EXHIBIT 10.21
GENERAL AGENCY AGREEMENT
THIS AGREEMENT, made this 1st DAY OF August, 1996, between North Pointe
Insurance Company, referred to as the "COMPANY," and MS General Agency, Inc.,
hereinafter referred to as the "GENERAL AGENCY".
For consideration received and pursuant to GENERAL AGENCY'S request that
the underwriting facilities of COMPANY be made available to GENERAL AGENCY, it
is agreed that:
1. APPOINTMENT.
The COMPANY appoints GENERAL AGENCY with the authority and the power to
solicit, receive, accept, bind, decline, countersign, and endorse
insurance on such classes of risk as the COMPANY from time to time may
authorize by letter of instruction, underwriting bulletin or underwriting
guide, which shall become a part of this contract, collect premiums, and
generally with all powers and authority necessary to conduct a general
agency for the COMPANY in the state(s) listed in the attached Appointment
and Commission Addendum, incorporated herein by reference. This authority
shall not be delegated by GENERAL AGENCY to any one person or persons
except as is expressly authorized in writing by an offices of the COMPANY.
This appointment is not exclusive and the COMPANY may appoint others in
the same state(s).
2. ACCEPTANCE OF APPOINTMENT.
GENERAL AGENCY accepts the appointment, agreeing to perform faithfully the
duties thereof to the best of its knowledge, skill, judgment.
3. REPORTING.
GENERAL AGENCY agrees to make prompt reports to COMPANY in such manner as
may be required by COMPANY of risks written, including renewals and/or
endorsements, to make full and prompt reports of all losses incurred, as
well as of all other details relating to the business and affairs of
COMPANY; and to allow personal examination and audit by a representative
of COMPANY
of all papers, records, and accounts referring thereto.
4. COMMISSIONS.
(a) As full compensation for insurance placed with COMPANY, COMPANY will
pay commissions in accordance with the attached General Agent
Commission Schedule (Addendum 1) (hereinafter referred to as
"Commissions").
(b) GENERAL AGENCY agrees, either during the continuance of this
Agreement or after its cancellation to refund unearned Commissions
caused by policy cancellations or reductions, in each case at the
same rate at which such Commissions were retained by or paid to
GENERAL AGENCY.
(c) COMPANY reserves the unilateral right to revise the rates of
Commissions by giving not less than sixty (60) days written notice
to GENERAL AGENCY. Such change shall not affect Commissions on
Premiums written before the effective date stated in the written
notice.
(d) Uncollectible premiums arising from additional amounts due on
particular policies as a result of adjustable exposures or audits
may be turned back to COMPANY for direct collection and GENERAL
AGENCY shall not be responsible for such premium provided:
(1) GENERAL AGENCY has made every reasonable effort to obtain and
retain an adequate deposit premium; and
(2) GENERAL AGENCY has billed for and made at least three attempts
(including original billing) to collect the additional
premium; and
(3) Notifies COMPANY no less than forty-five (45) days and no more
than sixty (60) days after the month in which GENERAL AGENCY
issued the Audit Endorsement and provides to COMPANY proof of
its three attempts to collect along with proof
2
of two attempts by its subproducer to collect the additional
premium due.
(e) No Commission will be paid on items turned over to COMPANY for
collection, unless subsequently collected by GENERAL AGENCY.
5. PREMIUMS AND ACCOUNTING.
The following provisions are applicable to all insurance placed by GENERAL
AGENCY with COMPANY:
(a) GENERAL AGENCY guarantees payment of all monies due COMPANY on
business written under this Agreement, whether or not collected by
GENERAL AGENCY. There shall be no flat cancellations of policies or
coverage bound or issued unless specifically authorized in writing
by COMPANY.
(b) Premium accounts, as shown in COMPANY'S monthly statements, are due
and payable to COMPANY as rendered. Payment is due in COMPANY'S
office forty-five (45) days from the end of the statement month and
in no event shall credit for the payment of premiums so reflected be
extended for longer than 45 days from the end of the month for which
the monthly statement applies. Requirement for payment "as rendered"
can only be waived by the COMPANY.
(c) In the event of a dispute regarding to the dollar amount owed to
COMPANY for an individual policy or in total for a monthly account
statement, GENERAL AGENCY agrees to pay the full amount stated by
COMPANY. COMPANY and GENERAL AGENCY shall cooperatively investigate
and attempt to resolve any such discrepancies as quickly as
reasonably possible. If COMPANY and GENERAL AGENCY are unable to
amicably resolve the discrepancy, the dispute may be submitted to
arbitration in accordance with the terms of this Agreement.
3
(d) All premiums are the property of COMPANY and shall be held by
GENERAL AGENCY in a fiduciary capacity in trust for COMPANY until
delivered to COMPANY. The keeping of an account with GENERAL AGENCY
on COMPANY'S behalf, as a creditor and debtor account, is declared a
record memorandum of business transacted, and neither such keeping
of account nor alteration in commission amount, nor failure to
enforce prompt remittance, compromise, settlement, declaration of
balance of account nor suspension or cancellation of this General
Agency Agreement shall be held to waive assertion of the fiduciary
relationship as to Premiums collected by GENERAL AGENCY.
(e) The right of GENERAL AGENCY or any other person to receive
Commissions shall at all times be subordinate to the right of
COMPANY to offset or apply Commissions, including Profit Sharing
Commissions, against any indebtedness of GENERAL AGENCY to COMPANY.
This right of offset shall also apply against any liability incurred
by COMPANY to any person(s) by reason of any negligent or
unauthorized acts committed by GENERAL AGENCY.
(f) All accounting and underwriting records of GENERAL AGENCY pertaining
to Contracts written through COMPANY shall be subject to inspection
by COMPANY at any reasonable time during the continuance of this
Agreement and for three years after the termination hereof
6. INDEPENDENT CONTRACTOR STATUS.
COMPANY and GENERAL AGENCY agree that this General Agency Agreement is
best served when GENERAL AGENCY is an Independent Contractor for all
purposes. As an independent contractor, GENERAL AGENCY has the right to
exercise independent judgment as to time, place and manner of soliciting
insurance applications, servicing policyholders, and otherwise carrying
out
4
the provisions of the Agreement. Furthermore, GENERAL AGENCY will pay all
expenses in connection with its GENERAL AGENCY and has no authority to
incur any indebtedness on behalf of COMPANY.
GENERAL AGENCY'S authority hereby conferred does not extend to the
adjustment, compromise or settlement of claims or the waiver of any policy
condition in relation thereto except upon specific authority in writing
from COMPANY.
7. NOTIFICATION TO THE COMPANY.
GENERAL AGENCY agrees to forward to COMPANY copies of all binders,
policies, certificates and endorsements issued by GENERAL AGENCY, or to
otherwise notify COMPANY of all liability accepted within thirty (30) days
following the effective date of such liability. However, any risk which
GENERAL AGENCY submitted to COMPANY for approval because GENERAL AGENCY
was not given authority to quote that particular risk by COMPANY'S
Underwriting Guide or underwriting program and which was approved for
quote by COMPANY must be reported to COMPANY the same day that GENERAL
AGENCY binds that risk.
Losses reported to GENERAL AGENCY shall be reported to COMPANY the same
day as received by GENERAL AGENCY.
8. OWNERSHIP OF EXPIRATIONS.
If, upon cancellation of this Agreement, GENERAL AGENCY has promptly
accounted for and paid to COMPANY all Premiums and other monies and
securities collected or held for or on behalf of COMPANY for which GENERAL
AGENCY may be liable; the records of GENERAL AGENCY and the use and
control of expirations shall remain the property of GENERAL AGENCY;
otherwise, the right and title to the records and the use and control of
ownership of expirations shall be vested in COMPANY for sale, use or
disposal as it deems fit to reduce
5
the amount of indebtedness.
Regardless of who owns control of the expiration dates, COMPANY and
GENERAL AGENCY recognize that the policyholder, who pays the premium,
ultimately decides who services and underwrites their insurance.
Therefore, despite the language regarding the property rights and the
expiration dates of policies, the decision of the policyholder reflects
the ultimate proprietary interest of expirations.
9. SUSPENSION.
COMPANY may immediately suspend all or any part of the authority given the
GENERAL AGENCY under this Agreement:
(a) If COMPANY ceases to write Insurance in the GENERAL AGENCY'S
state(s), or
(b) If GENERAL AGENCY fails to satisfy any obligation under this
Agreement, or
(c) If any public authority cancels, suspends or declines to renew
GENERAL AGENCY'S license or certificate of authority, or
(d) On the effective date of sale, transfer, or merger of GENERAL
AGENCY'S business, or
(e) Upon attachment of GENERAL AGENCY'S business, records or accounts
pursuant to any order of court. Notice of suspension shall be given
in writing to GENERAL AGENCY and GENERAL AGENCY shall thereupon
immediately cease exercising the authority, as referenced in the
Notice of Suspension, until GENERAL AGENCY receives notice in
writing from COMPANY that the suspension is no longer applicable.
The provisions of this section shall in no way diminish the right of
COMPANY to cancel this Agreement, nor is suspension a required
pre-requisite to cancellation.
10. CANCELLATION.
This Agreement may be canceled:
6
(a) At any time by mutual agreement, or
(b) Automatically if any public authority cancels, suspends or declines
to renew GENERAL AGENCY'S license or certificate of authority, or
(c) Automatically on the effective date of sale, transfer, or merger of
GENERAL AGENCY'S business; or
(d) Automatically upon attachment of GENERAL AGENCY'S business, records
or accounts pursuant to any order of court or regulatory official.
(e) By either party upon sixty (60) days written notice to the other (or
such longer period as may be required by the agent cancellation law
of GENERAL AGENCY'S state of domicile).
Any unused policies, certificates, endorsements or binders, and other
unused supplies containing COMPANY'S name and/or logo trademarks shall be
the property of COMPANY and shall be accounted for and surrendered by
GENERAL AGENCY to COMPANY on demand.
11. GENERAL AGENCY'S OBLIGATIONS AFTER TERMINATION.
If upon cancellation of this Agreement GENERAL AGENCY is entitled to the
ownership, use and control of expirations, COMPANY at GENERAL AGENCY'S
election will continue outstanding insurance in force until the normal
expirations of such insurance subject to the following:
(a) COMPANY reserves all of its rights to cancel policies continued in
force for non-payment of Premium or for underwriting reasons.
(b) GENERAL AGENCY shall continue to service the outstanding policies,
process non-renewal notices and endorse the policies.
(c) With respect only to the servicing of policies continued in force
after the termination of this Agreement, GENERAL AGENCY shall
continue to be the recognized representative of COMPANY, subject to
all of the provisions of this Agreement, except that GENERAL
7
AGENCY shall not, without the prior approval of COMPANY, increase or
extend the term or condition of any policies.
(d) All Premium are promptly accounted for and paid to COMPANY by
GENERAL AGENCY.
(e) The policyholder has the ultimate right to decide who writes their
insurance.
12. INDEMNIFICATION.
(a) COMPANY will defend and indemnify GENERAL AGENCY against liability,
including the cost of defense and settlements, imposed by law for
damages sustained by policyholders and caused by acts or omissions
of COMPANY, provided GENERAL AGENCY has not caused or contributed to
such liability by any act or omission. GENERAL AGENCY agrees to
notify COMPANY promptly of any claim or suit against GENERAL AGENCY
and to cooperate and participate with COMPANY in any investigation,
settlement or defense of the claim or suit.
(b) GENERAL AGENCY agrees to indemnify and hold COMPANY harmless for any
damages resulting directly or indirectly from GENERAL AGENCY'S
negligence, acts or omissions, any violations of any insurance law
or insurance department regulation and/or breach of GENERAL AGENCY'S
obligations under this Agreement.
(c) GENERAL AGENCY agrees to maintain the following kinds of insurance
in at least the amount indicated and provide proof of such coverage
upon request by COMPANY:
COMPREHENSIVE GENERAL LIABILITY $ 500,000/OCCURRENCE
PROFESSIONAL ERRORS AND OMISSIONS $1,000,000/EACH CLAIM AND IN THE
AGGREGATE
13. GENERAL PROVISIONS:
(a) COMPANY shall not be responsible for expenses incurred by GENERAL
AGENCY,
8
whether on GENERAL AGENCY or COMPANY'S behalf, unless previously
authorized by COMPANY in writing.
(b) GENERAL AGENCY shall not broadcast, publish or distribute any
advertising materials or other matters, including marks or logos,
referring to COMPANY or to COMPANY'S Contracts of Insurance, without
first securing written approval from an officer of COMPANY.
(c) Upon suspension of GENERAL AGENCY'S authority or cancellation of
this Agreement COMPANY may, at its sole discretion, seek to collect
premiums directly from any producing agency or from the insured.
(d) This Agreement shall not inure to the benefit of any successor in
interest of GENERAL AGENCY nor may any interest under this Agreement
be assigned by GENERAL AGENCY without the prior written consent of
an officer of COMPANY.
(e) If COMPANY shall find it necessary to perform any duty otherwise
imposed on GENERAL AGENCY under this Agreement, or by course of
conduct to continue to service the outstanding Contracts of
Insurance, GENERAL AGENCY shall be liable for all reasonable costs,
including attorney's fees, incident thereto.
(f) It is further understood and agreed that the individual stockholders
of GENERAL AGENCY, who are officers of GENERAL AGENCY, shall
guarantee that all conditions of the Agreement and any supplement,
amendment, extensions or renewals thereof shall be binding upon them
severally and jointly in the same manner as upon GENERAL AGENCY.
(g) It is expressly understood and agreed that there are no promises,
agreements, or understandings other than those contained in this
written General Agency Agreement; that all prior General Agency
Agreements with COMPANY, whether written or oral, are hereby
9
superseded; and that no general agency, employee or other
representative of COMPANY has any authority to obligate COMPANY by
any terms, stipulations, or conditions not herein expressed unless
the same be in writing from an officer of COMPANY and attached to
and made a part of this Agreement.
(h) Notices under this Agreement shall be given by delivering or mailing
a copy to the party entitled to notice. Notice by mail shall be
deemed sufficiently given when mailed by certified mail, postage
prepaid, addressed to COMPANY, or to GENERAL AGENCY at the last
known address of GENERAL AGENCY according to COMPANY'S records.
(i) GENERAL AGENCY shall comply with all applicable laws or regulations
of the state(s) in which it may operate with respect to the
procurement and placement of insurance and shall provide the
appointing authority in each state with all required filings,
affidavits, and reports; and agrees to collect and to pay all
premium taxes or other required taxes or fees that may become due
any taxing authority within the boundaries of any state or
commonwealth.
(j) GENERAL AGENCY agrees to assist COMPANY in the prompt reporting of
losses on business written and in a reasonable amount of subsequent
investigation as may be required by COMPANY; but GENERAL AGENCY'S
authority is limited to ascertaining and reporting facts to COMPANY.
GENERAL AGENCY has no authority to bind COMPANY on any matter
relating to the acknowledgment or acceptance, or compromising or
payment of any losses, unless directed to do so in writing by
COMPANY. No action or inaction of COMPANY shall serve as a waiver of
this limitation.
(k) If any dispute or disagreement shall arise in connection with any
interpretation of this Agreement, its performance or nonperformance,
or the figures or calculations used, the parties shall make every
effort to meet informally and settle such dispute in good faith.
10
However, if this fails to resolve the dispute, then it is agreed
that such differences shall be submitted for arbitration to three
disinterested executive officers of casualty insurance companies
incorporated in the United States, one to be chosen by COMPANY, one
by GENERAL AGENCY, and the third by the two so chosen; and a
decision of the majority of the three shall in each case be final.
The arbitrators shall be required to decide matters submitted to
them upon the customs and usages of the business in a spirit of
equity rather than of technicalities or legal requirements. Each
party shall pay the expense of its own arbitrator and a pro rata
portion of the expense of the third arbitrator. Unless otherwise
agreed by the parties hereto, the seat of arbitration shall be
Southfield, Michigan. No arbitration is required with respect to
Premiums due COMPANY and COMPANY can proceed with Civil action
without arbitration.
(l) If a conflict exists as to which General Agency is authorized to
represent an existing or prospective policyholder with respect to a
contract, the policyholder's written statement designating their
agent and COMPANY'S general agency shall control.
(m) COMPANY reserves the right to directly cancel any policy or binder
at any time. In the event of cancellation, COMPANY shall notify
GENERAL AGENCY of such cancellation.
(n) It is GENERAL AGENCY'S sole responsibility to notify the insured of
policy expiration and send notice of non-renewal when such notice is
required by law.
(o) Upon request by COMPANY, GENERAL AGENCY shall submit to GENERAL
AGENCY a financial statement of condition.
(p) Upon request by COMPANY for due cause, GENERAL AGENCY shall sign a
UCC Security Agreement and filing forms regarding expirations.
IN WITNESS WHEREOF, COMPANY has signed this Agreement by its authorized
official and
11
GENERAL AGENCY has signed this Agreement to be effective as of the day, month
and year first above written.
COMPANY
ATTEST: /s/ ▇▇▇▇▇▇▇ ▇. June BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- ------------------------------
DATED:10-17-96 DATED: 10-17-96
GENERAL AGENCY
ATTEST: /s/ ▇▇▇ ▇▇▇▇▇ BY: /s/ ▇▇▇▇ ▇▇▇, Pres.
---------------------- ------------------------------
DATED: 10-04-96 DATED: 10/4/96
12
ADDENDUM 1
GENERAL AGENT COMMISSION SCHEDULE
I. Applies to business developed via MS General Agency, excluding North
Pointe Insurance Company direct agents.
General Agency issued policies: 22.5%
Company issued policies: 17.5%
II. Commission on North Pointe policies produced by other general agents, with
underwriting and policy issuance performed by MS General Agency shall be
7.5% over other general agent's commission, not to exceed 28.5% gross the
commission.
III. MS General Agency should it produce profitable volume shall be entitled to
contingency/profit sharing per the attached contingent commission
schedule, (Exhibit 1).
COMPANY
ATTEST: /s/ ▇▇▇▇▇▇▇ ▇. June BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------- ----------------------------
DATED: 10-17-96 DATED: 10-17-96
GENERAL AGENCY
ATTEST: /s/ ▇▇▇ ▇▇▇▇▇ BY: /s/ ▇▇▇▇ ▇▇▇, Pres.
------------------- ----------------------------
DATED: 10-4-96 DATED: 10-04-96
EXHIBIT 1
AGENCY PROFIT SHARING / CONTINGENCY SCHEDULE
GENERAL AGENCY CONTINGENCY
Applies to business developed by MS General Agency, excluding North Pointe
direct agent production.
1. Total North Pointe direct written premium less returns and cancellations.
2. Loss ratio % is calculated by using paid commercial policy claims and
reserves on claims reported but not yet paid, divided by direct premium
earned less returns and cancellations.
3. Eligibility: Minimum volume required is $250,000 for the calendar year,
commencing in 1997. For premiums written in 1996, the minimum volume shall
be $100,000.
4. Calculation of contingency is based upon calendar year.
5. MS General Agency's Contingency Bonus is calculated, as follows:
AGENCY DIRECT
PREMIUM LOSS CONTINGENT LOSS CONTINGENT
WRITTEN VOLUME RATIO COMMISSION RATIO COMMISSION
-------------- ----- ---------- ----- ----------
$250,000 to $350,000 50% 1.0% 40% 1.5%
$350,001 to $500,000 50% 2.0% 40% 3.0%
$500,001 to $750,000 50% 3.0% 40% 4.0%
$750,001 to $1,000,000 50% 3.5% 40% 4.5%
over $1,000,000 50% 4.0% 40% 5.0%
Loss ratio on chart refers to a loss ratio of 50% or less, or 40% or less.
On July 1 of each year (commencing July 1, 1998), the Company will calculate the
loss ratio on premiums earned through December 31 of the year ending 18 months
prior, on a cumulative basis (based upon premiums earned the three (3) years
prior to said December 31).
Changes or termination of this Agreement may be made by mutual agreement of MS
General Agency and North Pointe Insurance Company.
COMPANY
ATTEST: /s/ ▇▇▇▇▇▇▇ ▇. June BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- ------------------------
DATED: 10-17-96 DATED: 10-17-96
GENERAL AGENCY
ATTEST: /s/ ▇▇▇ ▇▇▇▇▇ BY: /s/ ▇▇▇▇ ▇▇▇, Pres.
------------------- ------------------------
DATED:10-4-96 DATED: 10-04-96