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EXHIBIT 10.8
STANDARD
POLICY LIFE CYCLE
SERVICES AGREEMENT
CLARENDON
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POLICY LIFE CYCLE
SERVICES AGREEMENT
CLARENDON
This Policy Life Cycle Services Agreement ("Agreement") is effective
as of the 15th day of August, 1996 ("Effective Date"), by and between Millers
Integrated Claims Resources, Inc. dba ▇▇▇▇▇▇, a Texas corporation with
principal offices at ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("MiliRisk"), and
Blanch Wholesale Insurance Services, Inc. and Blanch Insurance Services, Inc. a
Texas corporation, having their principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Customer").
Whereas, Customer has entered into a General Agency Agreement (the
"GAA") with Clarendon National Insurance Company ("Clarendon") to administer
certain insurance policies previously issued by Allstate Insurance Company
("Allstate");
Whereas, Customer is desirous of MiliRisk providing Policy Life Cycle
Services for which Customer is responsible under the GAA, as set forth in this
Agreement;
Whereas, MiliRisk wishes to provide such Services for Customer; and
Whereas, the parties hereto wish to reduce their Agreement to writing.
Now, therefore, for and in consideration of the premises set forth
below and other good and valuable consideration, the receipt and sufficiency of
which is expressly acknowledged, Customer and MiliRisk hereby agree as follows:
ARTICLE 1. SERVICES
The "Services" to be performed by MiliRisk are set forth in Exhibit I
to this Agreement.
ARTICLE 2. TERM
2.1 The term of this Agreement shall commence on the Effective
Date and shall have a "Minimum Term" of 36 full calendar
months unless terminated earlier pursuant to the provisions
of this Agreement. The Agreement shall automatically be
renewed and extended after the conclusion of the Minimum Term
for an additional term or terms of 36 months unless
terminated pursuant to the provisions of Article 8.
2.2 The "Implementation Period" shall begin on the Effective Date
of this Agreement and shall end on the date MiliRisk notifies
Customer that MiliRisk is capable of receiving all future
applications on behalf of Customer. During the Implementation
Period, MiliRisk shall prepare an analysis of the lines of
business included within the terms of this Agreement.
Customer shall assist MiliRisk
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during such "Implementation Period" with the gathering of
appropriate data, information, background, and other facts as
needed by MiliRisk to enable MiliRisk to perform the Services
enumerated in Exhibit I of this Agreement.
2.3 Notwithstanding the foregoing provisions relating to the
Minimum Term, and any subsequent renewal terms, should
Customer terminate or repudiate this Agreement prior to the
end of the Minimum Term without cause provided for under
Sections 8.2 or 8.3, Customer shall pay a termination fee to
MiliRisk within thirty (30) days after the date it attempts
to terminate or repudiate this Agreement. A termination fee
totaling $2 million shall be due MiliRisk, if Customer's
attempt to terminate or repudiate this Agreement occurs
within the first 3 months of the Minimum Term. If the attempt
to terminate or repudiate this Agreement occurs after the
first 3 months, but before the end of the 6th month, a
termination fee is due MiliRisk in the amount of $1.75
million. If the attempt to terminate or repudiate this
Agreement occurs after the 6th month, but before the end of
the 9th month, a termination fee is due MiliRisk in the
amount of $1.5 million. If the attempt to terminate or
repudiate this Agreement occurs after the 9th month, but
prior to the end of the 12th month, a termination fee is due
MiliRisk in the amount of $1.25 million. If the attempt to
terminate or repudiate this Agreement occurs after the 12th
month, but prior to the end of the 15th month, a termination
fee is due MiliRisk in the amount of $1 million. If the
attempt to terminate or repudiate this Agreement occurs after
the 15th month, but prior to the end of the 18th month, a
termination fee is due MiliRisk in the amount of $750,000. If
the attempt to terminate or repudiate this Agreement occurs
after the 18th month, but prior to the end of the 24th month,
a termination fee is due MiliRisk in the amount of $500,000.
If the attempt to terminate or repudiate this Agreement
occurs after the 24th month, but prior to the end of the 36th
month, a termination fee is due MiliRisk in the amount of
$250,000. If the attempt to terminate or repudiate this
Agreement occurs after the 36th month, MiliRisk shall not be
entitled to a termination fee. The termination fees
references in this section are in addition to and not in lieu
of other compensation due to MiliRisk under this Agreement.
ARTICLE 3. DUTIES OF MILIRISK
3.1 During the Implementation Period, MiliRisk shall design,
construct, and implement the following software systems:
1. "Offer-to-write" sub system
2. Tracking system for follow-up, rejection
and acceptance of recipients of "offer-to-
write"
3. Conversion system (Allstate data to
Clarendon data)
4. Processing system to support the Services
enumerated in Exhibit I
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In addition, the Implementation Period will be used to
assemble the staff, arrange for furniture and fixtures, and
prepare for the start of business. All procedures required to
conduct business as well as the requisite staff training will
occur during this period.
In addition, the Implementation Period will be used to
assemble the staff, arrange for furniture and fixtures, and
prepare for the start of business. All procedures required to
conduct business as well as the requisite staff training will
occur during this period.
3.2 MiliRisk shall dedicate the necessary human, equipment and
computer resources to provide and, during the term of this
Agreement, will provide Customer with the Services enumerated
in Exhibit I of this Agreement for the Lines of Business and
States specified in Exhibit I.
3.3 MiliRisk shall designate an employee to act as liaison
with Customer to facilitate the provision of the Services.
3.4 MiliRisk shall maintain the confidentiality of data or
information which is the property of Customer and/or
Clarendon, and which is directly accessible to MiliRisk in
the implementation and performance of the Services.
3.5 MiliRisk shall maintain complete, accurate and orderly
underwriting books, files, records and accounts of all
transactions in accordance with generally accepted insurance
and accounting practices. MiliRisk shall be responsible for
the timely remittance of all premiums due Clarendon, whether
collected or not, which premiums shall be calculated from the
effective date of coverage under the applicable policies.
3.6 MiliRisk shall maintain permanent copies of all policies and
applications and correspondence related to the policies.
MiliRisk shall not destroy these permanent copies without the
written permission of the Customer for a period of at least
five (5) years from the termination date of the applicable
policies, or the period specified by the applicable state
statute regulating preservation of records, whichever is
longer. MiliRisk may, at its discretion, use magnetic,
optical, and other types of technology to store such data.
3.7 MiliRisk acknowledges and agrees that Clarendon, being at
risk and having ultimate responsibility for the policies to
be administered by MiliRisk, shall at all times have ultimate
discretion with respect to all matters pertaining to the
policies.
ARTICLE 4. DUTIES OF CUSTOMER
4.1 Customer shall provide the data necessary, in a timely manner
and in a format acceptable to MiliRisk, for MiliRisk to
perform the Services defined in Exhibit I
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of this Agreement. Customer acknowledges that delays in
delivery of required information will result in a similar
delay in fulfilling Services.
4.2 Customer acknowledges that MiliRisk assumes no risk or
responsibility for Customer's claims administration, claim
payments or recovery within this Agreement.
4.3 Customer will provide MiliRisk with the policy jackets and
the information and specifications necessary to perform the
Services defined in Exhibit I of this Agreement, including
but not limited to Customer's banking institution account
information, corporate and subsidiary logos (if applicable),
style and specifications of printed documents such as
insurance policies, and all other information and
specifications necessary to perform the Services.
4.4 Customer shall appoint a Project Manager with sufficient
authority within Customer's organization to facilitate
Customer's role as MiliRisk performs the Services enumerated
in Exhibit I of this Agreement.
ARTICLE 5. AUDIT PROVISIONS
5.1 MiliRisk shall maintain records of amounts billable to and
payments made on behalf of Customer. In addition, MiliRisk
shall maintain records of the data utilized to perform the
Services defined in Exhibit I of the Agreement until five
years following the termination date of the applicable
policies, or the period specified by the applicable state
statute unless such records are earlier returned to Customer.
MiliRisk agrees to provide reasonable supporting
documentation concerning any disputed invoice amount to
Customer within 15 days after Customer provides written
notification of the dispute to MiliRisk. Customer and an
auditor selected by Customer shall have access to all such
records upon mutually agreed upon prior notice for the
purposes of audit and verification during normal business
hours during the full term of this Agreement and during the
respective periods in which MiliRisk is required to maintain
such records. MiliRisk shall provide access to its books,
records sand bank accounts to the insurance department of the
State of Florida in a form usable by the department.
ARTICLE 6. PRICE AND PAYMENT
6.1 Customer agrees to pay Service Rates as specified in Exhibit
II hereto.
6.2 Except for Service Rates which are based upon a percentage of
direct written premium (the minimum of which shall be
adjusted in accordance with Exhibit II), the Service Rates in
Exhibit II hereto may be changed effective as of each
anniversary of the Effective Date during the existence of
this Agreement by the percentage increase in the United
States Customer Price Index for all Urban Users
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(CPI-U)published by the United States Bureau of Labor
Statistics, for the immediately preceding calendar year. In
the event a vendor supplying any service or product to
MiliRisk required for MiliRisk to provide the Services to
Customer increases its rates charged to MiliRisk, MiliRisk
may increase the contracted rates set forth herein to include
such increased costs.
6.3 The Service Rates may increase if changes in the Services
mutually agreed to in writing substantially alter the
servicing personnel, equipment, or result in the servicing
being done on a different system.
6.4 When Customer requests MiliRisk personnel to travel to any
location for the purpose of performing work under this
Agreement, the Customer will, in addition to the charges
specified for Services, pay MiliRisk for all reasonable
travel, living and out-of-pocket expenses.
6.5 Customer agrees to pay all tariffs and taxes that are now or
may become applicable to the Services rendered hereunder, any
equipment used by MiliRisk solely for Customer communication
line, its use, lease, operation, control, transportation or
value pursuant to this Agreement, or as measured by payments
made by Customer
6.6 Customer agrees to pay 50% of the advance set forth in
Exhibit II for implementation upon execution of this
Agreement. Remaining portion of the advance will be due at
the end of the Implementation Period.
6.7 Service fees for Services will be due and payable 15 days
after the close of a calendar month beginning 15 days after
the end of the month this Agreement is executed.
6.8 Customer agrees that MiliRisk will have the right to
renegotiate the Service Fees in the event of statutory,
regulatory, or judicial change that require additional
activities not contemplated at the inception of this
Agreement.
ARTICLE 7. LICENSE, TRADE SECRET AND PROPRIETARY RIGHTS
7.1 Although MiliRisk from time to time may use its own
proprietary computer software products in the performance of
the Services enumerated in Exhibit I of this Agreement, this
Agreement does not grant a license to Customer for the use of
any software products.
7.2 This Agreement grants to Customer no right to possess or
reproduce, or any other interest in, the computer software
programs performing all or any part of the Services or their
specifications in any tangible or intangible medium. Customer
may not mortgage, hypothecate, sell, assign, pledge, lease,
transfer, license or sublicense the computer software
programs performing all or any part of the Services, nor
allow any person, firm, or corporation to transmit, copy or
reproduce
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the computer software programs performing all or any part of
the Services or their specifications in whole or in part. In
the event Customer shall come into possession of the computer
software programs performing all or any part of the Services,
Customer shall immediately notify MiliRisk and return the
computer software programs performing the Services and all
copies of any kind thereof to MiliRisk upon MiliRisk's
request.
7.3 Customer promises and agrees not to disclose or otherwise
make computer software programs performing all or any part of
the Services available to any person other than employees of
Customer required to have such knowledge for normal use of
them. Customer agrees to obligate each such employee to a
level of care sufficient to protect the computer software
programs performing all or any part of the Services from
unauthorized disclosure. THE OBLIGATION OF CUSTOMER UNDER
THIS ARTICLE SHALL CONTINUE AFTER THIS AGREEMENT IS
TERMINATED.
7.4 MiliRisk warrants and represents that it owns, or is licensed
with respect to, all software it will employ in the
performance of this Agreement. In the event this Agreement is
terminated, MiliRisk will grant a license to Customer and/or
Clarendon to use the software which MiliRisk employs in the
performance of this Agreement to the extent MiliRisk is not
otherwise prohibited from doing so by contract or by
operation of law. MiliRisk shall use its best efforts to
deliver the software, as well as all necessary manuals, to
the Customer immediately upon delivery of data to the
Customer.
ARTICLE 8. TERMINATION
8.1 Either party may terminate this Agreement at the expiration
of the Minimum Term set forth in section 2.1 provided the
other party receives at least six (6) months prior written
notice of termination. Termination without cause during any
renewal term would also require six months notice.
8.2 Either party may terminate this Agreement upon breach by the
other party of any one or more of the terms and conditions of
this Agreement or the related exhibits, provided that the
party in breach is notified in writing by the other party of
the breach and the breach is not cured or a satisfactory
resolution agreed upon in writing within thirty (30) days of
such written notification, or if such breach is non-monetary
and is of such a nature that it cannot reasonably be cured
within such notice period, if the breaching party has not
within such time commenced to cure same and does not
diligently continue to and actually care same within a
reasonable period thereafter. The terms and conditions of
MiliRisk referred to in this Section 8.2 shall include, but
shall not be limited to:
(a) the obligation to deposit, report and remit
premiums;
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(b) the obligation to remit return premiums to insureds
when due;
(c) the obligation to process all policies,
endorsements, and notices of cancellation or
non-renewal, pursuant to Clarendon's underwriting
guidelines or other instructions;
(d) the obligation to observe and comply with applicable
laws, regulations, rules and rates affecting the
transaction of business hereunder; and
(e) the obligation to provide any other Services under
this Agreement.
8.3 In the event either party makes a general assignment for the
benefit of creditors or files a voluntary petition in
bankruptcy or petitions for reorganization or arrangement
under the bankruptcy laws, or if a petition in bankruptcy is
filed against either party and remains undismissed for a
period of thirty (30) days, or if a receiver or trustee is
appointed for all or any part of the property and assets of
either party, the other party may terminate the Agreement
immediately. MiliRisk shall have the option to terminate this
Agreement within 60 days of written notification in the event
that the annualized policy count does not exceed 50,000
policies.
8.4 This Agreement shall terminate automatically if the GAA is
terminated for any reason other than because of breach by the
Customer. The termination fee described in section 2.3 still
applies to this situation.
8.5 Rights Upon Termination. Upon expiration or termination of
this Agreement:
(a) The obligations of the Customer and MiliRisk to the
date of termination shall be discharged promptly.
(b) MiliRisk shall promptly return to the Customer any
policies, forms or other supplies imprinted with the
Customer's or Clarendon's name, regardless of who
incurred the cost for same.
(c) MiliRisk shall, at its sole expense, run off the
in-force business to normal expiration in accordance
with the provisions of this Agreement. The Customer,
however, may elect to run off the in-force business
itself or through its designee, in which case it may
do so and if this Agreement is terminated because of
a breach by MiliRisk, MiliRisk shall nevertheless be
liable for all expenses of the run-off operation;
however, if the termination is for a reason other
than as provided in Section 8.2, the Customer,
rather than MiliRisk, shall bear the expenses of the
run-off if it elects to run off the business itself
or through its designee. The term "run-off" as used
herein shall mean confirming coverage under policies
to claims adjusters, administering the in-force
policies and any required renewals thereof and
endorsements thereto, providing reports as required
by this Agreement,
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paying premium to Clarendon and return premium to
the insureds, collecting all sums due to or from
agents, including return commissions, and such other
activities as required of MiliRisk under this
Agreement.
(d) If MiliRisk is unable, or refuses, to run off the
in-force policies, or if the Customer elect to run
off such policies itself or through its designee,
MiliRisk shall promptly provide the Customer,
without charge, with a tape back-up of all data
files (the "Data").
(e) In any proceeding brought by the Customer or
Clarendon to recover premiums or return premiums or
other funds due hereunder to Clarendon or insureds
under the policies (hereinafter called "trust
funds"), MiliRisk shall be obligated to account on
its own records for such trust funds and to pay all
sums for which it cannot account. In any such
proceeding it shall be conclusively presumed that
MiliRisk is liable for trust funds which have not
been timely paid, and MiliRisk waives (i) any right
it may have to assert any counterclaim, crossclaim,
or set-off of any kind in the proceeding, and (ii)
any claim or defense based on or relating to its use
of the Customer's or Clarendon's reporting
procedures as provided for in this Agreement, or any
modification thereof. MiliRisk shall retain the
right to bring any separate proceeding it deems
appropriate to recover on any claims it may have, as
a creditor or otherwise, but the pendency of any
such proceeding shall not delay, hinder or defeat
the Customer's or Clarendon's right to promptly
recover any trust funds then due or to levy upon any
judgment therefrom.
ARTICLE 9. LIMITATION OF LIABILITY AND REMEDIES
9.1 If data is processed in error due to an error or defects in
the Services provided by MiliRisk, then upon MiliRisk
receiving notice of such error or defect, MiliRisk shall
reprocess such data without charge to Customer.
9.2 MiliRisk shall indemnify, protect, defend and hold Customer,
its officers, directors, shareholders and employees harmless
from and against any and all losses, damages, liabilities,
fines, settlements, penalties and judgments (including
reasonable costs and attorney's fees) (herein "Damages")
arising out of or resulting from the negligent, willful or
intentional acts of MiliRisk performed in connection with
this Agreement or arising from a breach of this Agreement by
MiliRisk. Customer shall indemnify, protect, defend and hold
MiliRisk, its officers, directors, shareholders and employees
harmless from and against any and all Damages arising out of
or resulting from the negligent, willful or intentional acts
of Customer performed in connection with this Agreement or
arising from a breach of this Agreement by Customer. This
indemnify shall survive the earlier expiration or termination
of this Agreement.
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9.3 MiliRisk's liability to Customer for Damages arising from
errors and defects in performing the Services (whether the
damage is based in tort or contact, law or equity) is limited
to an amount not to exceed the usual and customary charges
paid to MiliRisk under this Agreement in any one month of
this Agreement plus costs and attorney's fees as provided in
Section 10.11. Except as provided in Section 2.3, for any
breach of this Agreement which does not result in or
constitute a termination or repudiation of this Agreement,
Customer's liability to MiliRisk for Damages is limited to an
amount not to exceed the usual and customary charges paid to
MiliRisk under this Agreement in any one month of this
Agreement plus costs and attorney's fees as provided in
Section 10.11.
9.4 Customer's remedies and MiliRisk's liability for breaches of
this Agreement and errors or defects in the delivery of
Services are limited to the remedies and liabilities set
forth in section 8.2, 9.1, 9.2 and 9.3 of this Agreement.
MiliRisk's remedies and Customer's liability for breaches of
this Agreement are limited to the remedies and liabilities
set forth in section 2.3, 8.2, 9.2 and 9.3 of this Agreement.
ARTICLE 10. GENERAL
10.1 The parties shall not be liable or deemed to be in default
for any delay or failure in performance under this Agreement
or interruption of Service resulting, directly or indirectly,
from acts of God, civil or military authority, labor
disputes, shortages of suitable parts, materials, labor or
transportation or any similar cause beyond the reasonable
control o the parties.
10.2 Customer and MiliRisk agree that, while this Agreement is in
effect, neither will directly or indirectly induce any
employee of the other to terminate his or her employment, nor
will either, without prior written consent of the other,
offer employment to any employee of the other or to former
employees during the six (6) month period immediately
following such employee's termination. Notwithstanding the
foregoing, Customer shall not be bound by this provision if
MiliRisk withdraws from or eliminates its policy life cycle
service business entirely.
10.3 All notices which are required to be given or submitted
pursuant to this Agreement shall be in writing and shall be
either delivered in person or sent by certified mail, return
receipt requested, to the address set forth herein or to such
other address as the parties may from time to time designate
in writing for such purposes. Notices shall be deemed to have
been given at the time when personally delivered or, if
mailed in a certified post-paid envelope, upon the fifth day
after the date such notice shall be postmarked. All notices
to MiliRisk shall be addressed to the attention of the Chief
Financial Officer.
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10.4 The parties covenant and promise not to disclose the terms
and conditions of this Agreement to any third party (except
Clarendon) unless expressly agreed to by the parties.
Notwithstanding the foregoing, the parties agree that
disclosure may be made to any auditors, regulators, carriers,
or reinsurers on a need to know basis only without prior
consent.
10.5 This Agreement and any Exhibits made a part hereto: (a)
constitute the entire Agreement between the parties and
supersede and merge any and all prior discussions,
representations, negotiations, correspondence, writings and
other agreements and together state the entire understanding
and Agreement between MiliRisk and Customer with respect to
the Services described; (b) may be amended or modified only
in a written instrument agreed to and signed by MiliRisk and
Customer, and, (c) shall be deemed to have been entered into
and executed in the State of Texas and shall be construed,
performed and enforced in all respects in accordance with the
laws of the state. For purposes of venue, this Agreement is
performable in Tarrant County, Texas.
10.6 Neither party hereto shall be deemed to have waived any
rights or remedies accruing to hereunder unless such waiver
is in writing and signed by such party. No delay or omission
by either party hereto in exercising any right shall operate
as a waiver of said right on any future occasion. All rights
and remedies hereunder shall be cumulative and may be
exercised singularly or concurrently.
10.7 The descriptive headings of this Agreement are intended for
reference only and shall not affect the construction or
interpretation of this Agreement.
10.8 Wherever the singular of any terms is used herein it shall be
deemed to include the plural wherever the plural thereof may
be applicable.
10.9 The parties shall not assign the Agreement or any of its
rights hereunder without the prior written consent of the
other party which consent shall not be unreasonably withhold
unless the proposed assignment is to a competitor of the
other party.
10.10 If any provision of this Agreement or any Exhibit hereto or
the application thereof to any party or circumstances shall,
to any extent, now or hereafter be or become invalid or
unenforceable, the remainder of this Agreement shall not be
affected thereby and every other provision of this Agreement
shall be valid and enforceable, to the fullest extent
permitted by law.
10.11 In the event of any action between Customer and MiliRisk
seeking enforcement of any of the terms and conditions of
this Agreement, the prevailing party in such action shall be
awarded its reasonable costs and expenses, including its
court costs and reasonable attorney's fees.
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10.12 The parties hereto are independent contractors of one
another, and they should not in any instance be construed as
partners or joint venturers.
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MILIRISK AND CUSTOMER CERTIFY BY THEIR UNDERSIGNED AUTHORIZED
AGENTS THAT THEY HAVE READ THIS AGREEMENT, INCLUDING ALL EXHIBITS
HERETO, AND AGREE TO BE BOUND BY THEIR TERMS AND CONDITIONS.
EXECUTED to be effective the 15th day of August, 1996.
Millers Integrated Blanch Wholesale Insurance
Claims Resources, Inc. Services, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------ ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. Name: ▇▇▇▇▇ ▇▇▇▇▇
---------------------- ----------------------
Title: Exec. V.P. & CFO Title: President & CEO
--------------------- ---------------------
Blanch Insurance Services,
Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
----------------------
Title: President & CEO
---------------------
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EXHIBIT I
to the
MILIRISK
and
BLANCH WHOLESALE INSURANCE SERVICES, INC.
BLANCH INSURANCE SERVICES, INC.
A. SERVICES
During the term of this Agreement MiliRisk shall provide the Policy
Life Cycle Services defined below for the Lines of Business (Section B
of this Exhibit I) written by or through Customer on behalf of
Clarendon. MiliRisk will, in accordance with guidance and direction
provided by the Customer, and in accordance with the GAA, provide all
Policy Life Cycle Services and general management of these Services
described herein for the subject business as follows:
1. MiliRisk will provide the technical and administrative
services to support the acquisition of the Allstate policies
by Clarendon.
2. MiliRisk will convert Allstate business to initial
"offer-to-write system."
3. MiliRisk will produce "offers-to-write" insurance quotation
package.
4. MiliRisk will track recipients of "offers-to-write" and
report non-acceptance to Customer.
5. MiliRisk will convert acceptances to processing system to
issue policies.
6. MiliRisk will provide the necessary functions to satisfy the
Florida Insurance Department instructions as to the processes
required by Clarendon.
7. Underwriting Services to implement the Customer's
underwriting manual, rules, applications, and forms required
to handle new business, renewals, cancellations,
reinstatements, and endorsements.
8. Underwriting will review all incoming documents,
applications, etc. for completeness and compliance with the
Customer's underwriting rules and guidelines.
9. Underwriting will make decisions to issue, cancel, or amend
business submitted to the Customer according to the
Customer's underwriting rules and guidelines.
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10. Expert system rules will be developed and provided to
incorporate the Customer's desired risk profiles.
11. Processing will issue the Customer's policies, process
renewals, cancellations, and reinstatements, MiliRisk will
use such non-renewal or cancellation notices as may be
required by Policy wording or regulatory authority.
12. Invoices will be processed for additional premiums and
renewal bills.
13. Refunds will be processed for return premiums.
14. Inquiries for agents, insureds, and other relevant third
parties (mortgagees) will be handled on behalf of the
Customer.
15. Data Processing support for policy processing will be
provided which will include imaging of documents, data entry,
editing, expert system underwriting, electronic workflow,
rating, coding, reporting, accounting, and maintenance of
policy records.
16. Communications to agents, insureds, and mortgagees will be
provided in the delivery of policy sets, invoices, and other
materials enclosed in mailings to these constituents.
17. Physical Plant Management will provide the necessary services
to insure personnel assigned to support the Customer are
provided with the necessary space, furniture, fixtures,
electrical power, computer connections, telephone, and other
required assets to support the services.
18. Mailing Services will mail all necessary policy documents and
promotional material/marketing items to relevant parties.
19. Customer billing will be supported through direct ▇▇▇▇.
Direct premiums will be submitted through lockbox technology.
20. Accounting services will be provided for premiums by
receiving and distributing premiums, maintaining trust
accounts, accounts and paying agent commissions, in
accordance with the Customer's obligations under the GAA,
including but not limited to:
a. Premium Bank Account. Promptly upon receipt thereof,
MiliRisk shall deposit all premiums and other funds
collected for business written under this Agreement
into a deposit-only bank account to be established
and controlled by the Clarendon (the "Premium Bank
Account"). Until such deposit is made, MiliRisk
shall hold all premium and return premium in a
segregated account and shall be deemed to have a
fiduciary responsibility to the Customer and
Clarendon to turn over such funds to Clarendon.
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b. Operating Account. Clarendon shall established and
fund a separate bank account which MiliRisk may draw
upon to pay return premium due policyholders
(hereinafter called the "Operating Account"),
MiliRisk shall reconcile all disbursements from the
Operating Account each month by type and amount of
disbursement (e.g., return premium, commissions due
to or from Agents) and furnish a copy to the
Customer.
c. Reports. All reports and reconciliations to be
provided to the Customer or Clarendon under this
Agreement (whether in hard copy or maintained on
computers) shall be forwarded within seven (7)
business days after the end of each month. The
electronic files maintained by MiliRisk shall be
transferred as frequently as reasonably requested by
the Customer. Upon the Customer's request MiliRisk
shall furnish updated copies of its computer base
maintained in support of business written under this
Agreement. The transfer of this data shall be in a
format acceptable to the Customer and Clarendon and
readable on their respective computer systems. Such
data shall include all information contained in the
Registers listed in Exhibit III. The reports shall
include, but not be limited to, information and
statistical data (i) required by Insurance Services
Office ("ISO"), and (ii) necessary for Clarendon to
prepare any reports required by the National
Association of Insurance Commissioners ("NAIC"), or
(iii), other reports reasonably requested to monitor
and evaluate the subject business (the "Premium
Reports").
21. Bureau reporting will be supported to send full stat plan to
ISO as required.
22. Commission Handling - The MiliRisk Servicing Office will
calculate and pay commissions to the producer on Customer's
behalf, or will invoice and receive the return of commission
from the producer on return transactions; the MiliRisk
servicing office will prepare a magnetic tape of commission
data for Customer to prepare Federal 1099 tax statements for
commission paid to producers.
23. Policyholder Service - The MiliRisk Servicing Office will
handle questions from policyholders/insured and producers
concerning policy/endorsement issuance or billing.
24. Data Access/Reporting to Customer - The MiliRisk Servicing
Office will provide policy, premium and payment information
as set forth in Exhibit III and on-line access to the policy
master file on Florida homeowners and dwelling policies. The
"Policy Collection Register" and "Receivable Register" will
be furnished to the Customer and Clarendon on a monthly
basis. Each bound policy shall be included in the Policy
Register within ten (10) days of each policy's effective
date.
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25. MiliRisk shall establish and maintain written operational
procedures to handle all business related to the Policies.
26. Additional reports or modifications to agreed upon reports
will be charged to the Customer on a time and materials basis
utilizing the appropriate mix of service personnel required
to perform the modifications or produce new reports. Rates
for such personnel are listed in Exhibit II.
B. AUTHORIZED LINES OF BUSINESS:
Homeowners (HO3, HO6, HO4, and HO2) and Dwelling Fire (DFI).
C. AUTHORIZED STATES:
Florida
D. LOCATION OF PROVISION OF SERVICES:
MiliRisk shall provide the Services defined above at the
MiliRisk service center in Fort Worth, Texas.
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EXHIBIT II
SERVICE RATES
CONSULTANTS
Senior Consultants $175.00 per hour
Consultants $125.00 per hour
PROGRAMMERS
Lead Programmer/Analyst $150.00 per hour
Senior Programmer/Analyst $125.00 per hour
Programmer/Analyst $100.00 per hour
PROJECT LEADERS
Project Leaders $175.00 per hour
POLICY LIFE CYCLE SERVICES
6.5% of Direct Written Premium* subject to a $56.00 per policy
minimum,** and further subject to a 50,000 policy minimum on an
annualized basis. At the end of each six month period beginning on the
effective date hereof, an adjustment will be made if the active
policies processed multiplied by the per policy minimum exceed 6.5% of
direct written premium for the same period.
BILLING FEES
Installment fees shall be retained by MiliRisk
NSF fees shall be retained by MiliRisk
SPECIAL FEES
Processing system modifications will be charged to the Customer on a
time and materials basis utilizing the appropriate mix of service
personnel required to perform the modification. Additional reports or
modifications to agreed upon reports will also be charged to the
Customer on a time and materials basis utilizing the appropriate mix
of service personnel required to perform the modifications or produce
new reports. Hourly rates for such personnel are listed above.
IMPLEMENTATION PERIOD
$500,000 advance against future processing fees (amortized over first
12 months of operations) for design, construction, and implementation
of software systems*** to support contract.
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* Direct written premium by Clarendon Insurance Company for the authorized
lines of business in the authorized states by or through Customer which is
not reduced for reinsurance ceded.
** Effective July 1, 1988 and annually on July 1st thereafter, the per policy
minimum shall be adjusted by the percentage change in the US CPI for all
urban users (CPI-U) published by the US Bureau of labor Statistics for
immediately preceding calendar year.
*** 1. "Offer-to-write" sub system
2. Tracking system for follow-up, rejection and acceptance of recipients
of "offer-to-write"
3. Conversion system (Allstate data to Clarendon data)
4. Processing system to support the Services enumerated in Exhibit I
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EXHIBIT III
ACCOUNTING REGISTERS - DATA FILES - DEFINITIONS
The "Policy Collection Register" shall include but not be limited to:
State and Annual Statement Line of Business
-- Policy number
-- Name of insured
-- Policy effective date and expiration date
-- Name and or number of producing agents
-- Gross premium
-- Provisional commission due General Agent
-- Other charges or credits by type
-- Net cash received
-- An accounting for the difference (if any) between gross premium
and net cash received
The "Policy Register" shall list policies and endorsements issued and shall
include but not be limited to:
State and Annual Statement Line of Business
-- Type of transaction (new, renewal, cancellation, endorsement,
etc.)
-- Policy number
-- Name of insured
-- Policy or endorsement effective date and expiration date
-- Name and/or number of producing agent
-- Gross premium
-- Commission due producing agents
-- Provisional commission due General Agent
-- Other charges or credits by type
The "Return Premium Register" shall list each cancellation and return premium
endorsement and shall include but not be limited to:
State and Annual Statement Line of Business
-- Date and check number of disbursement
-- Policy number
-- Name of insured
-- Effective date cancellation and original policy expiration date
-- Payee
-- Gross return premium
-- Producing agent's return commission
-- General Agent's return commission
-- Net return premium
-- Amount of disbursement to payee
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-- An accounting for the difference (if any) between net return
premium and amount of disbursement
The Receivable Register will be produced each month as follows:
Beginning Receivable
plus Premium due Company (per policy register)
less Premium deposited (to premium bank account)
equals Ending Receivable
The "Premium File" list shall include but not be limited to:
Policy Number
Policy Effective Date
Policy Expiration Date
Date Entered (accounting date?)
Insured Name
Insured Address
Insured State (risk state)
Territory Code
Transaction
Transaction Effective Date
Coverage Code
Amount (written premium)
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