid

Trans. code Record count recoveries

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

100 Net paid losses..........................

(Income statement line 115)

Unprocessed statistical:

31 .............. $

140 (+) Prior month's.................... 34 .............. ..............

37 .............. ..............

150 (-) Current month.................... 40 .............. ..............

[[Page 3641]]

43 .............. ..............

160 Salvage not to be reported by

transaction (explain)

170 Other--Explain....................... 46 and 61 .............. ..............

49 .............. ..............

64 .............. ..............

84 amd 87 .............. ..............

52 Recovery .............. ..............

Salvage .............. ..............

Subrogation .............. ..............

67 Recovery .............. ..............

Salvage .............. ..............

Subrogation .............. ..............

Total: (Sum of Lines 100, 140, 160, and Total: (Add 31, 34, 40 through 64 .............. ..............

170 less 150). less 52 and 67)

Comments:

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

Monthly Reconciliation--Special Allocated LAE

Company name-----------------------------------------------------------

Month/year ending------------------------------------------------------

Co. NAIC No------------------------------------------------------------

Date submitted---------------------------------------------------------

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

Monthly statistical transaction report

Monthly financial report ------------------------------------------------------------------

Trans. code Record count Amounts

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

Special allocated loss adjustment expenses

(Other loss and LAE Calc.--Line 655)

71 .............. $

74 .............. ..............

Unprocessed statistical:

(+) Prior Month.......................... ................................. .............. ..............

(-) Current Month........................ ................................. .............. ..............

Other--Explain:

(1)...................................... ................................. .............. ..............

(2)...................................... ................................. .............. ..............

Total:................................. Total: .............. ..............

Comments:

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

Monthly Reconciliation--Net Policy Service Fees

Company name-----------------------------------------------------------

Month/year ending------------------------------------------------------

Co. NAIC No------------------------------------------------------------

Date submitted---------------------------------------------------------

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

Monthly statistical transaction report

Monthly financial report -----------------------------------------------------------------

Record count Fee amount

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

Net Policy Service

Fees $____________ (Income Statement--Line

170)

Unprocessed statistical:

(+) Prior Month's ____________............

(-) Current Month's ____________..........

Other--Explain:

(1) ____________..........................

(2) ____________..........................

Total ____________ Total ____________..............

Comments:

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

(Approved by the Office of Management and Budget under OMB control

number 3067-0169.)

Part 2--Claims Reinspection Program

WYO--NFIP Claims Reinspection Program

To keep WYO-NFIP Claims Management informed, to assist in the

overall claims operation, and to provide necessary assurances and

documentation for dealing with GAO, Congressional Oversight

Committees, and the public, the FIA and WYO Companies have

established a Claims Reinspection Program.

The Program is comprised of the following major elements:

A. All files are subject to reinspection.

B. Files for reinspection may be randomly selected by flood

event, or size of loss, or class of business, as determined by WYO-

NFIP Claims Management.

C. WYO-NFIP Claims Management will utilize a binomial table to

define sample size for reinspections prior to payment. A larger

sample may be used depending upon error ratio.

D. An agreed upon sample of closed files, by event, will be

subjected to reinspection as well.

[[Page 3642]]

E. A WYO representative will conduct the reinspection,

accompanied by an NFIP General Adjuster.

F. A joint, single report will be issued by the WYO Company

representative and the NFIP General Adjuster.

G. Copies of reinspection reports will be forwarded to the

Claims Management of both the WYO Company and the NFIP.

Part 3--Financial Audits, Underwriting Audits, Claims Audits,

Audits for Cause, and State Insurance Department Audits

A. Biennial Financial Audits

1. Objectives of WYO Biennial Financial Audit. The biennial

financial audit is intended to provide the Federal Emergency

Management Agency with independent assessment of the quality of

financial controls over activities relating to the Company's

participation in the National Flood Insurance Program as well as the

integrity of the financial data reported to FEMA.

a. Participating WYO companies are responsible for selecting and

funding independent Certified Public Accounting firms to conduct the

biennial audits. Such costs are considered part of the normal

administrative cost of operating the WYO program and as such are

included in the WYO expense allowance.

b. The WYO Company's representative will be notified in writing

to arrange for a biennial audit. This notice should provide the WYO

Company at least 120 days to prepare for the biennial audit.

c. It is also intended that the biennial audit will reduce if

not eliminate the need for FEMA auditors or their designees to

conduct on-site visits to WYO companies in their review of financial

activity. However, the requirement may still exist for such visits

to occur as determined by the auditors. The CPA firm's audit shall

be performed in accordance with GAO yellow book requirements.

Further, the CPA firm is required to select its own sample, even

though FIA may provide them with pre-selected policy and claim files

for review. In addition, nothing in this section should be construed

as limiting the ability of the General Accounting Office or FEMA's

Office of Inspector General to review the activities of the WYO

Program.

d. The purpose of the biennial audit is to provide opinion on

the fairness of the financial statements, the adequacy of internal

controls, and the extent of compliance with laws and regulations.

B. Audits for Cause

In accordance with the terms of the Arrangement, the

Administrator, on his/her own initiative or upon recommendation of

the WYO Standards Committee or the FEMA Inspector General, may

conduct for-cause audits of participating companies. The following

criteria, in combination or independently may constitute the basis

for initiation of such an audit.

1. Underwriting

a. Excessively high frequency of errors in underwriting:

i. Issuing policies for ineligible risks.

ii. Issuing policies in ineligible communities.

iii. Consistent premium rating errors.

iv. Missing or insufficient documentation for submit for rate

policies.

v. Other patterns of consistent errors.

b. Abnormally high rate of policy cancellations or non-renewals.

c. Policies not processed in a timely fashion.

d. Duplication of policy coverage noted.

e. Problems with Rollover from National Flood Insurance Program

(NFIP) to WYO (duplication of coverage, timeliness of changeover).

f. Relational type edits indicate an unusually high or low

premium amount per policy for the geographical area.

g. Biennial audit results indicate unusual volume of errors in

underwriting.

2. Claims

a. Reinspection indicates consistent patterns of:

i. Losses being paid when not covered.

ii. Statistical information being reported on original loss

adjustment found to be incorrect on reinspection.

iii. Salvage/subrogation not being adequately addressed.

iv. Consistent overpayment of claims.

b. Unusually high count of erroneous assignments and/or claims

closed without payment (CWP). (WYO Company is paid a flat fee for

CWP cases where little or no work is done--risk is fraudulent CWP

cases).

c. Unusually low count of CWP. (May indicate inadequate follow-

up of claims submitted).

d. Average claim payments which significantly exceed the average

for the Program as a whole.

e. Lack of (adequate) documentation for paid claims.

f. Claims not processed in a timely fashion.

g. Consistent failure of WYO Company to receive authorization

for special allocated loss adjustment expenses prior to incurring

them.

h. High submission of Special Allocated Loss Adjustment Expenses

(SALAE).

i. Consistently high policyholder complaint level.

j. Low/high count of salvage/subrogation.

k. Biennial audit indicates significant problems.

3. Financial Reporting/Accounting

a. Consistently high reconciliation variations and/or errors in

statistical information.

b. Financial and/or statistical information not received in a

timely fashion.

c. Letter of Credit violations are found.

d. WYO Company is not depositing funds to the Restricted Account

in a timely manner, or funds are not being transferred through the

automated clearinghouse on a timely basis.

e. Premium suspense is consistently significant, older than 60

days, and/or cannot be detailed sufficiently.

f. Large/unusual balance in Cash-Other (Receivable and/or

Payable).

g. Large, unexplained differences in cash reconciliation.

h. Large/unusual balances or variations between months noted for

key reported financial data.

i. Financial statement to statistical data reconciliation sheets

improperly completed indicating proper review of information is not

being performed prior to signing certification statement.

j. Repeated failure to respond fully in a timely manner to

questions raised by FIA or its servicing agent concerning monthly

financial reporting.

k. Biennial audit indicates significant problems.

C. Underwriting Audit

1. Samples of new business policies, renewals, endorsements and

cancellations will be provided by the FIA with the biennial audit

instructions, including samples of the Mortgage Portfolio Protection

business, where applicable. The audit is to be conducted in

accordance with GAO yellow book requirements. The CPA firm may

supplement with its own sample of risks which were in-force during

all or part of the Arrangement Year under audit for detail testing.

2. Underwriting Audit Outline.

a. Review of the Underwriting Department's responsibilities,

authorities and composition.

b. Personal interviews with management and key clerical

personnel to determine current processing activities, planned

changes and problems.

c. Administrative review to verify compliance with company

procedures.

d. Thorough examination of a random sample of underwriting files

to measure the quality of work. The CPA firm is expected to provide

a representative sample of its review to substantiate its opinion

and findings. At a minimum, the files should be reviewed to verify

the following:

i. Policies are issued for eligible risks;

ii. Rates are correct and consistent with the amount of

insurance requested on the application.

iii. Waiting period for new business is consistent with

government regulations;

iv. Elevation certification or difference is correctly shown on

application;

v. The coverage does not include more than one building and/or

its contents per policy;

vi. No binder is effective unless issued with the authorization

of FIA;

vii. The FIRM zone shown on the application is applicable to the

community in which the property is located;

viii. Community shown on application is eligible to purchase

insurance under the NFIP;

ix. Information on type of building, etc., is fully complete;

x. Applicable deductibles are recorded;

xi. A new, fully completed application or a photocopy of the

most recent application, or similar documentation, with the

appropriate updates to reflect current information is on file for

each risk, including those formerly written by the NFIP Servicing

Facility;

xii. If any files to be audited are unavailable, determine the

reason for the absence.

e. Endorsement Processing.

1. Complete tasks as applicable.

2. Review requests for additional coverage to ensure that they

are subject to the waiting period rule.

[[Page 3643]]

3. Review controls established to ensure that no risk is insured

under endorsement provisions that are not acceptable as a new

business risk (i.e., a property located in a suspended community).

f. Cancellation Processing. Verify controls to ensure that one

of the necessary reasons for cancellation exists and that the

transaction is accompanied by proper documentation.

g. Renewal Processing. Determine controls to ensure that all

necessary information needed to complete the transaction is

provided.

h. Expired Policies. Determine controls to ensure that each step

is carried out at the proper time.

i. Observance of Waiting Period. Establish procedures to

document, as a matter of WYO Company business record and in each

transaction involving a new application, renewal, and endorsement,

that any applicable effective date and premium receipt rules have

been observed (44 CFR 61.11). Documentation reasonably suitable for

the purpose includes retention of postmarked envelopes (for three

(3) years) from date, date-stamping and retention (via hard copy or

microfilm process) of application, renewal and endorsement documents

and checks received in payment of premium; computer input of

document and premium receipt transactions and retention of such

records in the computer system; and other reasonable insurer methods

of verifying transactions involving requests for coverage and

receipts of premium.

D. Claims Audit Outline

1. Review of the Claims Department's responsibilities,

authorities, and composition.

2. Personal interviews with management and key clerical

personnel to determine current processing activities, planned

changes and problems.

3. Administrative review to verify compliance with company

procedures.

4. Thorough examination of a random sample of claims files which

may be provided by FIA to measure the quality of work. At a minimum,

the files should be reviewed to verify the following:

a. Verify controls to ensure that a file is set up for each

Notice of Loss received.

b. Review adjuster reports to determine whether they contain

adequate evidence to substantiate the payment or denial of claims,

including amount of losses claimed, any salvage proceeds,

depreciation and potential subrogation.

c. Ascertain that building and contents allocations are correct.

d. Determine whether the file contains evidence identifying

subrogation possibilities.

e. Verify that partial payments were properly considered in

processing the final draft or check.

f. Verify that the loss payees are listed correctly (consider

insured and mortgagee).

g. Verify that the total amount of the drafts or checks is

within the policy limits.

h. Ascertain the relevance and validity of the criteria used by

the carrier to judge effectiveness of its claims servicing

operation.

i. Confirm that when information is received from an independent

adjuster, the examiner either acts promptly to give proper feedback

with instructions or takes action to pay or deny the loss.

j. Determine whether the Claims Department is using an

``impression of risk'' program in reporting misrated policies, etc.

k. Where attempts at fraud occur, verify that these instances

are being reported to FIA for referral to the FEMA Inspector

General's office.

l. If any files to be audited are unavailable, determine the

reason for their absence. In undertaking this portion of the

biennial audit, the Administrative Review Checklist (Exhibit B)

below should be utilized.

Exhibit ``B''--Administrative Review Checklist

Policy #

Insured's name:

State:

Date of loss:

Date paid:

Date reported:

Amt. of loss: $

Bldg. $

Contents $

Adjusting firm:

Examiner's name:

Comments

1. Investigation and Adjustments

A. Application of Coverage Yes No N/A

(1) Insurable interest?........... [ ] [ ] [ ]

(2) Is loss from the flood peril?. [ ] [ ] [ ]

(3) Did loss occur within the

policy term?..................... [ ] [ ] [ ]

(4) Does location and description

of risk coincide with policy

information?..................... [ ] [ ] [ ]

(5) Were proper deductibles

applied?......................... [ ] [ ] [ ]

(6) Other insurance considered?... [ ] [ ] [ ]

(7) Other losses?................. [ ] [ ] [ ]

b. Application of Sound Adjusting

Practices

(1) Was adjuster's report accurate/

complete?........................ [ ] [ ] [ ]

(2) Was an attorney used in the

settlement?...................... [ ] [ ] [ ]

(3) Was a technical expert used in

the settlement?.................. [ ] [ ] [ ]

c. Documentation

(1) Are damages clearly

identified?...................... [ ] [ ] [ ]

(2) Are damages flood related?.... [ ] [ ] [ ]

(3) Are damages clearly and

completely itemized and

documented by the adjuster?...... [ ] [ ] [ ]

(4) Was depreciation considered?.. [ ] [ ] [ ]

(5) Has subrogation been

considered?...................... [ ] [ ] [ ]

(6) Has salvage been properly

handled?......................... [ ] [ ] [ ]

(7) Was salvage timely?........... [ ] [ ] [ ]

2. Supervision

a. Assignments

(1) Are assignments made promptly? [ ] [ ] [ ]

(2) Is insured contacted promptly? [ ] [ ] [ ]

b. Reserves

(1) Are initial reserves indicated

on the first report?............. [ ] [ ] [ ]

(2) Are they adequate?............ [ ] [ ] [ ]

(3) Does final settlement compare

favorably with last reserve

established?..................... [ ] [ ] [ ]

c. Diary Control

(1) Automatic?.................... [ ] [ ] [ ]

(2) Timely?....................... [ ] [ ] [ ]

(3) Is file reviewed at diary date

with examiner's comments?........ [ ] [ ] [ ]

d. Examiner Evaluation and Settlement

Performances

(1) Is examiner directing adjuster

when needed?..................... [ ] [ ] [ ]

(2) Are files documented?......... [ ] [ ] [ ]

(3) Is adequate control maintained

over in-house adjuster?.......... [ ] [ ] [ ]

(4) Is adequate control maintained

over outside adjuster?........... [ ] [ ] [ ]

[[Page 3644]]

e. Salvage and Subrogation Yes No N/A

(1) Is salvage evaluated by

salvors?......................... [ ] [ ] [ ]

(2) Is salvage disposed of

promptly?........................ [ ] [ ] [ ]

(3) Are salvage returns adequate?. [ ] [ ] [ ]

(4) Is potential subrogation being

promptly and properly

investigated?.................... [ ] [ ] [ ]

(5) Are proper subrogation forms

used?............................ [ ] [ ] [ ]

(6) Are subrogation and salvage

files properly opened, diaried,

and referred (if appropriate)?... [ ] [ ] [ ]

(7) Are recovery funds for

subrogation and salvage being

properly handled?................ [ ] [ ] [ ]

f. Suits

(1) Are suits properly identified? [ ] [ ] [ ]

(2) Are suits being properly

evaluated?....................... [ ] [ ] [ ]

(3) Are suits being referred to

attorneys promptly?.............. [ ] [ ] [ ]

(4) Are attorneys being advised as

to handling settlement or

compromise?...................... [ ] [ ] [ ]

(5) Are suits being properly

controlled?...................... [ ] [ ] [ ]

(6) Are suits files properly

diaried?......................... [ ] [ ] [ ]

(7)-(8) [Reserved]................ [ ] [ ] [ ]

g. Other

(1) Was there other coverage by

the WYO Company?................. [ ] [ ] [ ]

(2) Were damages correctly

apportioned?..................... [ ] [ ] [ ]

(3) Was a solo adjuster used?..... [ ] [ ] [ ]

(4) Were there prior flood claims? [ ] [ ] [ ]

(5) Were prior damages repaired?.. [ ] [ ] [ ]

(6) Were prior claim files

reviewed?........................ [ ] [ ] [ ]

(7) Was a congressional complaint

letter in file?.................. [ ] [ ] [ ]

(8) Was it responded to promptly?. [ ] [ ] [ ]

(9) Is the statistical reporting

correction file being properly

managed?......................... [ ] [ ] [ ]

E. State Insurance--Department Examination

1. It is expected that audits of WYO Companies by independent

accountants and/or state insurance departments, aside from those

conducted by the FIA or its designee, will include flood insurance

activity. When such audits occur, a financial officer for the WYO

Company will notify the FIA, identifying the auditing entity and

providing a brief statement of the overall conclusions that relate

to flood insurance and the insurer's financial condition, when

available. In the case of an audit in progress, a brief statement on

the scope of the audit should be provided to the FIA. A checklist

will be utilized for this reporting and will be provided to WYO

Companies by the FIA.

2. The WYO Companies will maintain on file the reports resulting

from audits, subject to on-site inspection by the FIA or its

designee. At the FIA's request, the WYO Company will submit a copy

of the auditor's opinion, should one be available, summarizing the

audit conclusion. ``(Approved by the Office of Management and Budget

under OMB control number 3067-0169)''

Part 4--Reports Certifications

A. Certification Statement for Monthly Financial and Statistical

Reconciliation Reports

I have reviewed the accompanying financial and statistical

reconciliation reports of XYZ Company as of ____________. All

information included in these statements is the representation of

the XYZ Company.

Based on my review (with the exception of the matter(s)

described in the following paragraphs, if applicable), I certify

that I am not aware of any material modifications that should be

made to the accompanying reports.

Signed-----------------------------------------------------------------

(Responsible Financial Officer)

Date-------------------------------------------------------------------

B. Certification Statement for Monthly Statistical Transaction Report

I have reviewed the accompanying statistical transaction report

control totals in conjunction with appropriate statistical

reconciliation reports. All information included in these reports is

the representation of the XYZ Company.

``(Approved by the Office of Management and Budget under OMB control

number 3067-0169.)''

Signed-----------------------------------------------------------------

(Responsible Reporting Officer)

Date-------------------------------------------------------------------

(Catalog of Federal Domestic Assistance No. 83.100, ``Flood

Insurance'')

Dated: January 25, 1996.

Elaine A. McReynolds,

Administrator, Federal Insurance Administration.

[FR Doc. 96-2089 Filed 1-31-96; 8:45 am]

BILLING CODE 6718-05-M