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EXHIBIT 10.99
FLOOD INSURANCE SERVICES AGREEMENT
THIS FLOOD INSURANCE SERVICES AGREEMENT ("Agreement") is entered into
by and between INSURANCE MANAGEMENT SOLUTIONS, INC. ("Vendor"), St. Petersburg,
Florida, and FARMERS SERVICES CORPORATION ("Company"), a Nevada Corporation.
WHEREAS, Vendor has been designated by FIA as a "qualified performer"
for the provision of services to WYO Carriers under the NFIP; and
WHEREAS, Company wishes to engage the services of Vendor to administer
certain of Company's obligations under the WYO Flood Program in the state(s)
set forth herein.
NOW THEREFORE, IN CONSIDERATION OF the mutual covenants and agreements
hereinafter set forth, the parties hereto do covenant and agree as follows:
I. AUTHORITY OF VENDOR:
A. Appointment - Company hereby appoints Vendor to supervise and
administer its WYO Flood Program in those states ("Applicable
States") specified in the attached "Territory Schedule", attached
to and hereto made a part of this Agreement. Vendor hereby
accepts such appointment, and the grant of authority, and agrees
to carry out the resulting duties and responsibilities to the
best of its ability, knowledge, skill, and judgment, and in
accordance with the highest reasonably attainable standards of
quality generally utilized in the insurance and data processing
industries.
B. Authority - Company hereby grants Vendor the authority to act for
and on behalf of Company in matters required for Vendor to
properly supervise and conduct the handling of the aforesaid WYO
Flood Program, including the authority to collect and remit
premiums, process applications and other forms, issue policies,
and process claims, all in a manner consistent with, pursuant to
and as authorized by the provisions of the National Flood
Insurance Act of 1968 (as amended), the regulations of the NFIP,
FIA, FEMA and the terms of this Agreement.
II. SPECIFIC RESPONSIBILITIES OF VENDOR:
A. Policy Administration: - Vendor shall administer Company's WYO
Flood Program policies ("WYO Policy", or the plural, "WYO
Policies") and in accordance therewith shall be responsible for
the following policy administration functions: compliance with
community eligibility/rating criteria; policyholder eligibility
determination; WYO Policy issuance; WYO Policy endorsements; WYO
Policy cancellations; WYO Policy correspondence; payment of
agents' commissions to the Company for disbursement to its
agents; and, the receipt, recording, control, timely deposit, and
disbursements of premium funds in connection with the foregoing,
all in accordance with the WYO Flood Program Financial Control
Plan ("Financial Control Plan") requirements established by
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the FIA. Further, Vendor shall promptly reply to written and
telephone inquiries from policyholders and/or producers regarding
any WYO Policy administered pursuant to this Agreement.
B. Full Claim Service - Company shall have responsibility for the
administration and processing of WYO Policy claims ("Claim")
under this Agreement. Vendor shall provide "Full Claim Service",
which shall be defined as processing and administering a Claim
from the Claim's inception until closing. It is hereby agreed and
understood that Company may, upon ninety (90) days advance
written notice to Vendor, terminate the Full Claim Service
portion of this Agreement while leaving the remainder of duties
and obligations under this Agreement intact. In such event,
Company shall no longer be obligated to pay Vendor the Claims
Administration Fee as described in the attached Claims
Administration Fee Schedule.
The Claim shall be processed and administered in accordance with
the following procedures:
1. Processing. Vendor shall provide Claims processing in
accordance with the Arrangement and the Financial Control
Plan, and as further described in the Claims Administration
Schedule attached hereto. Vendor may also rely on information
and direction contained in the WYO Flood Program Claims
Manual, the FEMA Adjuster Manual, the Flood Insurance
(Agent's) Manual, the standard flood insurance policy, the
WYO Operational Overview, and/or other WYO Flood Program
instructional material.
2. Catastrophe Office. A catastrophe team may be engaged at the
discretion of the Vendor to provide Claims support. Vendor
shall coordinate activities and shall provide information to
the FIA or its designee whenever a flood insurance
catastrophe office is established.
C. Statistical Reporting - Vendor shall prepare and submit, to FIA,
monthly financial and statistical reports, reconciliations,
certifications, and statistical tapes on Company's behalf, in
accordance with WYO Flood Program Accounting Procedures and the
Transaction Record Reporting and Processing Plan ("TRRP Plan").
Vendor shall submit copies of all monthly reports to the Company.
D. Company Agents - Vendor shall provide to each Company Agent
appointed under this Agreement, a limited license to use Vendors
FloodWriter(C)(TM) software program, and a current flood zone
determination for any WYO Policy application submitted pursuant
to this Agreement. Further, excluding records required to be
maintained by Company in accordance with the FloodWriter(C)(TM)
software license, Vendor shall keep appropriate records, in
conformity with Internal Revenue Services regulations, for the
purpose of preparing 1099 reports for Company Agent's commissions
and Adjuster's fees paid by Vendor on behalf of Company. The
expense for the above services has been incorporated into the
Vendor's Monthly Service Fee.
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E. Time Standards - Vendor shall use its best efforts to adhere to
certain time standards for performance, as may be outlined and
amended from time to time within the FEMA/FIA Financial
Assistance/Subsidy Arrangement ("Arrangement").
III. PREMIUM COLLECTION AND ARRANGEMENT
A. Banking Arrangement - Vendor and Company shall establish banking
arrangements which comply with the Arrangement and other WYO
Flood Program requirements, and which will provide for the
establishment of a NFIP restricted account ("Restricted Account")
with Company as custodian, and a FEMA letter of credit ("Letter
of Credit"), with additional accounts as needed to facilitate
operations, all in conformity with FEMA/FIA guidelines. Company
shall grant specific Vendor employees check-signing authority on
any Restricted Account and the authority to initiate appropriate
drawdowns against Company's Letter of Credit, in order for Vendor
to act on Company's behalf in making disbursements for Company
liabilities established by the Arrangement, the WYO Flood
Program, and this Agreement. All such authorizations shall be in
writing and may be revoked, amended or modified at any time by
Company upon thirty (30) days advance written notice to Vendor.
B. Premium Remittance - Vendor shall be liable to the FIA for any
premiums Vendor has received on WYO Flood Program business
written under this Agreement. Vendor shall establish procedures
for a timely deposit and remittance of funds to the U.S. Treasury
via authorized automatic clearinghouse mechanism. Gross premium
collected by Vendor, for WYO Flood Program business written under
this Agreement, shall be remitted to the FIA by Vendor net of the
established NFIP Allowable Expenses. "Allowable Expenses" shall
mean a WYO Carrier's operating and administrative expenses.
C. Financial Data - Vendor shall maintain supporting documentation
for all bank accounts over which it has authority. At least
quarterly, Vendor shall prepare financial data, by state,
reflecting all debits and credits with respect to WYO Flood
Program business written pursuant to this Agreement, including
agents' commissions and Vendor's Servicing Fees paid, during the
preceding quarter.
IV. RECORDS AND AUDITS
Vendor shall keep adequate records of its performance of the services
provided pursuant to this Agreement, which shall be subject to review
by the Company during customary business hours and upon prior
notification, as agreed to by Vendor, which agreement shall not be
unreasonably withheld. Vendor shall retain such records for a period
of six (6) years unless otherwise agreed.
Company, and any insurance regulatory officials authorized by law,
shall have the authority to inspect and audit the books and records of
Vendor and its assignees which pertain to the business of Company,
including but not limited to policy files and loss and claim files, at
any time during reasonable business hours, and they may make copies or
extracts of any records pertaining
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thereto. Vendor shall provide auditors and inspectors of Company any
assistance that they may reasonably require in order for Company to
confirm compliance with the provisions of this Agreement. Vendor shall
notify Company of any audit or pending audit of Vendor by any person
or entity other than either of the parties or any of their agents. If
an audit by a regulatory authority results in Vendor or Company being
notified that Vendor or any of its subcontractors is not in
compliance with any generally accepted accounting principle or other
audit requirement, Vendor shall, at its own expense and within the
time period specified, comply with such regulatory authority.
V. EXPENSES AND FEES
A. Monthly Service Fee - Company shall pay Vendor a monthly
servicing fee ("Servicing Fee") as specified in the "Servicing
Fee Schedule", attached to and hereto made a part of this
Agreement.
B. Claims Administration Fee - In addition to the above Servicing
Fee, Company shall pay Vendor a claim administration fee ("Claim
Administration Fee") as specified in the "Claims Administration
Fee Schedule", attached hereto and made a part of this Agreement.
C. Additional Expenses - In accordance with the Arrangement, Company
shall be liable for operating, administrative and production
expenses, including but not limited to any State premium taxes,
agents' commissions, or any other expense of whatever nature
incurred by the Company in the performance of its obligations
under the Arrangement.
D. Vendor Expenses - In consideration of the Servicing Fees and
Claims Administration Fees paid to Vendor, Vendor shall pay the
general expenses of processing the WYO Flood Program Policies,
including those of policy administration, cash management, claims
processing and financial and transactional reporting.
E. WYO Flood Program Reimbursements - Any WYO Flood Program
Reimbursements made pursuant to the Arrangement, including, but
not limited to, those for Vendor's portion of unallocated loss
adjustments, the allocated loss adjustments, and for approved
special allocated loss expenses, shall be payable to Vendor upon
receipt by Company.
VI. ADDITIONAL SERVICES AND FEES
A. Flood Zone Determination Services - At no additional costs to
Company, Vendor shall provide flood zone determinations to the
Company or Company's Agents to assist in writing a flood policy
or policies to be placed with the Company.
B. Agent or Company Training - Vendor will provide, at no additional
cost to Company, four (4) training sessions per Agreement Year
and training material manuscripts suitable
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for reproduction by Company to Company or Company's agents. The
training materials provided by Vendor shall be in such form that
they are suitable for filing with the appropriate Departments of
Insurance and satisfy the requirements set forth in order for
continuing education credits to be awarded to those agents who
successfully complete the training session(s). Company agrees to
provide the training facility. Additional requests for training
by the Company will be charged at a rate of $125 per day plus per
diem and associated travel expense; reasonable per diem and
travel expense to be determined by the Company. Vendor will
require and Company agrees to provide thirty (30) days notice
for all training sessions, unless otherwise agreed.
C. Marketing Material - Company may use Vendor's previously
developed marketing or promotional materials, which Vendor may
customize and produce for Company at Company's expense.
D. Additional Fees and Service - Additional services not defined in
this Agreement may be provided as mutually agreed upon between
the Company and Vendor in writing.
E. Toll Free Telephone Number/Call Center - Vendor shall establish
and maintain toll free telephone number(s) on behalf of the
Company's WYO business, at no additional charge to Company.
Company shall own the toll free telephone number(s) which shall
be in the name of Company. Incoming calls shall be answered in
the name of the Company. The toll free telephone number(s) shall
be maintained by Vendor in good working order to accept all
inbound calls during the designated hours of operation, as
further described in the Claims Administration Schedule attached
to and made part of this Agreement. Best efforts will be made to
remedy any equipment or line failures in a timely manner.
VII. CONFIDENTIAL MATERIAL
A. Confidential and Proprietary Information -
1. During the course of performance under this Agreement, Vendor
will obtain or have access to certain proprietary information
of Company or its Affiliates or Subsidiaries including,
without limitation, names of contract owners, insureds,
beneficiaries, the identity and production of Farmers' Agents
and District Managers, compensation levels, the identity and
types of insurance purchased, and Farmers' distribution
network (the "Company Confidential Information"). Company
Confidential Information may also include rate manuals,
experience reports, and underwriting standards to the extent
such information applies specifically to Company's
policyholders and Policies. Each party acknowledges that all
such material is offered on a proprietary basis, for the sole
purpose of enhancing this Agreement. Further, each party
agrees that the original owner of these materials is deemed
to be the sole owner of these materials. Vendor will only
disclose Company Confidential Information to those persons
who require such information for the purpose of this
Agreement and how have been advised
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and agree to be bound by the terms of this Section.
2. During the course of information under this Agreement,
Company will obtain or have access to certain proprietary
information of Vendor. Each party acknowledges that all such
material is offered on a proprietary basis, for the sole
purpose of enhancing this Agreement. Further each party
agrees that the original owner of these materials is deemed
to be the sole owner for these materials. Company will only
disclose Vendor's Confidential Information to those persons
who require such information for the purpose of this
Agreement and who have been advised and agree to be bound by
the terms of this Section.
3. Each party further warrants, represents, undertakes and
agrees, for itself, its agents, employees and
representatives.
i. to keep the other party's Confidential Information
confidential to the extent it is not already available
publicly;
ii. to use the other party's Confidential Information only
as is necessary to carry out the terms and conditions
of this Agreement;
iii. not to disclose such information to others without the
prior written consent of the party who has claim to
the Confidential Information under the terms of this
Agreement. Such disclosure may be permitted if
required by applicable law or governmental regulations
or by order of a court of competent jurisdiction, in
which case prior to making such disclosure written
notice must be given to the party with legal right of
ownership under this Agreement. Such notice shall
describe in reasonable detail the proposed content of
such disclosure and shall permit the non-disclosing
party to review and comment upon the form and
substance of such disclosure; and
iv. upon the termination, to return to the other party or,
at its option, destroy all documents, electronic data
or records, and all other materials containing
Confidential Information. Vendor shall also require
all third parties with which it has contracted to
return to Company all Confidential Information. If a
party chooses to destroy rather than return
Confidential Information, it shall provide the other
party with a written, signed statement certifying that
all such Confidential Information has been destroyed.
B. Trademarks, Service Marks, Trade Names - Neither party shall use
or duplicate the name(s), trademark(s), servicemark(s), or trade
name(s) (whether registered or not) of the other party in public
releases or advertising or in any other manner unless such use or
duplication is specifically authorized in writing by the other
party, except that Vendor may include Company's name in a list of
clients/customers without such authorization.
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C. Agreement Terms - Neither party shall disclose information as to
specific terms of this Agreement, in particular any details about
the work performed or the Service Fees or claims Administration
Fees paid, without prior written consent of the other party.
D. Company's Records - Vendor shall maintain system integrity and
data security necessary to protect Company's records and data
from loss and damage and to protect against unauthorized
disclosure of Company's Confidential Information as described in
section VII(A) above.
E. Public Disclosure - The disclosure restrictions provided in this
section shall be extinguished at the time and to the extent that
the Confidential Information becomes generally available to the
public domain without the fault of either Vendor or Company.
VIII. COMMENCEMENT AND TERMINATION
A. Term of Agreement - This Agreement shall become effective on the
date that this document is executed by Company and by Vendor. The
initial term and subsequent terms shall expire on the last day of
the Arrangement Year ("Termination Date"), and this Agreement
shall automatically renew for additional one-year terms beginning
on October lst of each year, subject to the termination
provisions set forth below. The term Arrangement Year refers to
the annual policy issuing period established under the
Arrangement commencing on October 1st of one year and concluding
on September 30th of the following year.
B. Termination Without Cause - This Agreement may be terminated,
without cause, at any time after the initial one (1) year term by
either party upon written notice of termination to the other, not
less than ninety (90) days prior to the Termination Date.
C. Termination for Cause - Any party may immediately terminate this
Agreement for cause upon written notice to the other party in the
event of:
1. Bankruptcy, receivership, of either party, regardless of
whether any of these occur voluntarily or involuntarily; or
2. Failure by any party to fulfill a material obligation under
this Agreement, provided that such party has been notified in
writing of such failure and such failure continues without
cure for a period of ninety (90) days after written notice
thereof.
D. Accounting - Upon termination of this Agreement, Vendor shall,
within thirty (30) days following termination, fully account to
Company for all of its responsibilities and activities pursuant
to this Agreement.
IX. LIABILITY
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A. Limit of Liability - Vendor shall not be liable for any lost
profits, business goodwill, or other consequential, punitive,
special or incidental damages incurred by the Company, unless
such damages result from Vendor's gross negligence or willful
misconduct.
B. Indemnification of Company - Vendor shall indemnify, defend and
hold harmless Company, its officers, directors, agents, employees
and shareholders from and against any and all claims, suits,
hearings, actions, damages, liabilities, fines, penalties, costs,
losses or expenses, including reasonable attorney's fees, caused
by or resulting from any breach of this Agreement, misconduct,
error, omission, or other unauthorized act by Vendor or Vendor's
officers, directors, shareholders, agents or representatives,
except to the extent that such alleged misconduct, act, error,
omission or other unauthorized or improper act is primarily
attributable to Company. Vendor's indemnification under this
paragraph shall be in accordance with the limitations set forth
in this Agreement.
C. Indemnification of Vendor - Company shall indemnify, defend and
hold harmless Vendor, its officers, directors, agents, employees
and shareholders from and against any and all claims, suits,
hearings, actions, damages, liabilities, fines, penalties, costs,
losses or expenses, including reasonable attorney's fees, caused
by or resulting from any breach of this Agreement, misconduct,
error, omission, or other unauthorized act by Company or
Company's officers, directors, shareholders, agents or
representatives, except to the extent that such alleged
misconduct, act, error, omission or other unauthorized or
improper act is primarily attributable to Vendor.
D. Notice of Claim - All parties agree to promptly give the other
notice upon being notified or becoming aware of an allegation or
claim, which could give rise to a claim under this section.
X. ARBITRATION
A. Resolution of Disputes by Arbitration. The parties agree that all
controversies or disputes arising out of, in connection with, or
which relate to this Agreement or performance under this
Agreement, which cannot be resolved by mutual agreement, shall be
submitted to arbitration for resolution, as herein provided.
B. Selection of Arbitrators
1. Arbitration shall be by a panel of three neutral arbitrators,
each of which shall be an active or former officer of an
insurance administrator. In addition, each arbitrator shall
meet the requirements of, and shall agree to act in
accordance with, the Code of Ethics for Arbitrators in
Commercial Disputes sponsored by the American Bar Association
and the American Arbitration Association, except to the
extent that conduct prohibited by such Code is specifically
permitted by the terms of this Agreement.
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2. Within thirty (30) days after receipt of a demand for
arbitration, each party shall designate its arbitrator.
3. The arbitrators so designated shall, within thirty (30) days
of designation, select the third arbitrator. Arbitrators may
consult with the party nominating them as to acceptability of
persons under consideration for appointment by them as third
arbitrator. If the third arbitrator has not been selected
within that time, each arbitrator shall, within fifteen (15)
days, nominate three qualified individuals to serve as the
third arbitrator. The American Arbitration Association shall
appoint a third arbitrator from the persons nominated who
meet the qualifications described in this Agreement.
C. Arbitration Procedure.
1. Arbitration shall begin upon the filing by one of the parties
of a written demand for arbitration. Such demand shall
contain a statement setting forth the nature of the dispute,
the amount involved, if any, and the remedy sought. Such
demand shall be served upon the other party by certified
mail, return receipt requested.
2. Within sixty (60) days after the arbitration panel has been
finalized, the parties shall submit their dispute or
controversy to the panel of arbitrators for decision. The
site for the arbitration hearing shall be Los Angeles,
California, unless otherwise agreed to by the parties. The
rules for the gathering of evidence, taking of discovery or
depositions, if any, and the conduct of the hearing shall be
such rules as are included in the Commercial Arbitration
Rules of the American Arbitration Association as of the date
the arbitration panel was finalized, to the extent not
inconsistent with the terms of this Agreement. The parties
may agree to use modified rules to expedite the arbitration
process. The formal rules of evidence need not apply, in the
arbitrators' discretion, to the hearing.
3. All arbitrators shall participate in the deliberations and a
decision on any matter shall be by a majority of the
arbitrators.
4. The final decision of the arbitration panel shall be
submitted in writing, in such form as the arbitrators
determine, within thirty (30) days after the conclusion of
the arbitration hearing. The decision of the arbitrators
shall be final, except that an appeal may be taken only for
one or more of the reasons assigned for vacating an award by
the Uniform Arbitration Act as enacted by the State of
California, which law shall apply and govern the arbitration
process contemplated hereunder, to the extent not
inconsistent with this Agreement.
D. Costs of Arbitration Proceeding. Each party shall bear the cost
of its own arbitrator. The costs of the arbitration proceeding,
including the fees of the third arbitrator, shall be
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borne equally by the parties, unless the arbitration panel orders
otherwise. The panel, in its discretion, may also allocate and
award other reasonable out-of-pocket costs of the parties,
including reasonable attorney's fees, as it deems fair and
equitable under the circumstances.
E. Confidentiality. The parties agree, and the appointed arbitrators
shall agree as part of their acceptance of nomination, to keep
confidential and not disclose to persons not connected with the
arbitration the details of the arbitration proceeding and all
information received by them in connection therewith, except as
may be required by process of law.
XI. GENERAL AGREEMENTS
A. Applicable Law - This Agreement in all matters arising thereunder
shall be governed by and determined in accordance with the laws
of the State of California.
B. Entire Agreement - This Agreement, and any exhibits, schedules or
addenda attached hereto, contain all of the prior oral and/or
previously written agreements, representations, and arrangements
between the parties hereto. There are no representations or
warranties other than those set forth herein. No change or
modification of this Agreement shall be valid unless the same
shall be in writing and signed by all of the parties hereto. All
schedules, addendum of any kind, or attachments to this Agreement
shall be made a part of this Agreement and shall be subject to
all terms and conditions of this Agreement.
C. Company Warranties - Company warrants that its insurer affiliates
have entered into an agreement with FEMA pursuant to which they
are authorized to issue WYO Policies, and that they are licensed
to engage in the insurance business in all jurisdictions in which
it has duly authorized Vendor to issue WYO Policies or other
insurance coverage on the Company's behalf, or so deemed.
Further, Company warrants to Vendor that it and its insurer
affiliates will comply with the laws of the state or states
covered by this Agreement and with the rules and regulations of
all regulatory authorities having jurisdiction over their
activities, and shall, whenever necessary, maintain at their own
expense all required licenses to transact business in such
states, or so deemed.
D. Vendor Warranties - Vendor warrants to Company that it is duly
authorized and incorporated to transact the business of servicing
insurance companies. Further, Vendor warrants to Company that it
will comply with the laws of the state or states covered by this
Agreement and with the rules and regulations of all regulatory
authorities having jurisdiction over Vendor's activities, and
shall, whenever necessary, maintain at its own expense all
required licenses to transact business in such states.
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E. Invalidation - Should any part of this Agreement for any reason
be declared invalid, such decision shall not effect the validity
of any remaining portion, which remaining portion shall remain in
full force and effect as if the Agreement had been executed with
the invalid portion thereof eliminated. It is, therefore,
declared the intention of the parties hereto that each of them
will have executed the remaining portion of this Agreement
without including therein any such part, parts or portion which
may, for any reason, be hereafter declared void.
F. Construction of Agreement - The parties acknowledge that each
party and its counsel have reviewed and revised this Agreement
and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any
amendments or exhibits hereto.
G. Miscellaneous - Words of a gender used in this Agreement shall be
held to include any other gender, the words in a singular number
held to include the plural, when the sentence so requires.
Section headings are intended for purposes of description only
and shall not be used for purposes of interpretation of this
Agreement.
H. Notices - Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall
be given in writing by hand delivery, by overnight carrier, by
registered or certified mail or by facsimile transmission and
shall be addressed as follows:
As to Company Farmers Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇, Manager
As to Vendor Insurance Management Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
Notices sent by hand delivery shall be deemed effective on the
date of hand delivery. Notices sent by overnight carrier shall be
deemed effective on the next business day after being placed into
the hands of the overnight carriers. Notices sent by registered
or certified mail shall be deemed effective on the third business
day after being deposited into the post office. Notices sent by
facsimile transmission shall be deemed to be effective on the day
when sent if sent prior to 4:30 p.m. (the time being determined
by the time zone of the recipient) otherwise they shall be deemed
effective on the next business day.
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IN WITNESS WHEREOF, the parties hereto by their respective duly
authorized representatives have executed this Agreement to be effective as of
the ____day of________, 19___.
"Vendor" "Company"
INSURANCE MANAGEMENT SOLUTIONS, INC. FARMERS SERVICES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ [signature illegible]
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Date: January 14, 1999 Date: January 12, 1999
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SERVICING FEE SCHEDULE
Company shall pay Vendor a monthly Servicing Fee, for all Policy administration
services rendered by Vendor pursuant to this Agreement, in accordance with the
schedule below:
SERVICING FEE:
ARRANGEMENT YEAR POLICIES IN-FORCE (AS % OF WRITTEN PREMIUM)
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0 - 100,000 6%
100,001 - 250,000 5.75%
250,001 - + 5.5%
The Service Fee shall be retained from the Restricted Account as an Allowable
Expense payable to Vendor. Any reduction in Servicing Fees, resulting from the
attainment of a certain number of policies in-force as specified above, shall
only be applicable to WYO Flood Program business administered by Vendor after
Company's number of policies in-force reaches that certain specified level and
during the balance of that Arrangement Year. At renewal of the Agreement, the
Servicing Fee shall initially be based on the Company's number of policies
in-force during the prior Arrangement Year, and then modified on a quarterly
basis in accordance with the above Servicing Fee Schedule.
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CLAIMS ADMINISTRATION FEE SCHEDULE
In accordance with the corresponding claims service, Company shall pay Vendor
the following Claims Administration Fees:
1. Full Claim Service. Vendor shall retain 1.65% of Claim Catastrophe Fee.
The above Claims Administration Fees shall be retained from the Restricted
Account as an Allowable Expense payable to Vendor.
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TERRITORY SCHEDULE
Company hereby appoints Vendor to supervise and administer its WYO Flood
Program in the following "Applicable States":
The United States, its Territories and Possessions or such states that Company
or its insurer affiliates may be licensed by State law to engage in the
property insurance business and as may be mutually agreed upon in writing
between Company and Vendor.
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CLAIMS ADMINISTRATION SCHEDULE
Vendor will provide to Company the following claims administration services:
1. Vendor shared customer service representatives will be available each
business day by telephone at (800) numbers between 8:00 a.m. and 8:00 p.m.
(Eastern Time). Such customer service representatives will answer claims
administration related calls. If Vendor reasonably believes that a
catastrophic flood event has or is likely to occur, Vendor will (i)
activate, and maintain thereafter during the term of such event, a claim
reporting mailbox on the 1 (800) numbers to allow Company Issuing Agents
and Insureds to report claims at times other than those specified above,
and (ii) check such mailbox at the following intervals and respond to
emergency calls received: once between 6:00 a.m. and 8:00 a.m. (Eastern
Time) each business day; every two hours between 6:00 p.m. and 10:00 p.m.
(Eastern Time) each business day; and every two hours between 8:00 a.m.
and 10:00 p.m. (Eastern Time) each Saturday, Sunday and Vendor Holiday.
2. Upon receipt of claims by Company Agents or Insureds, Vendor will, either
through subcontracts with independent claims adjusters ("Independent
Adjusters") or through Company staff adjusters ("Company Adjusters"),
investigate and process such claims. Company will instruct Vendor as to
whether to use Independent Adjusters or Company Adjusters in the
investigating and processing of claims and Vendor will comply with such
instructions. Independent Adjusters will be approved by Company in advance
of performing any services with respect to Written Policies.
3. Independent Adjusters and Company Adjusters will service claims in
accordance with the FIA/NFIP Claims Service Instructions. Company will
promptly answer in writing any questions with respect to the
interpretation of such Instructions. Company will promptly resolve any
issues concerning Written Policies that Vendor is unable to resolve
through Vendor's standard procedures.
4. For each claim requiring a claim disbursement, Vendor will input the
amount of such disbursement into the WYO Claim System for processing.
5. Vendor will (i) print and mail checks for claims disbursements to the
Insured and provide a copy thereof to the associated Company Issuing
Agent, unless otherwise directed in writing by Company, and (ii) manage
the inventory of check stock and envelopes used in this process.
6. Vendor will conduct periodic audits of a random selection of the pending
and closed files of Independent Adjusters. Such audits will be conducted
once per calendar year, unless otherwise agreed in writing by Company and
Vendor. Such audits will consist of a review of the following: timeliness
of loss reporting; quality of investigation and supervision; expense
control; promptness of settlement and payments; and compliance with
procedures established by Company, Vendor, FEMA and FIA. The results of
such audits will be delivered by Vendor to Company.
7. On a weekly basis, Vendor will remit to an account designated by Company
any unallocated loss
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adjustment expenses paid pursuant to Article III.C.1 of the WYO
Arrangement, as applicable, net of amounts to be retained by Vendor
pursuant to Section III.
8. Vendor will notify Company of any pending or threatened litigation against
Company arising out of or related to any claim involving a Written Policy
of which Vendor becomes aware. Vendor will furnish documents, information
and personnel in connection with any litigation arising out of or related
to, claims by Insureds as reasonably requested by Company or its counsel,
at no additional charge except for Vendors' out-of-pocket costs for travel
and travel-related expenses, which costs will be subject to the
determinations of the Company. Company will have complete authority,
control and responsibility for any such litigation.
9. Vendor will update the adjuster file within the WYO Claim System with
those additions and deletions provided to Vendor from time to time by
Company.
10. Upon mutual agreement of the Company and Vendor, Vendor will produce
pre-loss notices for catastrophes that consist of at least 350 anticipated
losses. Vendor shall ship such notices via overnight courier to the
applicable Issuing Agents.
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