CLAIMS SERVICES AGREEMENT
This Claims Services Agreement ("this Agreement") is entered into by and between
Mechanical Breakdown Administrators, as a claims administrator ("Servicer"), and
American Bankers Insurance Company of Florida ("Company"). This Agreement is
effective as of January 1, 1998 (the "Effective Date").
WITNESSETH:
Whereas, Servicer renders claims services for certain insureds; and
Whereas, Company is desirous of contracting with Servicer for the performance of
claim services with respect to Company's policies, and Servicer is desirous of
performing such services;
NOW, THEREFORE, Company and Servicer, in consideration of mutual promises
contained herein and other good and valuable consideration, do hereby contract
and agree as follows:
1. SCOPE OF SERVICES
This Agreement shall apply to the coverages issued by Company as described on
Schedule "A" attached hereto (hereinafter the "Insurance") for designated
customers of Company. Servicer acknowledges that the scope of services hereunder
may be expanded in the future and agrees to provide additional claims services
for additional areas, as are mutually agreed between Servicer and Company.
2. SERVICER'S DUTIES
Servicer covenants and agrees to act as Company's representative in processing
and paying Insurance claims, and shall do the following:
A. provide and maintain, at its own expense, suitable facilities, staff
equipment, office supplies and telephone service for the performance of
Servicer's responsibilities.
B. certify the eligibility of claimants, determine the validity of claims, and
make appropriate investigations as may be necessary.
C. accurately pay legitimate claims in accordance with the terms of Company's
policies and procedures, applicable state laws and regulations and in accordance
with the standards as agreed between Company and Servicer.
D. process (pay, deny or request additional information) all claims within
twenty-five (25) days, unless applicable statute or regulation requires
processing within fewer days.
E. promptly notify Company of any claims that are disputed, fraudulent, or
otherwise questionable (including but not limited to any claims involving
allegations of improper claim handling, breach of contract, misrepresentation,
negligence, breach of statutory duty, and failure to act in good faith), refer
such claims to Company for consideration and final decision and act on Company's
instructions following such referral.
F. notify Company within forty-eight (48) hours of receipt of any claims-related
inquiries from State Insurance Departments or other regulatory agencies.
G. notify Company within forty-eight (48) hours of receipt of any notice or
service of threatened, pending, imminent, or existing litigation relating to
claims-related matters.
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H. report to Company on an agreed basis all detailed Insurance claim information
in format as reasonably specified by Company.
I. perform any other administrative functions incidental to the proper and
business-like execution of the claim service function as may be required and
mutually agreed to by Company and Servicer or as may be required by applicable
law.
J obtain any and all authorizations and licenses, if any, required for Servicer
to adjust and settle claims on behalf of Company in all states that Servicer
does business hereunder.
K. withhold payment of any claim, where Company has requested that Servicer do
so, for such period of time as may be specified by Company.
L. allow Company to conduct periodic on-site audits of all claim files.
M. secure all of Company's drafts and checks in a locked and restricted cabinet.
N. maintain a disaster recovery capability, and furnish a copy of such plan to
Company upon request.
O. ensure that all systems used to administer claims for Company are year 2000
compliant.
P. maintain errors and omissions coverage of at least $1,000,000 with a
deductible no greater than $50,000, and provide evidence thereof to Company upon
request.
In no event shall this Agreement be construed to obviate or constitute a waiver
of Company's authority to review and supervise all claims services performed by
Servicer.
3. COMPANY'S DUTIES
Company agrees to:
A. provide to Servicer sufficient information concerning coverage in force to
enable Servicer to properly execute the claim service function.
B. provide Servicer with copies of the Company's claims policies and procedures.
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C. make a final decision on any disputed, fraudulent or other questionable
claims as may be referred to Company by Servicer under this Agreement.
D. provide Servicer with all necessary claim forms and accounting forms or
formats which Company may require Servicer to utilize in performing its duties.
E. provide Servicer with any necessary system training and support to utilize
Company's on-line claim system, if applicable.
4. Books and Records
Servicer shall maintain books and records of all transactions in accordance with
prudent standards of insurance record keeping for a minimum of seven (7) years
after termination of this Agreement, or in accordance with state requirements,
whichever is greater.
For each individual claim, Servicer's records shall include:
(a) the identities of all persons involved in the claim,
(b) an estimated value of the claim and recommended loss reserve established by
Servicer,
(c) a claim reference number designed to follow the progress of the claim, and
(d) information relating to individual claim payments made, and whether such
payment was in partial or total satisfaction of the claim, and a history of
any claims previously made by such claimant.
Notwithstanding that Servicer may have physical possession of the claim records,
all such records shall be and remain the property of Company. Servicer shall
provide Company full access to and/or copies of such files and documents as
Company may request. Upon termination of this Agreement, Servicer shall forward
to Company all records and information relating hereto, or, upon Company's
request, destroy such records and information.
This section shall survive termination of this Agreement.
5. TERM AND TERMINATION
This Agreement shall be effective as of the Effective Date stated above and
shall continue until terminated as follows:
A. by either party upon written notice to the other party at least ninety (90)
days prior to such termination date.
B. by either party for cause. "Cause" shall be defined as a breach of this
Agreement which is not cured within thirty (30) days of receipt of written
notice by the non-breaching party. During such period, Company, in its sole
discretion, may suspend any and all settlements or payments. Upon receipt
of such notice, Servicer shall immediately return to Company all blank
check stock in its possession.
C. by either party immediately upon written notice in the event the other
party:
(1) does not pay, or admits in writing its inability to pay, its debts
generally as they become due; or
(2) institutes or has instituted against it any proceeding in bankruptcy or any
other insolvency or reorganization proceeding, and such proceeding is not
dismissed within thirty (30) days; or
(3) makes an assignment of all or substantially all of its assets for the
benefit of creditors.
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D. by Company immediately upon written notice in the event:
(1) any material change occurs in the ownership, management or control of
Servicer, or substantially all of Servicer's assets are sold; or
(2) Servicer's authority to conduct its business or any part thereof is
terminated or restricted by any public authority.
In the event of termination of this Agreement for any reason, Servicer shall
continue to provide the claims administration and adjustment services hereunder
after the effective date of termination with respect to all claims taking place
prior to such termination and shall, unless advised to the contrary by Company,
administer such claims to conclusion.
6. INDEMNIFICATION
A. By Servicer
Servicer shall use reasonable care and due diligence in performing its
obligations hereunder and all services rendered shall be done with reasonable
dispatch and in conformity with all applicable laws and regulations. Servicer
shall notify Company immediately of any notice received of any alleged violation
thereof and shall promptly correct any such violation, regardless of its cause.
Servicer agrees to indemnify Company, its officers, agents and employees, and
hold them harmless from any and all liability, loss, damage, costs and expenses,
including any extra-contractual damages, as they or any of them from time to
time incur resulting from claims, demands, disputes, investigations,
proceedings, actions, litigation, or judgments resulting directly or indirectly
from Servicer's breach of this Agreement or the negligence, willful misconduct
or fraudulent acts of Servicer or any of its officers, agents or employees.
In no event, however, shall Servicer indemnify Company or hold it harmless as
hereinbefore specified for the amount of the policy benefits which may be found
to be owed by Company, nor shall Servicer be responsible if the liability, loss
or damages, costs and expenses arise due to any negligence or willful misconduct
or fraudulent acts of Company, its officers, agents (excluding Servicer and its
subagents) or employees, or to the extent Servicer follows and complies with
Company's claims handling procedures, manuals, guidelines and instructions in
accordance with the terms of this Agreement.
Servicer shall pay all reasonable attorney's fees in connection with the defense
of any such indemnifiable action should it arise; provided, however, that
Company shall have the right to decide whether such action shall be compromised
or defended to its final outcome and Company shall direct such compromise or
defense.
If any claim payment is made hereunder to an ineligible person by Servicer, or
if it is determined that more or less than the correct amount has been paid by
Servicer, Servicer then will attempt to recover or adjust such payment, but is
not required to initiate court proceedings to effect any such adjustment. If
Servicer is unsuccessful in making such adjustments, it shall so notify Company
in order that Company may take such appropriate action as may be available.
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B. By Company
Company agrees to indemnify Servicer, its officers, agents and employees and
hold them harmless from any and all liability, loss, damage, costs and expenses
as they or any of them may from time to time incur resulting from claims,
demands, disputes, investigations, proceedings, actions, litigation or judgments
resulting directly or indirectly from the negligence or willful misconduct or
fraudulent acts of Company or any of its officers, agents (excluding Servicer
and its subagents) or employees; provided, however, that except for the amount
of actual policy benefits, Company shall not be obligated to indemnify customer
as hereinbefore specified for liability, loss or damages, costs and expenses
which arise due to any negligence, willful misconduct or fraudulent acts of
Servicer, its officers, agents or employees.
Company shall pay all reasonable attorney's fees in connection with the defense
of any such indemnifiable action should it arise; provided, however, that
Company shall have the right to decide whether such action shall be compromised
or pursued to its final outcome.
C. This section shall survive termination of this Agreement.
7. CONFIDENTIALITY
Neither Company nor Servicer shall disclose or communicate at any time to any
other person any confidential information or trade secrets relating to the
business of the other party or any affiliate or agent thereof, including but not
limited to business methods and techniques, research data, marketing and sales
information, customer lists, know-how and any other information concerning the
business of the other party or any affiliate or agent thereof, its manner of
operation, plans or other data not disclosed to the general public, unless prior
written consent is obtained from the other party. This section shall survive
termination of this Agreement.
8. INDEPENDENT CONTRACTOR
Servicer shall be an independent contractor, and nothing herein shall be
construed to create the relationship of employer/employee, partners or joint
venturers between Servicer and Company. Servicer is acting only as an agent of
Company and the rights and responsibilities of the parties hereto shall be
determined in accordance with the law of agency. Servicer, in performing its
obligations hereunder, may exercise its own judgment within the parameters set
forth herein.
9. NOTICE
Any notice to Servicer under this section shall be sufficient if addressed to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO
Mechanical Breakdown Administrators
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Any notice to Company under this Addendum shall be sufficient if addressed to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇. Senior Vice President, CMS
American Bankers Insurance Company
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Any notice hereunder shall be hand delivered or sent by prepaid commercial
overnight courier, and shall be effective upon receipt.
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10. NO WAIVER
The failure by either party to enforce any provision of this Agreement shall not
constitute a waiver of that provision or the party's right to subsequently
enforce such provision.
11. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Florida, without regard to the principles of
conflicts of law.
12. INVALID OR UNENFORCEABLE PROVISIONS
The invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if the invalid or unenforceable provision had been
omitted. To the extent this Agreement requires the approval of any public
official or agency, it shall not be effective until such approval shall have
been obtained as required by applicable law.
13. ENTIRE AGREEMENT; AMENDMENTS
The terms and provisions contained herein constitute the entire agreement
between the parties and supersede any previous communications, representations
or agreements, either oral or written, with respect to the subject matter
hereof. This Agreement may be amended only by a written document signed by both
parties hereto.
14. DELEGATION OF DUTIES
Servicer may seek the advice of experts in performing its duties and obligations
under this Agreement; however, Servicer may not delegate its obligations under
this Agreement to a company unaffiliated with Servicer, except with the written
permission of Company.
15. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of each party, its
successors and assigns; however, no right, benefit or interest hereunder may be
assigned without the prior written consent of Company.
16. ARBITRATION
In the event of any dispute between Company and Servicer which they are unable
to resolve, the dispute shall be submitted to arbitration at the request of
their party. The party requesting arbitration shall so notify the other party in
writing and shall specify the question or questions to be arbitrated. Within
thirty (30) days after receipt of such notification, Company and Servicer shall
each select an arbitrator and give the name and address thereof to the other.
The two persons selected as arbitrators shall promptly select a competent and
disinterested party as a third arbitrator. A decision rendered in writing,
signed by any two of the three arbitrators so chosen, shall be final and
conclusive on Company and Servicer and judgment may be entered thereon. If a
party fails to designate an arbitrator within thirty (30) days after
notification by the first designating party, then the entire arbitration panel
shall consist of one (1) arbitrator selected by the first designating party. In
this event, an arbitration decision shall be rendered in writing and signed by
the one (1) arbitrator and shall be conclusive and final on Company and Servicer
and judgment may be entered thereon. All expenses of arbitration shall be borne
equally by Company and Servicer. Arbitration under these provisions shall be
governed by laws of the State of Florida and shall take place in Miami, Florida,
unless another location is mutually agreed upon by Company and Servicer. This
section shall survive termination of this Agreement.
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17. COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which shall be
considered an original, but all of which together shall be considered one and
the same instrument.
18. YEAR 2000
Servicer represents and warrants that it is capable of performing its duties and
obligations hereunder in such a manner so as to be "year 2000 compliant." "Year
2000 compliant" shall mean that Servicer's software, hardware, computer systems,
procedures and processes shall perform Servicer's obligations under this
Agreement without interruption, delay, error or loss of functionality in any way
related to or arising from going from the twentieth to the twenty-first century,
or from data entry of records that begin with the year 2000.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by respective officers duly authorized to do so.
Executed by or on behalf of Servicer at
Executed on behalf of Company at Scottsdale, Arizona, this 25th day of
Miami, Florida, this 14th day of June, 1999
July, 1999
American Bankers Insurance Co. MBA, INC.
("Company") ("Servicer")
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------- -----------------------------------
Its: Senior Vice-President Its: CEO
Witness: Witness: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- --------------------------
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Schedule "A"
DESCRIPTION OF INSURANCE
Product/ Settlement Payment
Effective Date Line of Business Authority Authority
-------------- ---------------- --------- ---------
January 1, 1998 Mechanical Breakdown $3,500 $3,500
Insurance
&
Vehicle Service
Contracts
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Exhibit B
Claims Authority Processing Options
Option I - Claim payments are issued with account fluids.
* Account submits a weekly claims paid report, listing claim and expense
payments issued and voided. A copy of the required report format is attached.
(Exhibit A)
* A weekly check or ACH direct deposit would be issued for the net total of the
weekly claims paid report.
* Claim payments made in error that cannot be voided should be settled by the
account issuing a check to ABIC, providing payment was received based on prior
report.
* Account should obtain a completed W-9 form from all vendors/attorneys
providing services (ie: independent adjuster). The original should be forwarded
to American Bankers for tax reporting purposes.
Option II - Claim payments are issued with American Bankers (ABIC) check stock.
* ABIC would provide the account with a check stock or the account can design
checks to meet their format. Checks designed by the account must be in
compliance with the check specifications attached. (Exhibit B) Chase Manhattan
MUST approve the checks prior to payments being issued. A check number series
will be provided by ABIC.
* Account submits a weekly claims paid report, listing claim and expense
payments issued and voided. Check copies and voided/spoiled checks should be
attached to the weekly report. A copy of the required format is attached.
(Exhibit A)
* Claim payments made in error that cannot be voided should be settled by the
account issuing a check to ABIC.
* Account should contact American Bankers Claims Accounting Department to
request stop payment. The accounting department will notify the account when
confirmation of the stop payment(s) has been received and provide approval to
re-issue the check(s), if necessary.
* Account should obtain a completed W-9 form from all vendors/attorneys
providing services (ie; independent adjuster). The original should be forwarded
to American Bankers for tax reporting purposes.
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EXHIBIT A
WEEKLY CLAIMS PAID REPORT
CAUSE OF
CHECK NUMBER CHECK AMOUNT DATE ISSUED POLICY NUMBER LOSS DATE LOSS INSURED NAME PAYEE TYPE OF PAYMENT*
------------ ------------ ----------- ------------- --------- ---- ------------ ----- ----------------
XXXXX 9999.99 MMDDYY XX XXXXXXX MMDDYY XXXXX XXXXXXXXXX XXXXXXXXX X
Type of payment = P = Partial Payment, F = Final, S =Supplemental, E = Expense,
V = Void
Report should be in check number order. Please provide explanation for missing
checks.
All voided/spoiled checks must be attached to report.
For tax reporting we are required to obtain a W-9 for all vendors. Please
include a copy of the invoice for all vendor payments.
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EXHIBIT. B
CHASE
CHECK SPECIFICATION FORMAT ESSENTIALS
It is important to review and share this information with those involved in
creating your check stock. We require 50 VOIDED, BURSTED checks to test prior to
usage. The checks are reviewed to ensure the correct information is printed on
the face of the checks. The checks are then run through our check processing
equipment to test the quality as well as the accuracy of the micr line. We
retain two samples for our files. If the enclosed check spec sheet does not meet
your requirements, please notify me. CHASE MANHATTAN BANK DELAWARE (CMBD) will
test all checks as quickly as possible, usually within 3 work days. If checks
are not voided and bursted prior to reaching the bank, a delay in testing may
occur.
CHECK SIZE
Recommended Check Size 71/2" wide x 3" long
Maximum Check Size 81/2|" wide x 3 2/3" long
Minimum Check Sizes
6 digit check numbers 7" wide x 23/4" long
8 digit check numbers 71/4" wide x 23/4" long
10 digit check numbers 71/2" wide x 23/4" long
MICR ENCODING STRIP. AN AREA 5/8" DEEP BY THE LENGTH OF THE CHECK IS RESERVED
FOR MICR CHARACTERS. MICR CHARACTERS SHOULD BE WITHIN A 1/4" HIGH BAND WITH A
CLEAR BAND OF 3/16" ABOVE AND BELOW THIS STRIP. NO OTHER MAGNETIC INK PRINTING
MAY APPEAR IN THIS AREA.
SELF MAILERS
Self mailer checks are not recommended. Checks with perforations on all sides
are often not properly bursted and may not be efficiently processed through the
various processing points throughout the banking system.
CHECK NUMBER.
CMBD'S reporting system requires that check numbers be no less than 6 digits
and, no greater then 10 digits. The check number printed on your check must
match the check number printed in the MICR line.
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EXHIBIT C
DISASTER RECOVERY PLAN
A Disaster Plan is designed to create a state of readiness that will provide an
immediate response to any disaster that affects the physical plant and the
ability to use the facilities for normal business functions.
OBJECTIVE
The overall recovery objective is to restore critical functions Within 24-72
hours of a disaster occurrence. To facilitate recovery processing, critical
business functions are prioritized according to their impact on the day to day
operation. Functions related to claims, premium processing and cash management
have the highest priority.
PREMISE
The premise for the Disaster Recovery Plan is built upon the following:
* A disaster has occurred causing physical damage to the office facilities and
equipment resulting in the inability to use the facility to support normal
operations;
* Office facility is inaccessible following the disaster and may remain
inaccessible for an extended period of time;
* Computer equipment, software, data, documentation, supplies, etc., located in
the building have been damaged or destroyed.
DISASTER DESCRIPTION
A disaster is defined as "any unplanned event which results in the inability of
the corporation to support operations within the current environment, requiring
relocation of the functions to an alternate processing environment."
ASSUMPTIONS
The Disaster Recovery Plan is based on the following assumptions:
* Recovery procedures have been written such that recovery personnel are not
dependent on the availability of any one key individual.
* Various essential materials and resources are stored off-site or are readily
available.
- Vital records
- Hardware and software
- Critical forms
- Department and account/customer phone lists
- Disaster recovery plan
- Business procedures.
* Plan review, maintenance and updates are scheduled on a regular basis to
ensure that the plan remains current and viable.
* The off-site storage facility, where critical backup files and information are
stored, is intact and accessible.
* Organizations external to the corporation, such as customers, vendors,
government agencies and others, will be reasonably co-operative during the
recovery period.
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DISASTER RECOVERY PLAN OUTLINE
I. Telephone contact lists
A. Key employees by function or department
B. All Employees
C. Key vendors
1. Phone lines
2. Hardware/software
3. Alternate office space
D. All other vendors
II. Equipment and supplies
A. Priority functions/departments (24-72 hours)
1. Furniture
2. Office supplies
3. Hardware/software
4. Documentation-data files
5. Vendors
6. Personnel list
B. Non priority functions/departments
1. Furniture
2. Office supplies
3. Hardware/software
4. Documentation-data files
5. Vendors
6. Personnel list
III. Recovery team tasks
A. Determine area of disaster. Determine where recovery will occur
B. Determine telephone/data lines status. Necessary action to reroute/recover
C. Determine if data processing available or when it will be
D. Contact employees to inform where and when they need to report
E. Arrange recovery issues with disaster team leader to replace equipment,
supplies and recovery of files and data
IV. Set up work place and work force to carry out critical functions of
corporation
A. Monitor staff for fatigues, illness and safety
B. Monitor process and make changes where needed to ensure critical functions
are accomplished
V. Set up work place and work force to carry out the non-critical functions of
corporation should disaster last beyond week
VI. At end of disaster record what went wrong and what went right and modify
The Disaster Recovery Plan