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Exhibit 10.1
INSURANCE ADMINISTRATION SERVICES AGREEMENT
THIS INSURANCE ADMINISTRATION SERVICES AGREEMENT ("Agreement") is
effective as of the 3rd day of May, 2000 ("Effective Date"), by and between
INSURANCE MANAGEMENT SOLUTIONS, INC. ("IMS"), a corporation organized and
existing under the laws of the State of Florida with its principal place of
business located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and
RELIANCE INSURANCE COMPANY ("Customer") having its principal place of business
at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Cybercomp is a division of Customer;
WHEREAS, Customer is desirous of IMS providing insurance administration
services to its customers, as set forth in this Agreement;
WHEREAS, Customer wishes to engage the services of IMS to administer
certain of the Customer's obligations for the lines of business ("Authorized
Lines of Business") in the state(s) ("Authorized States") set forth in SCHEDULE
A;
WHEREAS, IMS wishes to provide such insurance administration services
as 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:
ARTICLE I. DEFINITIONS
Unless the context clearly requires otherwise, the following terms when used in
this Agreement shall have the meanings set forth below:
A. "Affiliate" is any company which controls, is controlled by, or under
common control with, a party, and "control" is defined as owning 50% or
more of such entity.
B. "Authorized Lines of Business" means the lines of business expressly
set forth in SCHEDULE A of this Agreement.
C. "Authorized States" means the states expressly set forth in SCHEDULE A
of this Agreement.
D. "Business Day" means any day other than a Saturday, Sunday or other day
which is an IMS holiday (New Years Day, Memorial Day, Independence Day,
Thanksgiving Day, day after Thanksgiving Day, Christmas Eve (after 12
PM Eastern Standard Time), Christmas Day).
E. "Change of Control" means (a) A sale, transfer or pledge, or the
issuance to a new shareholder, of fifty (50%) percent or more of the
voting stock of a party; or (b) A sale, transfer or pledge of a
substantial portion of the material assets of a party, or any merger or
consolidation of a party with another entity or entities.
F. "Insurance Administration Services" means the services set forth in
this Agreement and EXHIBITS I, II AND III hereto in the Authorized
States in accordance with the Specifications, the other terms of the
Agreement, the applicable laws, and regulations.
G. "Insurance Program" means the Customer's insurance products within the
Authorized Lines of Business to be offered within the Authorized
States.
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H. "Specifications" means the business requirements, functions, and
technical specifications the Insurance Administration Services are
obligated to materially comply with, as set forth in Exhibits I, II,
and III hereto and in Appendix D.
I. "Systems Development Life Cycle" means the process of defining,
documenting, and sign-off prior to deployment of all of the business,
functional, and technical specifications related to the Insurance
Administration Services to be performed under this Agreement, and the
development and quality assurance of those business, functional and
technical specifications after deployment as set forth in APPENDIX H.
APPENDIX H may be modified or revised upon the mutual written agreement
of IMS and Customer.
J. "Technical Information" means and shall include (without limitation)
computer programs, databases, designs, algorithms, processes,
structures, data formats, business methods, know how, and research and
development information.
ARTICLE II. TERM
A. The implementation period ("Implementation Period") shall begin on the
Effective Date of this Agreement and shall end upon the date
("Completion Date") on which all tasks delineated in the rollout plans
("Rollout Plans") contained within APPENDICES A, B, AND C are completed
by IMS and accepted by Customer in accordance with the Specifications
and the procedures specified within the System Development Life Cycle.
Customer shall provide to IMS during such Implementation Period the
data, information, background, and other facts needed for IMS to
complete the Rollout Plans, as delineated within APPENDICES A, B AND C
and in accordance with the Specifications.
B. The term of the Agreement shall commence on the Effective Date and
shall have a minimum operating term ("Minimum Operating Term") of
ninety-six (96) full calendar months following the Completion Date.
However, the term of this Agreement shall automatically extend for an
additional operating term ("Extended Operating Term") of twelve (12)
calendar months (at the rates in SCHEDULE B then in effect for the
first Extended Operating Term) at the end of the Minimum Operating
Term, or at the end of any Extended Operating Term, unless terminated
earlier pursuant to the termination provisions within Article VIII.
ARTICLE III. RESPONSIBILITIES OF IMS
A. During the Implementation Period, IMS shall design, construct, acquire
and/or implement the software systems that will enable IMS to provide
the Insurance Administration Services. In addition, the Implementation
Period will be used to assemble and train the IMS staff, arrange for
furniture and fixtures, and essentially complete all of the necessary
procedures required to provide to Customer the Insurance Administration
Services.
B. IMS will utilize the System Development Life Cycle and the appropriate
phase specific processes (as further described in APPENDIX H) to
complete the Rollout Plans and to accomplish any other project (related
to the Insurance Administration Services) to be performed on behalf of
Customer under this Agreement. IMS and Customer will cooperate to
jointly develop the test plans and business test cases to be used
during the System Development Life Cycle. IMS will provide Customer
with the test results and shall await the Customer's Acceptance (as
further detailed within the System Development Life Cycle in accordance
with the Specifications) prior to deployment into live production.
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C. IMS shall complete the Rollout Plans in accordance with the procedures
specified within the System Development Life Cycle and the
Specifications. Upon completion of each task delineated within the
Rollout Plan, IMS shall conduct such testing as it deems necessary or
appropriate in accordance with the System Development Life Cycle and
the Specifications and shall allow Customer an opportunity to conduct
its own testing regarding the task recently deemed completed by IMS.
IMS shall permit Customer to participate in such IMS testing if it so
chooses, and shall provide Customer any and all relevant test results.
IMS shall also co-operate with Customer's testing on its reasonable
request.
D. IMS shall dedicate the appropriate human, equipment and computer
resources to provide Customer with the Insurance Administration
Services, during any term of this Agreement, for the Insurance Program
in the Authorized States specified in SCHEDULE A. If Customer is
reasonably dissatisfied with a "Key IMS Staff Member" assigned by IMS
to provide Insurance Administration Services under this Agreement, then
upon Customer's written notice thereof, IMS shall exercise commercially
reasonable efforts to replace the Key IMS Staff Member within a
reasonable time from IMS' receipt of notice, but in no event later than
three (3) months from IMS' receipt of notice. Further, if a Key IMS
Staff Member resigns or is terminated by IMS, IMS shall provide
Customer fourteen (14) calendar days prior notice of the proposed
change in a Key IMS Staff Member (or, to the extent that a Key IMS
Staff Member resigns and fails to provide IMS fourteen (14) calendar
days notice, prompt notice upon receiving the resignation notice from
the Key IMS Staff Member). Notwithstanding the foregoing, if a Key IMS
Staff Member requests and is granted an intra-company job transfer or
if IMS transfers a Key IMS Staff Member to another job within IMS, IMS
shall provide Customer thirty (30) days notice prior to the effective
date of the proposed job transfer. For the purposes of this Section,
the following IMS staff members shall be considered "Key IMS Staff
Members": Commercial Business Unit Manager, Account Manager, IS Project
Manager, Accounting Manager and the Customer Service Manager.
E. IMS shall designate an employee ("Account Manager") of sufficient
status and authority to act as liaison with Customer to facilitate IMS'
performance of the Insurance Administration Services under this
Agreement. The Account Manager will have substantial property and
casualty insurance operational and underwriting experience and shall
provide Customer with a written monthly report designed by Customer, as
may be mutually agreed upon by Customer and IMS, for documenting the
status of the Insurance Administration Services.
F. IMS shall, based on accepted industry standards and in accordance with
generally accepted insurance and accounting practices as designated by
the appropriate state regulatory bodies, maintain complete and orderly
records and policy and/or claims files as may be required as a result
of IMS performing the Insurance Administration Services on behalf of
Customer. These files shall be retained by IMS, in a format or media
defined by IMS which shall be in compliance with applicable laws and
regulations, for a minimum of five (5) years or the period specified by
the applicable state and/or federal statutes regulating the
preservation of records, whichever is longer, unless the Customer
requests that its records be returned to it at their expense at the
expiration of the minimum five (5) year period.
G. At IMS' expense, IMS shall provide Customer adequate office space at
its principal servicing office for two designated employees of
Customer. Further, at Customer's sole option and expense (at the then
commercially reasonable leasing rates), IMS will provide additional
adequate office space at its principal servicing office for one or more
additional designated employees of Customer, but no more than five (5)
additional employees of Customer at any one time. With regards to any
office space provided by IMS to Customer, whether the office space is
provided at IMS expense or at Customer's
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expense, Customer shall remain responsible for all related office
expenses, including, but not limited to, any expense for: office
equipment, office furniture, telephones, telephone service, computers
and printers.
H. During any term of this Agreement, IMS shall reimburse Customer for the
expense of conducting an annual regulatory/compliance audit of the
Insurance Administration Services. Notwithstanding the foregoing, the
reimbursement by IMS to Customer shall not exceed ___*___ per calendar
year.
ARTICLE IV. RESPONSIBILITIES OF CUSTOMER
A. During the Implementation Period and during any term of this Agreement,
Customer shall provide to IMS, in a timely manner, any and all data,
information and other items within its reasonable control and necessary
to enable IMS to perform the Insurance Administration Services (and
shall use its best efforts to obtain any and all data, information and
other items not within Customer's reasonable control but nonetheless
necessary to enable IMS to perform the insurance administration
services). APPENDIX E sets forth the kinds of documentation, data and
information that will be required by IMS to support delivery of the
Insurance Administration Services. Customer shall also provide IMS with
Customer's banking institution account information, corporate and
subsidiary logos (if applicable), style and specifications of printed
documents (such as insurance policies), and policy jackets. Customer
hereby grants IMS a limited, non-transferable, non-assignable, license
to use Customer's corporate and subsidiary logos (and any other
copyrighted or trademarked property of Customer that may be provided to
IMS under this Agreement) while performing the Insurance Administration
Services. Customer acknowledges and agrees that delays in delivery of
required documentation, data and/or information by Customer will result
in a similar delay in fulfilling Insurance Administration Services or
completing the overall goals and objectives identified in APPENDIX D
and that such a delay in performing the Insurance Administration
Services shall not be deemed the "substantial fault" of IMS. If
Customer's failure to provide IMS the required documentation, data or
information will result in a delay in the performance of the Insurance
Administration Services provided by IMS of greater than two (2)
Business Days, then IMS will notify Customer. Customer shall comply
with, and shall perform the duties specified in, EXHIBIT I, II, AND III
as they relate specifically to Customer.
B. Customer shall work and cooperate with IMS in utilizing the System
Development Life Cycle (as specified in APPENDIX H) as reasonably
necessary to complete the Rollout Plans and to accomplish any other
project (related to the Insurance Administration Services) to be
performed under this Agreement, provided that such tasks remain the
ultimate responsibility of IMS hereunder. Customer participation in the
System Development Life Cycle shall include, but shall not be limited
to, reviewing and signing-off on all definitions and documentation
prior to the commencement of each phase within the System Development
Life Cycle. Customer shall perform functional and business case testing
within the IMS Model Office environment to ensure the product changes
meet the agreed upon specifications. Customer will work and cooperate
with IMS to jointly develop the test plans and business test cases to
be used during the System Development Life Cycle, provided however that
nothing herein limits Customer's right to conduct its own testing in
accordance with the provisions provided in Section III.C. Customer
shall exercise good faith in promptly testing and accepting IMS'
completion of each task within the Rollout Plan, in accordance with the
System Development Life Cycle and the Specifications, prior to live
production. Customer and IMS agree that time is of the essence during
the Implementation Period. Customer shall provide IMS with written
approval of its acceptance of each task within the Rollout Plan if such
task is in substantial compliance with all material requirements in
accordance with the System Development Life Cycle and the
Specifications. If the parties are unable to reach an agreement as to
whether a task has been completed by IMS in substantial compliance
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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with all material requirements with the System Development Life Cycle
and the Specifications, either party may resolve that dispute in
accordance with the dispute resolution procedures contained within
Article XII of this Agreement. By definition, the completion and
acceptance of each task delineated within the Rollout Plan also
includes the completion and acceptance of the integration of each new
task with previously completed, accepted and deployed Rollout Plan
tasks.
C. CUSTOMER ACKNOWLEDGES AND AGREES THAT IMS ASSUMES NO INSURANCE RISK FOR
THE BUSINESS PROCESSED UNDER THIS AGREEMENT.
D. From time to time, on terms reasonably acceptable to Customer and
within Customer's discretion, Customer agrees to act as a Beta Test
Site for purpose of testing the new technologies and/or system
modifications ("New Proprietary System") that IMS may develop (other
than a System Enhancement Project, as defined in Article XIII). In
consideration of Customer performing this function, IMS will grant
(prior its general release) a personal, non-transferable,
non-assignable, non-exclusive license to Customer (with the right to
sub-license the New Proprietary System to its appointed insurance sales
agents in accordance with the limitations set forth in this Agreement)
to use the New Proprietary System solely in connection with the
Insurance Administration Services to be performed by IMS under this
Agreement and subject to the same limitations and conditions imposed
upon the Proprietary System (as defined herein).
E. Customer shall designate a manager level employee ("Customer Liaison")
of sufficient status and binding decision making authority to act as
liaison with IMS and to facilitate Customer's role as IMS performs the
Insurance Administration Services enumerated in EXHIBITS I, II AND III
of this Agreement. The Customer Liaison will meet at least once each
calendar quarter, or as may otherwise be necessary, with the Account
Manager.
F. IMS' rights hereunder are not exclusive. Specifically, nothing herein
shall limit Customer's right to provide for itself, or to procure from
others, services comparable to the Insurance Administration Services,
on a whole or partial basis.
ARTICLE V. CUSTOMER ACCESS TO RECORDS / CONFIDENTIAL INFORMATION
A. At Customer's expense, Customer and Customer's reinsurers will be
permitted reasonable access to all IMS records, information, personnel
and facilities (excluding, specifically, proprietary Technical
Information) reasonably necessary to: (i) audit the completeness and
accuracy of the Insurance Administration Services provided under this
Agreement and reports produced for Customer pursuant to this Agreement;
(ii) verify the accuracy and validity of all ▇▇▇▇▇▇▇▇ and charges to
Customer under this Agreement, including any travel and living
expenses; and (iii) verify IMS' overall compliance with the terms of
this Agreement and applicable laws and regulations, and the guidelines
as provided by Customer.
Access to IMS' records, personnel and facilities will be provided
during normal business hours upon ten (10) Business Days prior written
notice to IMS by Customer for so long as IMS is required to maintain
such records under this Agreement; except in case of allegations of
fraud or in connection with regulatory inquiry, in which case access
will be granted within twenty four (24) hours of written notice to IMS.
Notwithstanding the foregoing, Customer may perform, at Customer's
expense, up to two surprise audits (per calendar year), with
twenty-four (24) hours written notice to IMS, specifically of the
records maintained by IMS that relate to Customer's custodial bank
accounts.
At Customer's expense (except in the case of state regulatory audits),
Customer will be permitted to copy those IMS records subject to audit.
Upon reasonable request by Customer, and at Customer's expense, IMS
will promptly mail or fax to Customer
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supporting documentation concerning any specific Customer policyholder
billing, payment or other transaction processed by IMS under the terms
of this Agreement.
IMS will provide adequate workspace for Customer to conduct audits in
accordance with this Article. Further, Customer or its representatives
shall take reasonable precautions, when conducting audits under this
Article, not to materially disrupt IMS' ongoing business activities.
B. The recipient ("Recipient") of confidential data and/or information
shall maintain the confidentiality of all data and/or information which
is the property of the other party ("Disclosing Party"), whether
originally supplied by the Disclosing Party, or whether generated by
the Disclosing Party in the course of performing or facilitating the
Insurance Administration Services under this Agreement and which is
directly accessible to the Recipient or is in the possession of
Recipient in the implementation, facilitation and/or performance of the
Insurance Administration Services. During any term of this Agreement,
Recipient may acquire, know, or have within its possession, information
(including, but not limited to, Technical Information) and/or data of
the Disclosing Party concerning commercial and trade affairs, rating
and underwriting rules and guidelines, the identity of clients, the
identity of insureds and beneficiaries, claims, benefits, rates and
agents, financial information, Proprietary System (as defined herein),
Third Party Proprietary System (as defined herein) and business
practices of the Disclosing Party ("Confidential Information").
Confidential Information which is provided in tangible form must be
clearly marked "Confidential", "Proprietary" or the substantial
equivalent thereof, or if orally disclosed must be clearly identified
as "Confidential" or "Proprietary" at the time of the disclosure
(except for IMS' Technical Information; Customer's Technical
Information as may be provided by Customer to IMS; Customer's
underwriting rules and guidelines; the identity of Customer's clients;
the identity of insureds and beneficiaries; and all data created or
generated in the course of the Insurance Administration Services and
specifically relating to Customer and/or its insurance sales agents,
insurance sales brokers, insurance sales representatives and clients;
which will be deemed "Confidential Information" under this Agreement).
Except as required by law, Recipient shall keep Disclosing Party's
Confidential Information confidential and shall only use the
Confidential Information in performing or facilitating the Insurance
Administration Services under this Agreement. Recipient shall not
disclose the Confidential Information without Disclosing Party's prior
written permission except to Recipient's employees, representatives,
consultants and agents who require the information to perform or
facilitate the Insurance Administration Services under this Agreement.
Customer and IMS each warrant to the other that all appropriate
measures shall be taken by such Recipient to safeguard the
confidentiality of the Confidential Information of the other, with a
level of care at least equal to the level of care with which Recipient
safeguards its own confidential or proprietary information. All
employees of Recipient and any third parties who are given access to
the Confidential Information shall be under written obligation to
Recipient to maintain such information in confidence.
IMS and Customer agree that any Recipient shall have no obligation with
respect to any information or data which:
(a) is already rightfully known to Recipient through
means other than Disclosing Party; or
(b) is or becomes publicly known through no wrongful act
of Recipient; or
(c) is rightfully obtained by Recipient from a
third-party without similar restriction and without
breach of this Agreement; or
(d) is independently developed by Recipient without
breach of this Agreement.
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Disclosing Party shall retain title to all Confidential Information
(whether tangible or intangible) delivered pursuant to this Agreement.
Recipient shall not copy, reproduce or use any Confidential Information
without written authorization of Disclosing Party, except as may be
reasonably required to accomplish the Insurance Administration Services
under this Agreement. Recipient shall promptly return or destroy, on
written request of Disclosing Party, all tangible copies containing
Confidential Information. The obligations under this Paragraph shall
survive the termination of this Agreement. Notwithstanding the
foregoing, this Article shall not prevent the disclosure of
Confidential Information to the extent legally required by any court or
regulatory entity having jurisdiction over the parties.
ARTICLE VI. EXPENSES AND FEES
A. In consideration of IMS providing Insurance Administration Services
described herein, and subject to IMS material compliance with the
material terms of this Agreement, Customer shall pay IMS an
implementation charge ("Implementation Charge"), miscellaneous fees
("Miscellaneous Fees") and servicing fee ("Service Fee") for each
Authorized Line of Business, as specified in SCHEDULE B. Except for the
Service Fee, which is based upon a percentage of the adjusted net
direct written premium, the Miscellaneous Fees specified in Section V
of SCHEDULE B hereto may be raised effective as of each anniversary of
the Effective Date by the percentage increase in the Geographical City
Consumer Price Index as reported by the United States Bureau of Labor
Statistics for the most recently completed calendar year that IMS is
performing services on behalf of the Customer. Further, in the event
that a vendor supplying a service or product to IMS (including but not
limited to postage and paper), which service or product is required by
IMS to provide the Insurance Administration Services to Customer,
increases or decreases its rates charged to IMS, IMS may increase, and
shall decrease, the contracted rates set forth herein to incorporate
such increased or decreased costs, as applicable.
B. On the second anniversary of the Completion Date, and subject
to IMS' material compliance with the material terms of this Agreement
hereunder, Customer shall immediately pay IMS a minimum fee ("Initial
Minimum Fee") that shall equal the difference between ($___*___) and
the aggregate amount of: (i) Service Fees paid to IMS during the
___*___ period immediately prior to the ___*___ anniversary of the
Completion Date, and (ii) miscellaneous fees for "time & material" work
(performed on behalf of Customer, outside of the scope of this
Agreement and related to the Insurance Administration Services to be
performed under Exhibit I, II, and III) paid to IMS during the ___*___
period immediately prior to the ___*___ anniversary of the Completion
Date. In addition to the foregoing, on the ___*___ anniversary of the
Completion Date, and subject to IMS' material compliance with the
material terms of this Agreement hereunder, Customer shall immediately
pay IMS a minimum fee ("Contract Term Minimum Fee") that equals the
difference between ___*___ and the aggregate amount of: (i) Service
Fees and Initial Minimum Fee paid to IMS during the ___*___ ___*___
period prior to the ___*___ anniversary of the Completion Date, and
(ii) miscellaneous fees for "time & material" work (performed on behalf
of Customer, outside of the scope of this Agreement and related to the
Insurance Administration Services to be performed under Exhibit I, II,
and III) paid to IMS during the ___*___immediately prior to the ___*___
anniversary of the Completion Date.
C. Customer shall not be required to reimburse IMS for travel, living and
out-of-pocket expenses incurred by IMS personnel unless such expenses
are approved in writing by Customer prior to travel.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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D. Customer agrees to pay all tariffs and taxes that are now or may become
applicable to the Insurance Administration Services rendered hereunder.
This provision includes but is not limited to sales, use, and personal
property taxes, or any other form of tax based on Insurance
Administration Services performed, equipment used by IMS solely for
Customer, and the communicating of storage of data used by IMS solely
for Customer, but does not include taxes based upon the net income of
IMS. If any governmental body imposes on IMS a tax ("Impact Tax") that
is applicable to the Insurance Administration Services performed by IMS
under this Agreement and that Impact Tax significantly impacts the
future profitability of Customer's Authorized Lines of Business, then
IMS shall make a good faith effort to reduce the impact of the Impact
Tax by exploring and pursuing commercially reasonable options to reduce
the impact of the Impact Tax.
E. IMS shall establish a custodial bank account on Customer's behalf to be
used by IMS in performing the premium billing and collection payment
obligations delineated in EXHIBITS I, II, AND III of this Agreement.
Invoices prepared will be in Customer's name or as directed by Customer
and will require all premiums to be sent to a post office box in
Customer's name, or at Customer's option and expense, have all premiums
deposited in a lock box by tape feed at Customer's expense. Customer
hereby authorizes IMS, subject to Customer's prior written approval, to
form such custodial bank account ("Custodial Account") on Customer's
behalf. IMS will prepare bills for premiums due and transmit them in
accordance with Customer's provided billing plan and guidelines in
Customer's name and receive the premiums so billed on behalf of
Customer (including installments, reminders, cancellations and pending
notices). Postage charges and supplies are included in the fees
delineated in SCHEDULE B of this Agreement. Account reconciliation and
cash receipt, payment posting, deposit posting, overpay and underpay
processing, and NSF processing will be handled by IMS.
Cancellation notices will be sent for non-payment in accordance with
Customer's provided guidelines and applicable laws and regulations. IMS
will disburse funds from the premiums received on behalf of Customer
for commission payments, return of premium, overpayments and policy
cancellation or changes resulting in a return of premium. IMS will
receive the monies due in trust under the Insurance Administration
Services enumerated in EXHIBITS I, II, AND III of this Agreement and
will remit to Customer on a daily basis the premiums received by IMS,
less the disbursements made on behalf of Customer, and an amount
necessary for IMS to perform the Insurance Administration Services on a
day-to-day basis. IMS shall provide to Customer a monthly statement
detailing any disbursements of funds under this Section.
F. IMS will provide Customer with a statement ("Monthly Statement") each
month detailing IMS' Service Fees and Miscellaneous Fees. Customer will
provide IMS with written notice within three (3) Business Days of
receipt of a Monthly Statement of any disputed amounts in such Monthly
Statement. IMS will withdraw from the Custodial Account all undisputed
Service Fees and Miscellaneous Fees. If IMS has not received written
notice of any disputed amount from Customer within three (3) Business
Days of Customer's receipt of a Monthly Statement, then IMS will
withdraw the entire amount delineated on the Monthly Statement. If
Customer disputes any amount listed on a Monthly Statement, then the
parties will exercise best efforts to resolve the dispute within five
(5) Business Days from the date Customer receives the Monthly
Statement. Customer will not be required to maintain a balance greater
than what is necessary for IMS to perform the Insurance Administration
Services on a day-to-day basis and for IMS to pay fees and other
charges to be paid IMS under the Agreement. IMS and Customer will
mutually agree upon a formula for calculating the required balances.
Customer agrees to promptly change the formula if a negative balance
occurs, and Customer further agrees that Customer will be responsible
for paying any charges, interest or penalties resulting from Customer's
failure to maintain a positive balance.
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All billing and installment fees and interest accrued on monies
deposited in the Custodial Account will be the sole and exclusive
property of Customer. Additionally, all Custodial Account service fees,
including, but not limited to account maintenance, return item charges,
ACH services, account reconciliation process ("ARP"), account repo
investment, account research, etc., charged by the underlying financial
institution in connection with the administration of said Custodial
Account shall be the sole responsibility of the Customer and shall be
deducted directly from the Custodial Account. IMS will submit
statements to the Customer on a regular monthly basis for all charges
incurred hereunder for the preceding month. Failure by Customer to pay
all undisputed fees and expenses when due shall be considered a
material breach of this Agreement.
G. With the exception of the Minimum Operating Term and the first Extended
Operating Term, prior to renewal of this Agreement for any Extended
Operating Term, IMS may modify SCHEDULE B in its discretion to reflect
any increase in the cost of providing the Insurance Administration
Services (including, but not limited to statutory, regulatory, or
judicial changes that require IMS to incur additional cost or expenses
in performing the Insurance Administration Services) or to remain
competitive with the rates currently being charged within the industry
for like services. Any modification of SCHEDULE B shall be proposed to
Customer at least six (6) months prior to the expiration of any
Extended Operating Term. IMS shall modify Schedule B to reflect any
increase or decrease in such costs.
H. If costs arise during any term of this Agreement that were not
anticipated by the parties at the time this Agreement was executed,
then payment of such costs will be resolved as follows: (a) if the work
or reason giving rise to the unanticipated cost is only for Customer's
benefit, was requested or approved by Customer, then Customer will pay
such costs and IMS shall not use such work product for other IMS
customers; or; (b) IMS will pay such costs.
I. Within sixty (60) calendar days after IMS provides internet access
(which shall include deployment of the internet access into live
production) to Customer's insurance sales agents for a particular
Authorized Line of Business within an Authorized State in compliance
with the Specifications ("60 Day Internet Access Milestone"), Customer
shall ensure that within any monthly billing period a minimum of sixty
percent (60%) of all new business that is processed by IMS for that
Authorized Line of Business within the Authorized State is processed
using the internet access and without the manual intervention of IMS,
provided IMS is in material compliance with the material terms of this
Agreement hereunder. If in any given monthly billing period, after the
60 Day Internet Access Milestone, more than forty percent (40%) of such
new business for a particular Authorized Line of Business within an
Authorized State is not processed by IMS via the internet access and
with the manual intervention of IMS, then Customer shall retroactively
pay IMS on a time and material basis (as specified in SCHEDULE B,
Section V of this Agreement) for the manual processing of any new
business that is in excess of the forty percent (40%) level.
J. Within one hundred and twenty (120) days after IMS provides internet
access (which shall include deployment of the internet access into live
production) to Customer's insurance sales agents for a particular
Authorized Line of Business within an Authorized State in material
compliance with the Specifications ("120 Day Internet Access
Milestone"), Customer shall ensure that within any monthly billing
period a minimum of eighty percent (80%) of all new business that is
processed by IMS for that Authorized Line of Business within the
Authorized State is processed using the internet access and without the
manual intervention of IMS, provided IMS is in material compliance with
the material terms of this Agreement hereunder. If in any given monthly
billing period, after the 120 Day Internet Access Milestone, more than
twenty percent (20%) of such new business for a particular Authorized
Line of Business within an Authorized State is not
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processed by IMS via the internet access and with the manual
intervention of IMS, then Customer shall retroactively pay IMS on a
time and material basis (as specified in SCHEDULE B, Section V of this
Agreement) for the manual processing of any new business that is in
excess of the twenty percent (20%) level.
K. Immediately upon deploying internet access into live production
("Internet Access") for a particular Authorized Line of Business within
an Authorized State, IMS shall measure the average "down time" (between
the hours of 9 AM to 9 PM EST) per Business Day of the Internet Access
("Average Daily Down Time") for that particular Authorized Line of
Business within that Authorized State. The term "down time" shall be
defined as any amount of time that Internet Access is not accessible in
accordance with the Specifications to Customer or its insurance sales
agents, except to the extent due to network failures outside of IMS'
reasonable control. Then, on the four (4) week anniversary of the date
that IMS provides Internet Access to Customer for an Authorized Line of
Business within an Authorized State and on the last day of every
subsequent four (4) week period ("Four Week Measuring Period") until
the 120 Day Internet Access Milestone is reached, IMS shall compute a
four (4) week rolling average of Average Daily Down Time ("Four Week
Average Down Time"). If the Four Week Average Down Time is greater than
ten percent (10%) of the total amount of time that the Internet Access
is available to Customer and its insurance sales agents (between the
hours of 9 AM to 9 PM every Business Day during any Four Week Measuring
Period), then Customer shall be granted an additional amount of time
("Additional Compliance Days") to comply with the provisions of Section
(H) and (I) of this Article as provided below:
--------------------------------------------- ----------------------------------------------
FOUR WEEK AVERAGE DOWN TIME ADDITIONAL COMPLIANCE DAYS
--------------------------------------------- ----------------------------------------------
Less than 10% No Additional Compliance Days
--------------------------------------------- ----------------------------------------------
Between 11% and 15% Five Additional Compliance Days
--------------------------------------------- ----------------------------------------------
Additional increments of 5% Five Additional Compliance Days
(i.e., between 16% and 20% shall entitle
Customer to five Additional Compliance Days
for a total of ten Additional Compliance Days)
--------------------------------------------- ----------------------------------------------
Nothing in this Section K limits Customer's other remedies for IMS'
breaches relating to down time.
ARTICLE VII. LICENSE, TRADE SECRET AND PROPRIETARY RIGHTS
A. IMS, from time to time, may use its own proprietary computer software
products and account servicing methods and procedures ("Proprietary
System") which are identified, described or referenced in EXHIBIT I, II
AND III hereto, in the performance of the Insurance Administration
Services. During any term of this Agreement, IMS grants a personal,
non-transferable, non-assignable, non-exclusive license to Customer
(with the right to sub-license the Proprietary System to its appointed
insurance sales agents in accordance with the limitations set forth in
this Agreement) to use the Proprietary System solely in connection with
the Insurance Administration Services to be performed by IMS under this
Agreement. Provided that Customer is in material compliance with the
material terms of this Agreement, IMS further grants Customer an
option, exercisable by written notice to IMS, to license the
Proprietary System on or before the end of the term of this Agreement
pursuant to terms, conditions and license charges that are mutually
agreeable to IMS and Customer. The parties hereby agree to make a good
faith effort to complete a licensing agreement containing mutually
agreeable and commercially reasonable terms, conditions and license
charges, within twelve (12) months from the Effective Date of this
Agreement; provided, however, that if the parties are unable to reach
an agreement within twelve (12) months on a mutually acceptable
licensing agreement, the Customer's option to license
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the Proprietary System shall not expire (so long as Customer is in
material compliance with the material terms of this Agreement) and the
parties shall continue to make a good faith effort to complete a
licensing agreement containing mutually agreeable and commercially
reasonable terms, conditions, and license charges. For the purposes of
this Article, the term "commercially reasonable terms, conditions, and
license charges" shall mean terms, conditions and license charges that
are substantially similar to terms, conditions and license charges that
are being offered to any IMS client (if any) or within the insurance
computer software licensing industry for substantially similar
proprietary computer software products and account servicing methods.
IMS agrees that it will not, during or after the term hereof, sell,
license, sublicense, or otherwise make available any modification or
enhancement to the Proprietary System that IMS specifically designs and
develops for Customer pursuant to this Agreement and/or EXHIBIT I, II,
AND III of this Agreement and during the any term of the Agreement
("IMS/Customer Exclusive Modification") to any other customer of IMS
without Customer's prior written consent. Notwithstanding the
foregoing, only those modifications and enhancements to the Proprietary
System or part thereof (including, but not limited to, modifications
and enhancements made during the Implementation Period) that are
specifically marked with the legend "IMS/Customer Exclusive
Modification" (as, upon mutual agreement of IMS and Customer, will be
documented by IMS within the System Development Life Cycle) will be
considered an IMS/Customer Exclusive Modification. IMS and Customer
agree that the parties shall act in a commercially reasonable manner in
determining whether any modification or enhancement to the Proprietary
System is "proprietary" or "exclusive" to Customer and thus shall be
marked as a "IMS/Customer Exclusive Modification". If the parties are
unable to reach an agreement as to whether a modification or
enhancement to the Proprietary System is "proprietary" or "exclusive"
and thus should be deemed an IMS/Customer Exclusive Modification,
either party may resolve that dispute in accordance with the dispute
resolution procedures contained within Article XII of this Agreement.
Further, no provision within this Agreement shall be interpreted as
prohibiting IMS from selling or licensing its Proprietary System, or
modifications and enhancements to the Proprietary System (not
specifically designed or developed for Customer pursuant to the terms
of this Agreement and not specifically marked "IMS/Customer Exclusive
Modification"), to any other customer or prospective customer of IMS,
so long as Customer's Confidential Information is not disclosed.
B. IMS, from time to time, may also use proprietary third party computer
software products and third party account servicing methods and
procedures ("Third Party Proprietary System"), which are identified,
described or referenced in EXHIBIT I, II AND III hereto (including the
principal Commercial Lines Workers Compensation and other processing
software) in the performance of the Insurance Administration Services.
During the term of this Agreement, IMS will utilize a Third Party
Proprietary System ("WC Software") to perform the principal processing
functions in connection with the Commercial Lines Workers Compensation
Insurance Administration Services set forth in EXHIBIT III hereto, and
(provided that Customer is in material compliance with the material
terms of this Agreement) Customer shall be granted an option to license
such WC Software, on or before the termination of this Agreement,
pursuant to the third-party vendor's then current terms, conditions and
license charges therefor. IMS agrees that it will not, during or after
the term hereof, sell, license, sublicense, or otherwise make available
any modification or enhancement to the Third Party Proprietary System
that IMS specifically designs and develops for Customer pursuant to
this Agreement and/or EXHIBIT I, II, AND III of this Agreement and
during the any term of the Agreement ("Third Party Exclusive
Modification") to any other customer of IMS without Customer's prior
written consent. Notwithstanding the foregoing, only those
modifications and enhancements to the Third Party Proprietary System or
part thereof (including, but not limited to, modifications and
enhancements made during the Implementation Period) that are
specifically marked with the legend "Third Party Exclusive
Modification" (as, upon mutual agreement of IMS and Customer, will be
documented by IMS within the System Development Life Cycle) will be
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considered a Third Party Exclusive Modification. IMS and Customer agree
that the parties shall act in a reasonable manner in determining
whether any modification or enhancement to the Third Party Proprietary
System is "proprietary" or exclusive" to Customer and thus shall be
marked as a "Third Party Exclusive Modification". If the parties are
unable to reach an agreement as to whether a modification or
enhancement to the Third Party Proprietary System is "proprietary" or
"exclusive" and thus should be deemed an Third Party Exclusive
Modification, either party may resolve that dispute in accordance with
the dispute resolution procedures contained within Article XII of this
Agreement. Further, no provision within this Agreement shall be
interpreted as prohibiting IMS or the Third Party Proprietary System
vendor from selling or licensing the Third Party Proprietary System, or
modifications and enhancements to the Third Party Proprietary System
(not specifically designed or developed for Customer pursuant to the
terms of this Agreement and not specifically marked "Third Party
Exclusive Modification"), to any other customer or prospective customer
of IMS, so long as Customer's Confidential Information is not
disclosed.
C. Other than the limited rights to use the Proprietary System and Third
Party Proprietary System, this Agreement grants to Customer no right to
possess or reproduce, down load, reverse engineer, or obtain any other
interest in, the Proprietary System and the Third Party Proprietary
System or their specifications in any tangible or intangible medium.
Customer may not mortgage, hypothecate, sell, assign, pledge, lease,
transfer, license, or sublicense the Proprietary System or any Third
Party Proprietary System, nor allow any person, firm, or corporation to
transmit, copy, reproduce, download, reverse engineer, or obtain any
other interest in the Proprietary System or any Third Party Proprietary
System or their specifications in whole or in part. In the event
Customer shall come into possession of the source or object code
associated with Proprietary System or any Third Party Proprietary
System, Customer shall immediately notify IMS and return the source or
object code associated with Proprietary System or a Third Party
Proprietary System in its possession and all copies of any kind thereof
to IMS upon IMS' request.
D. Customer covenants and agrees not to disclose or otherwise make the
Proprietary System or any Third Party Proprietary System available to
any person other than employees, insurance sales agents or
representatives of the Customer required to have access or use of the
Proprietary System or Third Party Proprietary System to facilitate IMS'
or Customer's performance under this Agreement. Customer agrees to
obligate each such employee, appointed insurance sales agent or
representative to a level of care sufficient to protect the Proprietary
System or a applicable Third Party Proprietary System from unauthorized
disclosure.
E. IMS warrants and represents that it owns, or is licensed with respect
to, all Proprietary Systems and Third Party Proprietary Systems that it
will employ in the performance of this Agreement and that it has the
right to grant the rights herein provided.
F. With regard to any IMS proprietary computer software products
("Software Products"), which make up part of the Proprietary System and
are licensed to Customer under this Article, IMS agrees that it will
deposit the source code, including all program notes and annotations
(if any) and required development and maintenance tools ("Source Code")
for the Software Products (and any updates, modifications or
enhancements) with an escrow agent ("Escrow Agent") acceptable to
Customer and IMS. If this Agreement is terminated pursuant to Article
VIII (B) (a), Customer shall have the right to obtain a single copy of
the then current version of the Source Code from the Escrow Agent. The
Source Code obtained by Customer pursuant to this Article shall be
subject to the same restrictions and limitations imposed upon Customer
regarding its use of the Proprietary System, which restrictions and
limitations shall survive the termination of this Agreement. Further,
with regards to WC Software, IMS agrees that it will require its WC
Software third party vendor ("WC Vendor") to deposit the WC Software
source code ("WC Source
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Code") for the WC Software (and any updates, modifications or
enhancements) with an escrow agent ("WC Escrow Agent") acceptable to
IMS and the WC Vendor. If the WC Vendor is declared insolvent or
bankrupt, commences or has commenced against it a proceeding in
bankruptcy not dismissed within sixty (60) days of commencement, IMS
shall have the right to obtain a single copy of the then current
version of the WC Source Code from the WC Escrow Agent.
G. The obligations of Customer and IMS under this Article shall continue
after this Agreement is terminated.
ARTICLE VIII. TERMINATION
A. Either party may terminate this Agreement at the end of the Minimum
Operating Term or at the end of any Extended Operating Term, provided
the terminating party gives the other party at least six (6) months
prior written notice of such termination.
B. This Agreement shall also terminate:
(a) at the election of the Customer, upon notice to IMS, if IMS
becomes insolvent, if it makes an assignment for the benefit
of its creditors, if a petition for relief under the
Bankruptcy Code is filed by or against it and it is not
dismissed within thirty (30) days of being filed, or if a
trustee, receiver or other custodian of its assets is
appointed;
(b) at the election of IMS, upon notice to Customer, if Customer
becomes insolvent, if it makes an assignment for the benefit
of its creditors, if a petition for relief under the
Bankruptcy Code is filed by or against it and it is not
dismissed within thirty (30) days of being filed, or if a
trustee, receiver or other custodian of its assets is
appointed;
(c) at the election of the Customer, upon notice to IMS, if IMS
commits any of the following acts or omissions in the
performance of any material term of this Agreement: actual
fraud, or willful misconduct (which includes, but is not
limited to, willful violation of any material covenant of this
Agreement, or willful violation of any material State
Insurance Department regulation or statutory provision
applicable to IMS);
(d) at the election of the Customer, if IMS materially breaches
any provision of this Agreement and fails to cure such breach
within sixty (60) days after notice thereof is given to IMS by
the Customer;
(e) at the election of IMS, if Customer materially breaches any
provision of this Agreement and fails to cure such breach
within sixty (60) days after notice thereof is given to
Customer by IMS (except for Customer's failure to pay any and
all fees and expenses due under Article VI of this Agreement,
in which case Customer must cure such breach within thirty
(30) days after notice thereof is given to Customer by IMS);
or
(f) at the election of the Customer, upon notice to IMS, in the
event of a "Change of Control" of IMS, unless (i) IMS has
provided Customer sixty (60) days advance notice of the
proposed Change of Control and (ii) Customer has agreed in
writing to such Change of Control.
C. Except for termination of this Agreement under Article VIII.A. (a), (b)
and (f), either party may contest a ground for termination asserted
against it by initiating a dispute resolution procedure under Article
XII within 30 days after receiving a notice of termination. In such
case this Agreement will not terminate, and the parties will continue
performing, unless
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and until the allegedly defaulting party fails to comply with a final
award against it under such dispute resolution procedure within 15 days
after it is rendered.
D. On expiration or termination of this Agreement, IMS shall return to
Customer all of Customers Confidential Information, either in
electronic or hard copy form, in IMS' possession and delete any
electronic copies thereof related to the Insurance Administration
Services provided by IMS during any term of this Agreement; Customer
shall do the same and cause Customer's agents, representatives,
consultants and employees to do the same relative to IMS' Confidential
Information. Customer shall pay IMS (in accordance with SCHEDULE B then
in effect) any and all Service Fees, miscellaneous fees and third party
fees due IMS for Insurance Administration Services performed prior to
the termination date this Agreement. IMS and Customer shall cooperate
in any transition period during the wind-up of Insurance Administration
Services provided Customer under this Agreement. If Customer requires
assistance in converting Customer's data to a new format, or requires
assistance from IMS relative to Customer's transition to an alternative
processing arrangement, then IMS shall provide such services at the
then current rates in Section V of SCHEDULE B. (except in the case
where IMS is finally adjudicated by a court or Arbitration Board as
being in material breach of this Agreement in accordance with Article
VIII.B.(d) and Customer terminates this Agreement for such material
breach in accordance with Article VIII.B.(d), then IMS will provide
such data conversion services at IMS' sole expense).
ARTICLE IX. WARRANTIES AND COVENANTS
IMS covenants that: (a) all Insurance Administration Services shall materially
conform to the descriptions set forth in EXHIBITS I, II AND III of this
Agreement; (b) all Insurance Administration Services shall be performed in a
good and workmanlike manner; (c) all Insurance Administration Services shall be
performed by persons who are adequately trained and skilled in the property and
casualty insurance and computer industries to provide the same in accordance
with the requirements of this Agreement and such persons shall be equipped with
the tools, software and other equipment necessary to perform the Insurance
Administration Services; and (d) IMS will comply with the law of the state or
states covered by this Agreement and with the rules and regulations of all
regulatory authorities having jurisdiction over IMS' activities, and shall,
whenever necessary, maintain at its own expense all required licenses to
transact business in such states. IMS warrants to Customer that (a) IMS has the
right to grant the license to the Proprietary System used to perform the
Insurance Administration Services and, that the rights to such Proprietary
System granted hereunder will not infringe upon or misappropriate a third
party's copyright, patent, or trade secret rights; (b) IMS is duly authorized
and incorporated to transact the business of servicing insurance companies; and
(c) the express warranties provided here and elsewhere in this Agreement are
IMS' only warranties and no other warranty, express or implied, including any
warranty of merchantability, fitness or fitness for a particular purpose, will
apply to the provision of Insurance Administration Services under this
Agreement.
ARTICLE X LIABILITY, LIMIT OF LIABILITY, INDEMNITIES AND REMEDIES
A. The parties shall assume the following obligations and liabilities as
specified below and subject to the limitations on liability set forth
in Paragraph B below:
(a) If, due to IMS' substantial fault, Customer is required to pay
a penalty, settlement or fine resulting from an insurance
regulatory inquiry of the Insurance Administration Services,
then IMS will reimburse Customer for such fine, settlement,
and/or penalty;
(b) IMS shall indemnify, defend and hold harmless Customer, its
officers, and directors from any liability, cost, loss, fine,
penalty, claim, demand, damage or expense, including
reasonable attorney fees, incurred as a result of any material
breach of IMS'
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obligations under this Agreement or the material breach of any
representation or warranty made pursuant hereto;
(c) Customer shall indemnify, defend and hold harmless IMS, its
officers, and directors from any liability, cost, loss, fine,
penalty, claim, demand, damage or expense, including
reasonable attorney fees, incurred as a result of any material
breach of Customer's obligations under this Agreement or the
material breach of any representation or warranty made
pursuant hereto;
(d) If: (i) in any given four (4) week rolling period ("Initial
Deficient Service Period"), due to IMS' substantial fault,
performance of the Insurance Administration Services within an
Authorized Line of Business falls outside of one or more of
the "Service Standard Levels" for that Authorized Line of
Business (as set forth in EXHIBIT I, II, OR III); and (ii) due
to IMS substantial fault IMS does not re-establish performance
within the next immediately four (4) week rolling period
("Subsequent Service Period") for that Authorized Line of
Business; then, thereafter, for so long as the Insurance
Administration Services for that Authorized Line of Business
fail to comply with any material part of the Service Standards
Levels for that Authorized Line of Business, due to IMS
substantial fault, Customer may withhold ___*___ of the
Service Fees due under SCHEDULE B for that particular
Authorized Line of Business ("ServiceHoldback") for all
subsequent four (4) week rolling periods ("Deficient Service
Period"), until IMS re-establishes the Insurance
Administration Services, for that Authorized Line of Business,
within the related Service Standard Levels, for that
particular Authorized Line of Business, for a complete four
(4) week rolling period.
After any Deficient Service Period, if the Insurance
Administration Services for an Authorized Line of Business
comply with the Service Standard Levels for that Authorized
Line of Business for a complete four (4) week rolling period,
then Customer shall immediately remit all amounts previously
withheld as a Service Holdback for that Authorized Line of
Business, subject to any allowance for "Liquidated Damages" as
specified below. If IMS fails to bring the Insurance
Administration Services for an Authorized Line of Business
within the Service Standard Levels for that Authorized Line of
Business during the four (4) week rolling period immediately
following any Deficient Service Period (not including the
Initial Deficient Period and the Subsequent Service Period),
Customer will be entitled to retain as "Liquidated Damages",
___*___ of all amounts withheld as a Service Holdback for that
Authorized Line of Business during that Deficient Service
Period. Notwithstanding the foregoing, if the parties
anticipate IMS will be out of compliance with the Service
Standard Levels for a particular Authorized Line of Business
due to a material increase in IMS work load in any given four
(4) week rolling period for that Authorized Line of Business,
then IMS may request and Customer shall send, subject to
availability, the necessary Customer personnel ("Overload
Personnel") to IMS' service center to cooperate with and
assist IMS in re-establishing or maintaining Service Standard
Levels for that Authorized Line of Business. IMS will
reimburse Customer for Customer's direct costs (including
related salaries and travel expenses of the Overload Personnel
during their period of service to IMS) incurred in providing
such assistance, but only to the extent actually used by IMS.
In addition to the reimbursement of salary and travel expenses
of the Overload Personnel, IMS shall pay Customer a ___*___
override on any salary reimbursements that it may pay Customer
for Overload Personnel utilized by IMS pursuant to this
Section. IMS acknowledges: (a) that the Service Standards
Levels set forth in EXHIBIT I, II, AND III are only intended
to gauge the service levels and do not relieve IMS of its
obligation to perform the Insurance Administration Services in
accordance with this Agreement and applicable laws and
regulations, and (b) that the liquidated damages herein do not
limit Customer's right to terminate this Agreement as herein
provided.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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B. Except for: (i) Service Fees and other amounts owed to IMS by Customer
in consideration of IMS providing the Insurance Administration
Services, miscellaneous services or third party services; (ii) acts of
fraud, or willful misconduct; (iii) IMS' obligations to indemnify
Customer pursuant to Paragraph C and D below; (iv) amounts payable by
IMS under Article XIII of this Agreement; and (v) violations of Article
VII of this Agreement; each party's maximum liability ("Maximum
Liability") to the other party for any cause whatsoever, during any one
calendar year (including, but not limited to, amounts payable to
Customer by IMS for regulatory fines, settlements and penalties) shall
be limited to direct damages incurred by that party and shall be
limited to the greater of: (a) ___*___ of the Service Fees actually
paid to IMS under SCHEDULE B during the calendar year in which the
direct damages were suffered by a party; or (b) ___*___ each such
calendar year. To the extent that a penalty, settlement or fine (for
which IMS is required to assume liability under this Article) relates
back to a certain policy, the penalty, assessment or fine shall have
been deemed to be paid on the effective date that the policy was issued
by IMS under this Agreement and the damage shall be deemed to be
suffered during that same calendar year. This Article shall survive any
termination of this Agreement.
C. IMS shall indemnify and defend Customer, and its officers, directors,
employees, agents, and Affiliates, at IMS' sole cost (including
reasonable attorney's fees), for any final (non-appealable) judgment
recovered against Customer finding that the right granted by IMS to
Customer to use the Proprietary System in connection with this
Agreement infringed upon or misappropriated a third party's copyright,
patent, or trade secret rights; provided, however, that Customer gives
IMS prompt written notice from Customer's receipt of such claim.
D. IMS shall indemnify and defend Customer, and its officers, directors,
employees, agents, and Affiliates, at IMS' sole cost (including
reasonable attorney's fees), for any settlement recovered against
Customer finding that the right granted by IMS to Customer to use the
Proprietary System in connection with this Agreement infringed upon or
misappropriated a third party's copyright, patent, or trade secret
rights; provided, however, that Customer gives IMS prompt written
notice from Customer's receipt of such claim. Customer may participate
in the negotiation of any proposed settlement, however, Customer shall
not make, agree to or execute any settlement (for which Customer is
indemnified by IMS hereunder) without IMS prior written approval.
E. If data is processed in error due to an error or defect in the
Insurance Administration Services provided by IMS, then upon IMS
receiving notice of such error or defect, IMS shall reprocess such data
without charge to Customer.
F. All parties agree to promptly give the other notice upon being notified
or becoming aware of any and all allegations or claims, which could
give rise to a claim under this Article.
ARTICLE XI. GENERAL AGREEMENTS
A. This Agreement in all matters arising thereunder shall be governed by
and determined in accordance with the laws of the State of New York.
B. The parties shall not liable or deemed to be in default or "substantial
fault" for any delay or failure in performance under this Agreement or
interruption of the Insurance Administration Services resulting,
directly or indirectly, from an external act outside of the control of
IMS, including, but not limited to: 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 of the parties. Notwithstanding the foregoing, IMS shall make a
good faith effort to explore and pursue commercially reasonable
alternatives that may be available to eliminate the delay, failure or
interruption caused by the external
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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act. IMS acknowledges that it has a detailed emergency recovery plan
for interruption of the Insurance Administration Services and has
contracted with an emergency "Hot Site". IMS shall follow its recovery
plan, which provides recovery priority to "Production Customers" and is
designed to re-establish the Insurance Administration Services
following a disaster causing an interruption thereof. IMS acknowledges
that Customer is a Production Customer. Customer acknowledges that the
Hot Site is only a temporary bridge and that there may be a diminution
in the performance levels of the Insurance Administration Services (but
IMS will make a good faith effort, under the circumstances, to meet
IMS' goal of re-establishing, at a minimum, quoting, rating and policy
issuance services for Production Customers within 72 hours of a
disaster) until the main data center capabilities are re-established.
Once Service Fees paid by Customer to IMS under this Agreement, during
one (1) calendar year, exceed ___*___, Customer and IMS shall mutually
agree on a disaster recovery plan that shall be exclusive to Customer.
C. Customer and IMS agree that, during any term of this Agreement and for
a period of six (6) months following the termination of this Agreement,
neither party will directly or indirectly induce any employee of the
other to terminate his or her employment with the other party; nor will
either, without prior written consent of the other, offer employment to
any employee of the other party or to former employees of the other
party during the six (6) month period immediately following such
employee's termination. This Paragraph shall survive termination of
this Agreement.
D. Any and all notices, designations, consents, offers, acceptances, or
any other communication provided for herein may not be delivered via
the e-mail but 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 Customer: Cybercomp by Reliance National
A Reliance National Group Holdings Company
Crossroads Corporate Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Executive Vice President
As to IMS: Insurance Management Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
Notices sent by hand delivery should be deemed effective on the date of
that hand delivery. Notices sent by overnight carrier should be deemed
effective on the next Business Day after being placed into the hands of
the overnight carrier. Notices sent by registered or certified mail
shall be deemed effective on the fifth Business Day after being
deposited into the post office. Notices sent by facsimile transmission
shall be deemed to be effective on 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.
E. This Agreement, and any exhibits, schedules or addenda attached hereto,
contains 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
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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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. Article V (B), VII, X, XI (C) shall survive any termination
of this Agreement.
F. 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. Article headings are intended
for purposes of description only and shall not be used for purposes of
interpretation of this Agreement.
G. 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.
H. If either party should bring a Court action alleging breach of this
Agreement or seeking to enforce, rescind, renounce, declare, void or
terminate this Agreement or any provisions thereof, the prevailing
party shall be entitled to recover all of its legal expenses, including
reasonable attorney's fees and costs (including legal expenses for any
appeals taken), and to have the same awarded as part of the judgement
in the proceeding in which such legal expenses and attorney's fees were
incurred.
I. Neither IMS nor Customer shall assign this Agreement or any of its
rights hereunder without the prior written consent of the non-assigning
party, except that Customer may assign this Agreement to a purchaser of
all or substantially all of its assets or equity. A Change of Control
of either party shall constitute an assignment. Upon written approval
by IMS, which written approval shall not unreasonably be withheld,
Customer and its assigns may assign this Agreement to any Affiliate of
Customer, whether by direct assignment, Change of Control, or any other
manner.
J. The parties agree not to disclose the terms and conditions of this
Agreement to any third party, except (i) as required in the normal
conduct of Customer's business, or (ii) as required by law or
regulation including without limitation, any Federal securities law, or
regulation.
ARTICLE XII. DISPUTE RESOLUTION PROCEDURES
A. Prior to initiation of arbitration, the parties will attempt in good
faith to promptly resolve any material dispute regarding this Agreement
by negotiations between senior management ("Senior Management") of the
parties. Senior Management of each party will meet within ten (10)
calendar days of notice ("Notice of Dispute") by a party of the
existence of a material dispute, at a mutually agreed time and place,
to resolve the material dispute. Senior Management, who shall have the
authority to settle the dispute, shall prepare and exchange memoranda
stating the issues in the material dispute and their positions. If the
material dispute is not resolved to the mutual satisfaction of the
parties within seven (7) calendar days of the meeting of Senior
Management, then the parties may attempt to resolve the controversy
using mediation.
B. If the matter has not been resolved pursuant to the aforesaid mediation
procedure within thirty (30) calendar days of the issuance of a party
of a Notice of Dispute, or if either party will not participate in
mediation, then either party may initiate arbitration upon fifteen (15)
calendar days written notice to the other party. Notwithstanding the
foregoing, all deadlines specified above may be extended upon mutual
agreement of the parties.
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C. Except for the right of either party to apply to a court of competent
jurisdiction for review of the award of arbitration, for a temporary
restraining order, preliminary injunction or other equitable relief to
preserve the status quo, or disputes relating to breach of the
confidentiality, non-disclosure or trade secret provisions of this
Agreement, all claims, disputes, controversies and other matters
relating to breach of this Agreement, and which cannot be resolved by
the parties shall be settled by arbitration in accordance with this
Agreement.
D. Notice requesting arbitration ("Arbitration Notice"), or any other
notice made in connection therewith, shall be made in writing by one
party and sent by certified mail, return receipt requested, to the
other party. The Arbitration Notice shall state in particular all
issues to be resolved in the view of the complaining party, shall
appoint the arbitrator selected by the complaining party and shall set
a tentative date for the hearing, which date shall be no sooner than
forty-five (45) calendar days and no later than ninety (90) calendar
days from the date that the Arbitration Notice is mailed. Within twenty
(20) calendar days of receipt of the complaining party's Arbitration
Notice, the respondent shall notify the complaining party of the
location for conducting arbitration and the name of its appointed
arbitrator. When the two arbitrators have been appointed, they shall
agree on a third independent arbitrator and shall appoint such person
by written notice to the parties signed by both arbitrators within
thirty (30) calendar days from the date of the appointment of the
second arbitrator. If the two arbitrators fail to agree upon the
appointment of an independent arbitrator at the end of thirty (30)
calendar days following the appointment of the second arbitrator, then
the independent arbitrator shall be appointed by the American
Arbitration Association ("AAA"), or its successor, in accordance with
its then prevailing commercial arbitration rules then in effect. The
three (3) arbitrators shall constitute the Arbitration Board ("Board").
E. The members of the Board shall be active or retired (i) lawyers or
professionals familiar with insurance and/or (ii) active or former
officers or management employees of insurance and/or data processing
firms and/or software development companies. The person selected by the
two respective arbitrators appointed by the parties shall be the umpire
or chief arbitrator and must be a lawyer.
F. Arbitration shall be conducted in accordance with the Commercial Rules
of the American Arbitration Association ("AAA") then in effect except
as modified herein.
G. The parties agree that all then current employees of each with material
relevant information will be voluntarily produced, at the employer's
expense, for all proper discovery and arbitration hearings.
H. The cost of the arbitration relative to the arbitrators and the AAA
("Costs") shall be borne equally pending the arbitrators' award. Each
party shall bear its own expenses for attorneys' fees. The prevailing
party in any arbitration proceeding hereunder shall be entitled, in
addition to such other relief as may be granted, to recover the portion
of the Costs incurred by that party in connection with arbitration
under the Agreement prior to the award.
I. The parties agree that the arbitrators shall be required to render
their decision in writing within thirty (30) calendar days of the
conclusion of the arbitration proceedings, unless such time shall be
extended by mutual agreement of the parties.
J. With respect to any matter brought before the Board, the Board shall
make a decision having regard to the intentions of the parties, the
terms of this Agreement, and custom and usage of the insurance and data
processing industry. Such decisions shall be in writing and shall state
the findings of fact and conclusions of law upon which the decision is
based, provided that such decision may not (i) award consequential,
punitive, special,
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incidental or exemplary damages, or (ii) include a suspension of this
Agreement or any provisions hereof. The decision shall be based
exclusively upon the evidence presented by the parties at a hearing in
which evidence shall be allowed. Said decisions may be reviewable and
vacated, modified or corrected, in whole or in part, by appropriate
courts of competent jurisdiction for clear abuses of discretion or
errors at law by the Board. If the decision is not vacated, modified,
or corrected in whole or in part upon an appeal, such decision shall be
final and binding upon all parties to the proceeding and may be entered
by either party in any court having competent jurisdiction.
ARTICLE XIII. ADDITIONAL AUTHORIZED STATES AND AUTHORIZED LINES OF
BUSINESS - SYSTEM ENHANCEMENT PROJECTS
A. If Customer requests that IMS initiate a project (related to the
Insurance Administration Services) that will require IMS to materially
deviate its systems from the system functionality currently in use by
IMS ("System Enhancement Project"), IMS will provide Customer, on a
timely basis, with an estimate of the time and costs required to
complete such System Enhancement Project along with a detailed
description and project plan of the change(s) requested. The detailed
description of the project, the project plan and the estimated
completion date ("Project Completion Date") of the System Enhancement
Project will be subject to Customer's approval in writing in its
discretion, prior to any work being performed by IMS.
B. If a System Enhancement Project is authorized by Customer and IMS fails
to complete a System Enhancement by the designated Project Completion
Date, IMS will be subject to liquidated damages as specified in "the
"Matrix" contained in APPENDIX F. Notwithstanding the foregoing, the
above Matrix shall only apply to System Enhancement Projects that
require more than one hundred (100) man-hours of time to complete.
Further, the Customer acknowledges and agrees that delays in delivery
of required documentation, data and/or information by Customer may
result in a similar delay in completing a System Enhancement Project
within the designated Project Completion Date. Accordingly, if
Customer's fails to provide to IMS the required documentation, data or
information within the date that was mutually agreed to prior to the
initiating of the System Enhancement Project, then the designated
Project Completion Date of the System Enhancement Project shall be
extended in accordance with APPENDIX "G". The parties acknowledge that
Customer's projected damages from delay are difficult to ascertain and
that the amounts in the Matrix are reasonable approximations of such
damages.
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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 3rd day of May, 2000.
"IMS": "Customer":
INSURANCE MANAGEMENT SOLUTIONS, INC. RELIANCE INSURANCE COMPANY
By: /s/ ▇. ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------ -------------------------------------
▇. ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
As its: PRES/CEO As its: EVP
------------------------------------ -------------------------------------
Date: 5/3/2000 Date: 5/2/2000
------------------------------------ -------------------------------------
WITNESS: WITNESS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 5/3/2000 /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5/2/2000
------------------------------------ -------------------------------------
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SCHEDULE "A" - AUTHORIZED STATES AND INSURANCE PROGRAM
SCHEDULE "B" - FEE SCHEDULE
EXHIBIT 1 - COMMERCIAL LINES BUSINESS OWNER PROGRAM
EXHIBIT 2 - COMMERCIAL LINES UMBRELLA PROGRAM
EXHIBIT 3 - COMMERCIAL LINES WORKERS COMPENSATION PROGRAM
APPENDIX "A" - BUSINESS OWNER STATE ROLLOUT PLAN
APPENDIX "B" - UMBRELLA STATE ROLLOUT PLAN
APPENDIX "C" - WORKERS COMPENSATION ROLLOUT PLAN
APPENDIX "D" - OVERALL GOALS AND OBJECTIVES OF CYBERCHOICE (BOP) PROGRAM
APPENDIX "E" - CUSTOMER REQUIREMENTS FOR DOCUMENTATION
APPENDIX "F" - IMS SYSTEM ENHANCEMENT LIQUIDATED DAMAGES SCHEDULE
APPENDIX "G" - SYSTEM ENHANCEMENT EXTENSION SCHEDULE
APPENDIX "H" - SYSTEM DEVELOPMENT LIFE CYCLE
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SCHEDULE A
AUTHORIZED STATES AND INSURANCE PROGRAM
IMS shall provide Insurance Administration Services as described in EXHIBITS I,
II AND III for the following authorized line(s) of business ("Authorized Line of
Business") in the following authorized state(s) ("Authorized States"):
1. AUTHORIZED LINE OF BUSINESS:
Commercial Lines: Business Owners Policy (BOP) including Building,
Personal Property, and General Liability.
AUTHORIZED STATES:
The initial authorized state to be implemented will be ___*___. The
next ___*___ states will be: ___*___. The next ___*___ states will be:
___*___, followed by ___*___.
2. AUTHORIZED LINE OF BUSINESS:
Commercial Umbrella
AUTHORIZED STATES:
All ___*___, the ___*___ and ___*___.
3. AUTHORIZED LINE OF BUSINESS:
Workers' Compensation/Employers' Liability
AUTHORIZED STATES:
All ___*___, ___*___ and ___*___.
4. IMS SERVICES CENTERS:
IMS shall provide the Insurance Administration Services defined above
primarily at IMS' St. Petersburg/Tampa, Florida Service Center
location; or for data processing services only, at IMS' Bozeman,
Montana Service Center, or with Customers' prior written approval, at
another comparable IMS Service Center.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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SCHEDULE B
BUSINESS OWNERS, COMMERCIAL UMBRELLA AND
WORKERS COMPENSATION/EMPLOYERS' LIABILITY SERVICE FEES
SECTION I IMPLEMENTATION SERVICE CHARGES
Customer shall pay IMS an "Implementation Charge" equal to $___*___ in
consideration of IMS implementing the Insurance Administration Services to be
performed under this Agreement. All data center charges associated with
implementing the base system are included in the Implementation Charge.
Customer will pay IMS $___*___ of the Implementation Charge upon execution of
the Agreement and the remaining balance of the Implementation Charges as
follows:
---------------------------------------------------------------------------------------------------
The Customer shall pay IMS the following portion of the Implementation Charge,
totaling ___*___, upon the completion and Acceptance of each defined "mid point"
delineated in the Rollout Plans (APPENDIX A, B, AND C) for each Authorized Line
of Business:
Authorized Line of Business Portion of Implementation Charge Amount
---------------------------------------------------------------------------------------------------
Business Owners (Appendix A) * *
Commercial Umbrella (Appendix B) * *
Workers' Compensation (Appendix C) * *
---------------------------------------------------------------------------------------------------
TOTAL * *
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
The Customer shall pay IMS the remaining portion of the Implementation Charge,
totaling ___*___, upon the completion and Acceptance of each Rollout Plan
(APPENDIX A, B, AND C) for each Authorized Line of Business:
Authorized Line of Business Portion of Implementation Charge Amount
---------------------------------------------------------------------------------------------------
Business Owners (Appendix A) * *
Commercial Umbrella (Appendix B) * *
Workers' Compensation (Appendix C) * *
---------------------------------------------------------------------------------------------------
TOTAL * *
---------------------------------------------------------------------------------------------------
SECTION II DEFINITIONS
The following words will have the following meanings:
1. "Adjusted Net Direct Written Premium" ("NDWP") shall equal the gross
amount of direct written premium (including increases thereto resulting
from endorsements and premium audits) processed by IMS for a particular
Authorized Line of Business, in a month, less the amount of reductions
due to cancellations, endorsements and premium audits in such month for
such Authorized Line of Business.
2. "Total Inception to Date NDWP" will mean the current sum total of
Customer's monthly NDWP for a particular Authorized Line of Business,
as measured Inception to Date (from the Effective Date of this
Agreement).
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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3. "Charge Size" will mean the appropriate vertical column in the Charge
Factor Table below, for each Authorized Line of Business, to be
determined by the Customer's Total Inception to Date NDWP for that
particular Authorized Line of Business.
4. "Charge Factor" will mean the appropriate percentage of premium to be
paid IMS, for Insurance Administration Services rendered for a
particular Authorized Line of Business, based upon the Charge Size and
the Monthly Average Policy Premium for that particular Authorized Line
of Business.
5. "Monthly Average Policy Premium" will mean the appropriate horizontal
row in the Charge Factor Table below, for each Authorized Line of
Business, to be determined by dividing the sum of the NDWP processed by
IMS in a given month for that particular Authorized Line of Business by
the number of new and renewal policies processed in such month for that
particular Authorized Line of Business.
SECTION III INSURANCE ADMINISTRATIVE SERVICES - SERVICE FEE SCHEDULE
Customer shall pay IMS a monthly servicing fee ("Service Fee"), for all
Insurance Administration Services rendered by IMS pursuant to this Agreement.
The Service Fees will be calculated as follows:
1. The appropriate Charge Size for that particular Authorized Line of
Business, for each month will be identified.
2. The Monthly Average Policy Premium will be calculated and the
corresponding Charge Factor in the Charge Size Column, for that
particular Authorized Line of Business, will be identified.
3. Each Service Fee, for a particular Authorized Line of Business, will
equal the product resulting from multiplying the Charge Factor in the
Charge Factor Table (at the intersection of the Average Monthly Policy
Premium row and the Charge Size column) times the NDWP processed by IMS
for the month for that particular Authorized Line of Business.
-------------------------------------------------------------------------------------------------------------
BUSINESS OWNERS
CHARGE FACTOR TABLE
CHARGE SIZE (BASED ON TOTAL INCEPTION TO DATE NDWP)
-------------------------------------------------------------------------------------------------------------
Monthly
Average * * * * *
Policy
Premium
-------------------------------------------------------------------------------------------------------------
___*___ * * * * *
-------------------------------------------------------------------------------------------------------------
___*___ * * * * *
-------------------------------------------------------------------------------------------------------------
___*___ * * * * *
-------------------------------------------------------------------------------------------------------------
Any reduction in the applicable Charge Factor, resulting from the attainment of
a certain level of Total Inception to Date NDWP production level as specified
above, shall only be applicable to
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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business processed by IMS after Customers' Total Inception to Date NDWP
production reaches that certain specified level.
-------------------------------------------------------------------------------------------------------------
COMMERCIAL UMBRELLA
CHARGE FACTOR TABLE
CHARGE SIZE BASED ON TOTAL INCEPTION TO DATE NDWP
-------------------------------------------------------------------------------------------------------------
Monthly * * *
Average
Policy
Premium
-------------------------------------------------------------------------------------------------------------
___*___ * * *
-------------------------------------------------------------------------------------------------------------
___*___ * * *
-------------------------------------------------------------------------------------------------------------
___*___ * * *
-------------------------------------------------------------------------------------------------------------
Any reduction in the applicable Charge Factor, resulting from the attainment of
a certain level of Total Inception to Date NDWP production level as specified
above, shall only be applicable to business processed by IMS after Total
Inception to Date NDWP production reaches that certain specified level.
-----------------------------------------------------------------------------------------------
WORKERS' COMPENSATION
CHARGE FACTOR TABLE
-----------------------------------------------------------------------------------------------
Monthly * * * * * *
Average Policy *
Premium *
*
-----------------------------------------------------------------------------------------------
___*___ * * * * * *
___*___
-----------------------------------------------------------------------------------------------
___*___ * * * * * *
___*___
-----------------------------------------------------------------------------------------------
___*___ * * * * * *
___*___
-----------------------------------------------------------------------------------------------
___*___ * * * * * *
___*___
-----------------------------------------------------------------------------------------------
SECTION IV HYPOTHETICAL MONTHLY SERVICE FEE
For illustrative purposes only, a hypothetical monthly Service Fee for the
Business Owners Authorized Line of Business is set forth below:
Customers' Total Inception to Date NDWP at the end of the example month was
$___*___. The Charge Size column is therefore $___*___ to $___*___. In this
month IMS processed 2000 policies with a NDWP of $___*___. The Monthly Average
Policy Premium row is $___*___. The hypothetical monthly Service Fee will be
equal to ___*___.
The above example is representative for the Authorized Lines of Business of
Business Owners and Commercial Umbrella only.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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SECTION V MISCELLANEOUS FEES
1. System modifications, enhancements, interfaces to Customer or other
third-parties systems will be performed on a time and materials basis @
$___*___ per person, per hour, subject to an annual adjustment based on
IMS' then current standard fees.
2. Data Conversion from existing Customer system to IMS system will be
performed on a time and materials basis at the rate of $___*___ per
person, per hour.
3. Third-party information services used to provide the Insurance
Administration Services will be a pass-through expense to Customer.
4. Data communication line charges (used by IMS solely for Customer) will
be a pass through expense to Customer.
5. IMS will provide data entry services at IMS' servicing office at the
time and materials rate of $___*___ per person, per hour.
6. Brio(R) (a third party reporting tool) is approximately $___*___ per
full service seat license or $___*___ for a limited seat license.
Customer shall maintain responsibility for purchasing the appropriate
number of licenses for their use.
SECTION VI WORKERS COMPENSATION PARTNERSHIP INCENTIVE
1. IMS shall pay Customer, provided that Customer is in material
compliance with the material terms of the Agreement, the following
advance payments, which will represent Customer's incentive fee for the
first ___*___ of Net Direct Written Premium ("Client WC NDWP") for
Workers Compensation Business processed by IMS, using the WC Software
(as defined in the Agreement) or any alteration, modification or
enhancements of the WC Software (collectively, "Client WC Software"),
for Clients other than Customer.
___*___ ___*___
___*___ ___*___
___*___ ___*___
___*___ ___*___
At Customer's expense, Customer will be permitted reasonable access to
IMS' records, information, personnel and facilities (excluding,
specifically, proprietary Technical Information of IMS and the Clients
and proprietary confidential information of the Clients) reasonably
necessary to verify IMS' compliance with the terms of this Section VI.
Access to IMS' records, personnel and facilities will be provided
during normal business hours upon ten (10) Business Days prior written
notice to IMS by Customer.
2. After the threshold of ___*___ Client WC NDWP is met ("Threshold
Date"), IMS shall pay Customer __*__ of Client WC NDWP for Workers
Compensation business processed by IMS, using the Client WC Software,
for Clients other than Customer. Beginning on the month after the
Threshold Date, IMS shall deliver quarterly reports to Customer on the
amount of Client WC NDWP administered, using the Client WC Software, on
behalf of Clients hereunder. After the Threshold Date, IMS shall make
such payments with respect to Client WC NDWP accrued during any term of
this Agreement. IMS shall make such payments quarterly and shall
accompany each payment with a statement showing Client WC NDWP during
the applicable quarter and the calculation of such fee.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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3. The payment fees to the Customer described in this Section VI are
dependent on the execution of the Agreement not later than April 14,
2000. For any delay in the execution of the Agreement beyond April 14,
2000, each corresponding payment to the Customer will be delayed
proportionately to the same Business Day of the following month as
defined in this Section VI.
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EXHIBIT I
COMMERCIAL LINES BUSINESS OWNERS PROGRAM
DEFINITIONS
Capitalized terms, not otherwise defined in the Agreement or in this Exhibit,
shall be construed as otherwise generally understood in the insurance and data
processing industry.
PLAN OF OPERATION
PROJECT ASSUMPTIONS
With the expansion of Customer's business plan to incorporate its new Business
Owner's Policy ("BOP") insurance product it intends, over the short-term, to
use its current Customer insurance sales agent network. Ultimately, by
expanding its product offerings Customer will increase its distribution channel
and create the opportunity for significant premium growth.
In order to ensure that Customer is positioned to achieve its stated goals and
that it will be able to provide its insurance sales agents ("Agents") with an
Internet solution that is compatible with their current system capabilities,
IMS has developed the following system requirements for the BOP insurance
product. These requirements are based upon numerous discussions that have taken
place with Customer's key management team over recent months.
1. To meet Customer's business objectives IMS will implement a system
with the following system functionality:
o Quick quote function
o User controlled editing to establish distinct underwriting rules
o Use of Customer company specific policy forms
o Customized output with Customer specific logo on forms
o Loading of rate files
o Use of Customer rates/loss cost multipliers for BOP
o Receivables processing
o Automated renewal/endorsement process
o Cancellation processing
o Reinsurance processing
o Claims data management
o Agency management reporting
o Premium and commissions accounting
o Generation of commission statements and checks
o Compliance of statutory reporting
o Testing of all functions with Customer's data
o Controlled environment with Customer approval and sign-off of test
results
o Document packaging
o Cash processing
o Audit/inspection processing/vendor management
o Interfaces for Customer's clearance system, FARE, ISO ▇▇▇ and D&B,
and Claim TPA
2. Customer will not use ISO policy forms. There are 5 company specific
general forms, 12 property forms, and 21 liability forms. Of these, 5
will be dynamic declarations displaying all limits for included and
optional coverages in the Insurance Program. The remaining forms will
be static. In addition, there will be one (1) to three (3) forms per
state that are state specific and may contain minimal dynamic data. It
is assumed these additional forms will only vary slightly when
implemented requiring minor maintenance support and that certain
additional forms may be required to be added to BOP from time to time.
However,
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with regards to any additional forms that may be added from time to
time, Customer shall be billed for the System Enhancement at the time
and materials rate unless: (a) the System Enhancement will take less
than forty (40) hours to complete; and/or (b) the form to be
implemented is state mandated form.
3. Customer will promptly provide IMS with all data required on the
declaration pages. IMS will create the sample declaration for
Customer's approval based on the data provided. All coverage limits
will be displayed on the property or liability declarations. In
addition to these declaration pages, Customer also requires a schedule
of forms and endorsements applicable to the program, common policy
declarations, and a schedule of locations. All forms contain dynamic
data.
4. In order to utilize document packaging, OCR lines must be printed on
all forms.
5. Customer will inform IMS of any changes to forms and any new versions
and their attachment rules as they are developed.
6. In order to utilize other third party databases (▇▇▇, Dun &
Bradstreet) and build the necessary interfaces with these third party
databases, Customer will negotiate with the various information
service providers so that it will in turn allow IMS electronic access
to their databases for use in processing Customer's business.
7. IMS will, at least initially, have to rely on Customer to provide IMS
with regulatory and ISO requirements and inform IMS of the necessary
changes in all Authorized States. Once IMS receives these notices IMS
will apply the changes and ensure compliance.
8. Customer will promptly provide the necessary resources to handle the
reporting required for state-specific calls based on the data provided
by IMS through FARE (a Customer proprietary system).
9. IMS will assist the Customer corporate bureau reporting team by
providing the appropriate premium and loss information for the annual
verification submission to ISO.
10. Customer will promptly provide IMS with an electronic copy of the
specific Cybercomp class codes that will apply to the eBOP program.
11. In order to develop the final system specifications and to complete
the business requirements document, IMS will require the following
additional information:
STATE SPECIFIC INFORMATION:
o State filings as completed
o Underwriting manuals by state as completed
o Cause of loss codes by coverage and state (if state differences
apply)
o Add state-specific forms and distribution
GENERIC INFORMATION:
o Annual statement line of business by coverage
o Binding requirements and workflow
o Standard anti-fraud wording
o Endorsement business rules and workflow
o Cancellation business rules and workflow
o Reinstatement business rules and workflow
o Audit business rules and workflow
o Generic forms and distribution
o Inspection business rules and workflow
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o New business rules and workflow
o Renewal business rules and workflow
12. Customer's underwriting group will provide IMS with the necessary
changes to the prototype screens. IMS will apply these changes to the
screens once they have been received from Customer. Screens to be
developed based on product rules and guidelines to be provided. IMS
will identify functional changes outside the scope of the original
Agreement and assess impact to cost and time schedule as necessary.
13. A list of the standard reports available from IMS has been provided to
Customer for its review. Customer can choose the reports that it would
like to receive on a regular basis from this list.
14. IMS will create a policy transaction file to be provided on-line to
Customer's claim third party administrator ("Claim TPA") for coverage
verification. It is IMS' intent to provide the coverage verification
data file to the Claim TPA's and Cybercomp on a daily basis by posting
the data file to the web-enabled front-end for the Claim TPA's to
access only their data. It will be the responsibility of the Claim TPA
to download the data on a daily or interim basis. IMS will hold the
daily files for a period to be reasonably agreed upon by Cybercomp and
IMS. As a transitional phase for the Claim TPA's retrieving the claims
data from the Internet, IMS will provide the data files to the Claim
TPA's via e-mail.
15. Customer will not be issuing short-term policies. Agents will have to
issue full term policies and cancel if necessary. Customer will
promptly provide IMS the rules to follow for canceling the policy on a
pro-rata basis.
16. Customer will offer a multi-year term policy if Customer and IMS
mutually agree such an offering can be supported in the existing IMS
system infrastructure with little to no change and without impact to
the implementation schedule or cost.
17. IMS can support the use of a building code effectiveness grading
system in the rating algorithm if necessary. Customer will promptly
provide IMS the criteria to be used in the rating.
18. IMS can support a minimum retained premium, which is referred to as a
"flat minimum". Customer will promptly provide IMS with the minimum to
be used for the Customer's BOP policies.
19. Customer will promptly provide IMS the zip codes to territory mapping
for use in rating and statistical reporting.
20. IMS can support a 6-digit classification code ("6-Digit Code"). The
6-Digit Code will be comprised of the 4 position SIC code and a 2
position code identifying the type of business. Management reporting
will be done based on the 6-Digit Code and will not require reporting
based a breakdown of the class code.
21. IMS will follow the exception processing guidelines established by
Customer for processing submissions that fall outside the Customer's
BOP underwriting guidelines.
22. IMS will provide the Claim TPA's access to the policy forms to make
decisions on coverage. The process to be used for providing access
will be agreed upon by Customer and IMS and will not impact the
implementation schedule or cost.
23. IMS' system performs field value and relational editing as the user
inputs data. Customer will promptly provide IMS the edits to be used
for the Customer's BOP program.
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24. IMS' system will retain submission data input by Agent as soon as the
reservation is cleared and the quote process is allowed to continue.
This data will be available for management reporting as per Customer's
request. IMS will evaluate each request and provide an estimate to
implement based on the agreed upon process for enhancement requests.
25. Customer Claim TPA's are responsible for submitting accurate data in
the correct position, size, type and format and with the correct
values as assigned by ISO or IMS. All data formats should be edited
prior to submission to IMS.
26. Customer Claim TPA's will submit one (1) file monthly to IMS by tape
cartridge or as ASCII files attached to e-mail by a predefined
timeframe to be determined after the completion of the detail business
requirements.
27. IMS will provide an error report of claims rejected by the interface
due to incorrect data being submitted. The report will be provided on
a monthly basis after processing the current month claims file from
the Claim TPA. Claims that do not pass all edits will be rejected in
their entirety. Rejected claims will be corrected and resubmitted with
all data previously rejected, including all financial transactions.
All resubmitted transactions should be included with the next Claim
TPA file transmission. All claims passing edits will be processed to
IMS' system.
28. IMS will provide Customer with the required policy/claims data for
calculating the Claim TPA's processing fees.
29. Customer will pay all Claim TPA fees as per contract between Customer
and the Claim TPA. Any services offered by IMS for Claim TPA data
processing beyond the contracted services will be charged to Customer
per the Agreement based upon prior approval from Customer.
30. Customer is looking to acquire the services of a single toll free
vendor ("Toll Free Vendor") for claims reporting. This Toll Free
Vendor will also need a copy of the policyholder coverage information
to confirm coverage, locations and forms and provide the necessary
data to the Claim TPA for administering the claims. It is IMS' intent
to provide the Toll Free Vendor access to the coverage verification
data needed through IMS' web-enabled front-end. The Toll Free Vendor
will need access to more policy data than the Claim TPA. The IMS
security levels will define which data is to be accessed by the Toll
Free Vendor or the Claim TPA and allow the Toll Free Vendor access to
all policy data irrespective of the Claim TPA assigned.
31. IMS will provide insured welcome letters ("Welcome Letter") to be
generated and mailed out of the IMS system. The Welcome Letter
consists of a one (1) page document that is mailed to the Insured. The
Welcome Letter will be mailed with the policy if the policy is mailed
within seven (7) Business Days of binding. If policy is not prepared
for mailing within seven (7) Business Days, the Welcome Letter will be
mailed separately.
32. IMS will provide time and material estimates to implement the various
components required for interfacing the Kokopelli designed web-site to
the IMS system as the detail specifications are provided by Customer.
DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT. These
components are as follows:
o RFP - IMS will be given an opportunity to respond to the RFP for
hosting the web system.
o Agency profile and set up will be done on Kokopelli front-end.
Customer will require that the Agent have a logon for Kokopelli
and a separate logon to the IMS application as an additional
security layer. Agent will be required to input his or her
password to access quote and support application. IMS will develop
the interface/integration between the IMS security system and
Kokopelli.
o IMS will develop a https protocol between Kokopelli and the IMS'
producer system and the PDS agent master when agency appointment
is approved, updated, cancelled.
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33
Customer will need to establish the procedures for handling
sub-agents via the Kokopelli system or other defined process.
o IMS will provide a daily file containing policy status information
to the Kokopelli system. The insureds access is limited based on
whether an in-force policy exists for the insured.
o IMS will provide insured access to the loss run reports provided
to the Agents via the support site. The navigation should be
streamlined to eliminate the selection choices and display only
the loss run report for the insured's policy.
o Customer will promptly provide IMS screen prints of the Kokopelli
web-site in order to develop a similar look and feel for the
product sites being developed. The color scheme and background
layout of the Kokopelli site should be similar in the product
sites. All other functions will be specific to the product
application or follow the current Workers Compensation Internet
application.
o IMS will provide separate time and material estimates for
components listed above based on whether IMS is the web hosting
vendor or not.
o In the event the Kokopelli solution for the Agent appointment is
not in production prior to the implementation of the first state
rollout on the IMS system, an alternate solution for establishing
the Agent data in the IMS system will be developed.
33. IMS will provide Customer a time and materials estimate to implement
an interface to a premium finance company for retrieving a finance
quote and establishing financing at binding. DELIVERY OF SUCH FUNCTION
IS OUTSIDE THE SCOPE OF THE AGREEMENT.
34. IMS will offer Customer the capability of tracking the Claim TPA
take-over process in the claims data interface. The additional
processes for providing data extracts and reports for the current and
new Claim TPA, will be estimated by IMS on a time and material basis.
DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE
AGREEMENT.
35. IMS will provide the ability for Agents to process premium and
non-premium endorsements to in-force policies via the Internet
application.
36. IMS will provide the management of the inspection and audit vendors
selected by Customer for responding to service requests. The
management of these vendors will be based on the defined rules and
guidelines established by Customer. IMS and Customer will jointly
share in the efforts to develop an automated solution for the vendor
management process in the IMS system.
37. The IMS system will handle capturing multiple aggregates at the
coverage level. IMS will provide a report to Customer identifying
policies where a percentage of the policy aggregate has been met.
38. IMS will offer Customer an interface to an appropriate vendor to be
selected by Customer, or to integrate the vendor's database and
calculation algorithm, to perform an insurance-to-value calculation.
IMS will provide a time and materials estimate upon receipt of the
file specifications and business requirements to implement this
function. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE
AGREEMENT.
39. IMS will offer Customer an interface to the Hartford Steam Boiler
Inspection and Insurance Company for the purpose of submitting premium
bordereaux and the corresponding premium payments on a monthly basis
within the days specified in the treaty. IMS will provide a time and
materials estimate to implement this function. DELIVERY OF SUCH
FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT.
40. IMS will offer Customer a data feed to Customer's catastrophe modeling
system. IMS will provide a time and materials estimate to implement
this function. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE
AGREEMENT.
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41. IMS will provide cover pages in color (blue or black ink) with the
graphics based on line of business.
42. IMS will provide Customer the capability to offer its Agents
installment agency billing for Agents' Business Owners' Policies. With
the cooperation of Customer, this function will be made available to
Customer no later than twelve (12) months from Customer's request to
implement this function.
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REQUIREMENTS DEFINITION
BUSINESS REQUIREMENTS
THIS SECTION DETAILS THE APPLICABLE STIPULATIONS OF THE INSURANCE
ADMINISTRATION SERVICES TO BE PROVIDED UNDER THE AGREEMENT BASED ON THE
CATEGORIES LISTED BELOW.
1. DOCUMENT PACKAGING REQUIREMENTS
IMS uses automated, system-generated forms, from policy declaration pages to
Agent statements, and maintains the necessary form information: form names,
recipients, and printer instructions, including variable information such as
company name and address. The IMS system not only catalogs all current forms in
use, but also stores previous versions of forms should IMS need to retrieve
them for Customer's legal or auditing purposes.
Standard Forms and Distribution:
----------------------------------------------------------------------------------------------------------------------------------
DOCUMENT
FORM PACKAGING
FORM DESCRIPTION RECIPIENT RECIPIENT DISTRIBUTION
----------------------------------------------------------------------------------------------------------------------------------
Declarations I,A,L,X I,A,L,X Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Installment Due Notice I,L,X I, L, X Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Schedule of Payments A only A only Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Short Down Payment Notice I,A,L,X I,A,L,X Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Adjusted Premium Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Cancel Underwriting (reason codes on back) I,A,L,X A,L,X Insured's copy goes proof of mail to
insured
----------------------------------------------------------------------------------------------------------------------------------
Notice of Cancellation (reason codes on back) I,A,L,X A,L,X Insured's copy goes proof of mail to
insured
----------------------------------------------------------------------------------------------------------------------------------
Notice of Nonrenewal (reason codes on back) I,A,L,X A,L,X Insured's copy goes proof of mail to
insured
----------------------------------------------------------------------------------------------------------------------------------
Confirmation of Cancellation I,A,L,X A,L,X Insured's copy goes proof of mail to
insured
----------------------------------------------------------------------------------------------------------------------------------
Cancellation Nonpay (has coupon on back) I,A,L,X A,L,X Insured's copy goes proof of mail to
insured
----------------------------------------------------------------------------------------------------------------------------------
Cancel Policy Financial Status A only A only Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Notice of Reinstatement ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Notice of No Coverage I,A,L,X A,L,X Insured's goes proof of mail to insure
----------------------------------------------------------------------------------------------------------------------------------
Additional Premium Due ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Premium Due Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Past Due Premium Notice I,A,L,X I,A,L,X Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Balance Due Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
7
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----------------------------------------------------------------------------------------------------------------------------------
Balance Due Final Notice I,A,L,X I,A,L,X Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Renewal Notice/Payment Schedule ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Final Renewal Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
BAS/Corr Letterhead ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
All coverage forms I only I only Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Legend: I = Insured, A = Agent, L = Lender, X = Additional Interest/Imaging
Requirements
2. IMAGING REQUIREMENTS
The IMS underwriting department has access to all documents that are sent to
IMS and all document packaging output documents related to a policy through an
electronic form archive. As a standard procedure all system-generated documents
are transmitted to the IMS imaging system via Computer Output to Laser Disc
("COLD"). These stored images are duplicates of the original documents sent to
the policyholders, Agents and other respective parties and can be reproduced
for Customer, its auditors, reinsurers, and its Agents upon request. IMS does
not retain hard copy documents once the IMS records management department scans
the images into the system.
3. INPUT REQUIREMENTS
The information required for quoting and binding a policy shall be input into
the IMS system by Customer's Agents using the Internet. IMS' underwriting
department will be prepared to handle exception processing that may occur based
on procedures defined by Customer. As defined in Customer's underwriting
guidelines, the largest building content value will be marked as a key
location. The first location address will then automatically pre-fill the
mailing address. Modifications to quotes will not be indicated on the
production report. Customer will promptly provide IMS with three sets of
questions designed to classify different types of commercial property risks
such as restaurants and contractors.
An individual Agent will be able to enter the same quote within a predefined
number of attempts. If this number is exceeded that Agent will not be allowed
to continue the process and will automatically be referred to IMS' customer
service department for assistance. The production quote count will not be
affected by an unsuccessful quote attempt.
The input requirements are based solely on the information provided by Customer
to IMS. During the implementation of the Rollout Plan, as the detailed
underwriting information for each state is determined, additional requirements
will be incorporated into the project scope.
4. MANAGEMENT REPORTING REQUIREMENTS
The reports that Customer provided to IMS have been analyzed and compared to
the IMS standard reports to ensure that the information Customer requires is
available. This analysis and a list of IMS' standard reports have been provided
by IMS to Customer and Customer acknowledges receipt thereof. IMS will send a
weekly e-mail with the Weekly Data File Report that represents the Agent's BOP
books of business to each Marketing/Field Representative. IMS will also send
this information to Customer's Accounting Group via e-mail. In addition, IMS
will provide an accounting group report that contains all BOP books of business
sorted by Customer's Marketing/Field Representative.
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5. AD HOC REPORTING REQUIREMENTS.
IMS utilizes a third party ad hoc reporting tool called Brio(R).
Brio(R) Report provides the enterprise reporting tools and technology that
Customer will need to develop and process a complete range of reports, from
small reports to mission-critical operational reports that access large volumes
of data in production databases, legacy applications, and data warehouses.
Output from Brio(R) Report can range from high-volume printed reports to highly
interactive reports delivered via the Web.
BRIO(R) CAPABILITIES
The following is a list of Brio(R) capabilities that Customer may choose to
utilize. The use of these features is determined at the end user level.
o Merge premium data with loss data
o Read only so that the data can be changed
o Drill down into the data
o Intelligent method for subtotaling and totaling
o Can filter the data by year to date, week to date, etc.
o Time Service Report -- e-mailed or static on the Customer web site
o Running the month end process on
a weekly basis
o Fifteen (15) file layouts for reporting against Month End (samples
were previously provided to Customer
o Three to five (3-5) additional file layouts based on specific data
reporting requirements to be provided by Customer which will not
require the capture of additional data within the base system
database.
NOTE: In order for Customer to realize the full benefits of the Brio(R)
reporting tool, it would be necessary for Customer to establish a dedicated
line into the IMS system. This would allow Customer to access Brio(R) and
Customer-specific data.
6. FORMS
Customer will not use ISO policy forms. There are 5 company specific general
forms, 12 property forms, and 21 liability forms. Of these, 5 will be dynamic
declarations displaying all limits for included and optional coverages in the
program. The remaining forms will be static. In addition, there will be one (1)
to three (3) forms per state that are state specific. Certain additional forms
may be required to be added to BOP from time to time. However, with regards to
any additional forms that may be added from time to time, Customer shall be
billed for the System Enhancement at the time and materials rate unless: (a)
the System Enhancement will take less than forty (40) hours to complete; and/or
(b) the form to be implemented is state mandated form.
7. OUTPUT AT AGENT'S OFFICE
In response to Customer's request that specific forms be available to print in
the Agent's office IMS agrees to provide the following:
o Quote
o Memorandum of coverage
o Application
o Binder
o Billing status information
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o Policy status information
o Employer limits information
o Policy loss run report
o State specific program underwriting forms
o Premium finance agreement (creation of the finance agreement
requires an interface with a premium finance company. THIS
INTERFACE IS OUTSIDE THE SCOPE OF THIS AGREEMENT.
8. STATISTICAL, FEDERAL AND STATE REPORTING REQUIREMENTS
IMS will support regulatory reporting for the eBOP program. IMS will ensure
that all of the required fields necessary to produce the required information
are defined in the system. IMS will also utilize the ISO edit package for
validation of data prior to reporting.
IN ADDITION TO MEETING THE FEDERAL AND STATE REPORTING REQUIREMENTS, IMS WILL
PROVIDE THE FOLLOWING ISO REPORTING SUPPORT SERVICES:
o Quarterly or as dictated by each state's reporting requirements
statistical reporting to ISO under the Businessowners module of
the commercial stat plan
o statistical agent liaison
o IMS will assist the Customer corporate bureau reporting team with
the annual verification by providing the necessary reconciliation
of statistical or financial variances using the required ISO
definition codes
o IMS will offer Customer selected data for a Customer data feed to
its catastrophe modeling system. (THIS INTERFACE IS OUTSIDE THE
SCOPE OF THIS AGREEMENT.)
9. STATUTORY REQUIREMENTS
IMS recognizes that statutory requirements will vary from state to state. IMS
agrees to analyze and document these requirements based on the information
provided by Customer as each new Authorized State is phased in.
10. UNDERWRITING REQUIREMENTS
The underwriting decisions for the Businessowners insurance product will be
completed utilizing an underwriting template provided by Customer. The
underwriting will take place on-line via specially designed screens and will
provide automatic rejection of applications that do not meet the defined
underwriting guidelines. When a fax or mail-in submission is received, the IMS
commercial underwriting department will use the Internet screens and the
predefined Customer rates, rules and guidelines in the IMS system to issue or
reject the policy.
AUDITS
IMS will provide audit letters for the Customer new business and renewal
policies, upon receipt of an application for a BOP risk that requires IMS to
send an audit letter requesting underwriting information, such as prior loss
history, payroll and gross receipts. IMS will follow audit guidelines that will
be provided to IMS by Customer. IMS will take "necessary steps" if no response
is received from the insured, which necessary steps may include issuance of a
second audit letter and/or issuance of an underwriting cancellation notice.
When an audit response is returned to IMS, IMS will process the appropriate
credit or debit to the policy, and send follow-up correspondence with an
explanation of the reason(s) for the change in policy premium.
In addition to the Audit letters, IMS will also send notification to the Audit
TPA of Customer's choice that will inform the Audit TPA that a particular risk
requires an on-site audit. Upon receipt
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39
of a complete audit finding, IMS will then process any necessary changes to the
policy, as outlined by Customer.
INSPECTIONS
IMS' commercial underwriting department will order, on behalf of Customer,
underwriting inspections from Customer's inspection administrator as required
by state mandates or Customer's underwriting rules and guidelines. IMS will
process the resulting policy updates, as outlined in Customer's underwriting
manual, such as cancellations or documentation on the policy.
REINSTATEMENT WITH A LAPSE IN COVERAGE
IMS will process reinstatements subject to the guidelines set by Customer.
EXCEPTION PROCESSING
Submissions that fall outside of Customer's Business Owner's Program
underwriting guidelines and that result in a disputed rejection, will be
handled according to an "Exception Processing" document that will be created
and approved by Customer with consultation and input from IMS.
10.1 ACCEPTABLE CLASSIFICATION
Customer will promptly provide IMS the Customer classes eligible for the eBOP
Program. Customer will then provide a matrix to IMS for use during policy
processing in determining eligible classes, cross-editing of classes and
generation of class specific forms.
10.2 POLICY LEVEL GUIDELINES
Customer's specific underwriting rules will be displayed on a customized data
entry screen. The system will be designed to ensure that the Customer specific
criteria are met before the risk is accepted. The underwriting rules will vary
by state.
Additional state specific underwriting guidelines will be utilized for the eBOP
program. IMS will provide these guidelines in the form of underwriting
questions, as shown in the eBOP Prototype. The resulting response from the
Agent will determine the acceptability of the risk. IMS will use the two sets
of questions that will be required for restaurants and contractors.
10.3 RISK SCORING
IMS will use the criteria defined by Customer to score the risk and determine
the appropriate product tier. Based on Customer's requirements, IMS will
establish a default in the system so that if a score is generated that is
outside the tier range (example provided is +100 to -100), an error message
will be generated in the system. The user will be informed Customer is
declining to quote the business and the reason why.
The risk scoring function in the system will allow for different criteria range
thresholds and automatically make point assignments by state. Additionally, an
effective and expiration date will be used in the AS/400 system tables to allow
changes within the state set up.
Policies insuring multiple locations will generate a risk score for each
location with a weighted average of the risk scores for all locations.
In states allowing filing of multiple tiers within a single company, the tier
rate will be applied using discounts and/or surcharges. In states requiring
separate companies per tier, the rates will be calculated by applying a rate
factor after the completion of premium development for the risk.
Based on the weighted average risk score generated during the rating process,
the risk will be placed in the appropriate product tier.
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40
An example of a possible multiple company rating tier is provided below (as
provided by Customer):
------------------------------------------------------------ ------------------ -------------
RISK SCORE POINT TIER RATING
INSURANCE COMPANY RANGE FACTOR
------------------------------------------------------------ ------------------ -------------
Reliance National Insurance ___*___ ___*___
------------------------------------------------------------ ------------------ -------------
United Pacific ___*___ ___*___
------------------------------------------------------------ ------------------ -------------
Reliance Insurance ___*___ ___*___
------------------------------------------------------------ ------------------ -------------
Reliance National Indemnity ___*___ ___*___
------------------------------------------------------------ ------------------ -------------
Reliance Universal Insurance ___*___ ___*___
------------------------------------------------------------ ------------------ -------------
An example of the risk criteria that IMS will use for the development of the
risk scoring mechanism is shown below (as provided by Customer):
------------------------------------------------------------- --------------------------------------- ---------------------
CRITERIA RANGE POINTS
------------------------------------------------------------- --------------------------------------- ---------------------
Years In Business At Location * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
History Verification From D&B * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Credit Scoring * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Building Age * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Classification * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Standard Industrial Classification (SIC) Verification * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Crime Scoring * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Distance From Water * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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------------------------------------------------------------- --------------------------------------- ---------------------
Central Station Burglar & File Alarm * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Length of Time Without Reported Claims * *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
* *
------------------------------------------------------------- --------------------------------------- ---------------------
Large Building Credit * *
------------------------------------------------------------- --------------------------------------- ---------------------
10.4 COVERAGES
Customer's Businessowners policy will provide basic coverage with the option to
select a package endorsement for predefined increased limits. The product will
also offer the ability to choose additional increased coverage/limits for
selected coverages within the product. At a minimum, the Customer BOP product
will offer basic coverage limits for Building or Business Personal Property and
Business Liability.
11. RATING REQUIREMENTS
Customer will promptly provide IMS with rating development guidelines that will
be incorporated into the rating algorithms. Customer established these
guidelines from the ISO Commercial Lines Manual. Specific rules and paragraphs
from the ISO Commercial Lines Manual are referenced within the explanation of
the general rating rules below:
11.1 GENERAL RATING RULES
o Factors or multipliers are to be applied consecutively and not
added together unless otherwise specified.
o Round rates, factors and multipliers after the final calculation
to three decimal places. Five-tenths or more of a mill shall be
considered one mill, for example, .1245 = .125.
o Round the premium for each coverage for which a separate premium
is calculated to the nearest whole dollar. Round a premium
involving $.50 or over to the next higher whole dollar.
o Compute premium for mandatory coverages by using the limit of
insurance and, once computed, apply the premium separately to
building and business personal property. The limit of insurance
must be the replacement cost value (Rating Basis Code 2) of the
property to be insured. This does not apply to fast food
restaurants.
o Applicable to eligible fast food restaurants:
a. Compute premium separately for mandatory property and
liability coverages.
b. For mandatory liability coverage, the rates apply per $1,000
of gross sales.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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11.2 PREMIUM DEVELOPMENT
Businessowners policies are class rated. The building and personal property
rates are stored and accessed in system tables based on territory, building
construction, public fire protection, building occupancy, and whether or not
the building has a sprinkler system. Optional coverages result in the addition
of a flat premium or can be increased by applying a rate to the insured values,
depending on the coverage.
12. PROPOSED DETAILED INTERNET WORK FLOW
The following proposed detailed workflow provides an outline of the tasks that
shall be completed by an Agent in order to enter a new Businessowner policy.
The workflow for interfacing with third-party vendors such as ▇▇▇ and ▇▇▇▇ &
Bradstreet may change based on availability and cost to Customer of data from
the third-party sources. As long as the number of interfaces and the data
required for validation does not increase from what was previously defined the
workflow may require only slight modification. As part of the eBOP project IMS
will develop the screens and processes to support these functions.
IMS encourages the processing of cash through Electronic Funds Transfer (EFT),
which is IMS' preferred method for processing cash quickly and efficiently. At
least initially, Customer would like to have the ability to process checks and
credit card payments in addition to EFT. To support this request IMS will make
all three of these methods available.
(Work flow diagrams for renewals, endorsements, cancellations, and
reinstatements will require further review and discussion with Customer before
being finalized. However, similar or like work flow processes are anticipated
for these transactions.)
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43
12.1 eBOP Proposed Internet New Business Process Diagram
Entrance Screen
Quote of
Support Support Support Flow
Quote
State Selection / Effective date
Eligiblility No
Eligible
Yes
Retrieve D&B and
Clearance Info Dun and Bradstreet Lookup
Years in Business / Losses
Policy Level Coverage
Location / Coverage
Mostly
Additional
Locations Yes
No
Coverage
Building Option Contents
Building and Contents
Building Coverage 1st --- O --- 2nd Contents Coverage
Loop Loop
repeated repeated
for each Yes for each
Location Additional Building
Buildings Contents Options
No
Loop
Repeated Return
Buildings Options for each entrance
Building screen
Proposal
Retrieve ▇▇▇ Info for all Locations
Continue
Working Quote/Premium Print
Quote
Bind
Binding Binding System Marks Agent Faxes
Information Anti-Fraud Instructions Policy Pending Application EFT to IMS
Cash
Binder
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12.2 Customer Proposed Cash Process Diagram
IMS Entering Cash
Initiates Cash
Process
Check Retrieve Funds ACH Sweep Account
Check Received Bounced ACH Funds
Credit Card Charged to Agent/ No Transferred
Insured
IMS Continues
collection efforts No Check clears Sweep Account
Credit
Processed Yes
Yes
Notify Reliance Via Bounced ACH
Email charged to Agent/ No Funds Automatic Policy
Insured Transferred Issuance
IMS Issues Policy
Yes
No
IMS Cancel Policy Submit
Credit Card # No Cancel Policy
w/in 24 hrs.
Yes
System generates Output Dec
Premium deposited in Reliance
Account Policy Issuance
Notice to Agent
Reliance funds transferred to Reliance
operating account
IMS will draw fee from Reliance
operating account
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13. CUSTOMER SERVICE
Although IMS realizes that most of the transactions that IMS will be processing
for Customer will be received through the Internet, the need for customer
service, once a policy has been issued, still exists. IMS' commercial lines
staff will quote submissions and bind coverage if an Agent accepts, based on
verification of the program guidelines, required underlying limits of insurance
and any applicable exclusion(s).
The IMS commercial lines customer service department associates will undergo
comprehensive product training that will include Customer's eBOP policy
guidelines.
13.1 POLICY PROCESSING
In conjunction with the Internet capabilities, the IMS customer service unit
will utilize IMS' "Policy Processing System" to provide full processing for all
BOP policy requirements (as specified in this Exhibit), while managing the
entire policy process (new business, quoting, renewals, change endorsements,
cancellations, and reinstatements). When an audit response is returned to IMS,
IMS will process the appropriate credit or debit to the policy, and send
follow-up correspondence with an explanation of the reason(s) for the change in
policy premium.
To assist in this process the Policy Processing System utilizes the Group 1,
Code 1 software. This product not only recognizes and corrects incorrect
addresses, but also draws in the city and state information thereby expediting
the data entry process whether through the Internet or the exception processing
procedures.
Access to the Policy Processing System is based on user authority, with
security at both the menu option and function levels. These authority levels
govern access by IMS' internal resources as well as the designated external
users.
System edits are built based on the Customer eBOP Program underwriting and
rating guidelines. IMS will automatically determine risk acceptability based on
these edits.
13.2 CUSTOMER SERVICE NEW BUSINESS PROCESS
The diagram that follows provides a high level overview of IMS' workflow, as
established for processing Customer's mailed-in or faxed new business
applications. This basic workflow will also apply to renewal, endorsement and
cancellation processing for the eBOP program.
13.3 QUALITY CONTROL SELF AUDIT
Customer will perform initial quality control functions during the first six
(6) months of live production processing. During this time, Customer will
develop a self audit process to be implemented by IMS, the terms of which will
be mutually agreeable to IMS and Customer and are to be negotiated separately
from this Agreement.
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IMS CUSTOMER SERVICE DEPARTMENT
NEW BUSINESS PROCESS DIAGRAM
IMS Mailroom
Receives Umbrella
Submission
Route to
Commercial
Department
Underwriter
Companies
Automated
Quote
Acceptability No Decline
Met?
Yes
Quote Emailed or
Faxed to Agent
Agent No Archive
Accepts Quote
Quote?
Yes
Bind
Coverage
upon Receipt
of Funds
Funds No Process
Received? Cancellation
Yes
Customer
Service
Issues Policy
through
AS/400
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13.4. SURVEY AND UNDERWRITING REPORTS
IMS will provide third party reports such as CLUE reports on an as needed basis
for new business or renewal processing. The type and frequency of the reports
shall be designated by Customer and shall be handled as a pass through expense
to Customer for billing purposes. IMS shall utilize authorized vendors for
obtaining the required records.
13.5. CORRESPONDENCE
When dealing with Agents, insureds, claimants, and lenders, IMS' customer
service representatives utilize IMS' "Correspondence System". IMS will send
custom form letters, track outgoing correspondence, and log incoming
correspondence. IMS will create the form letter templates, which will then
reside in the IMS system for repeated use, based on the guidelines provided by
Customer.
IMS will save a copy of the letter online and create a history record showing
that a letter was sent. IMS will produce user activity reports from the
Correspondence System that assist in tracking outgoing correspondence created
by an individual user or group of users on any date. These reports will be
provided to Customer upon reasonable request.
13.6. CLIENT INFORMATION
Customer search option allows IMS to view all the policies belonging to a
specific policyholder. The Customer update option allows IMS to change general
insured information (e.g., addresses, telephone numbers, etc.). Entering this
insured information one time applies the information to all products under that
insured.
13.7. POLICY HISTORY AND NOTES
IMS will respond to requests that involve historical data through the history
option found within the IMS system. This option allows IMS to view policy
transactions and forms in detail. Selecting the history option reveals the
policy activity screen, which displays the entire history of the current
policy. This function provides IMS with the ability to respond more effectively
to Customer's Agents and policyholders.
Additionally, when policy processing deviates from the norm, documenting these
differences for future reference through the Comments Processor is standard
procedure. This function provides an internal notebook, attached to a policy,
that alerts the user to important information.
13.8. APPLICATION SUPPORT TABLES
Over six hundred (600) files contained in the "Application Support Tables"
allow IMS to customize "Insurance Tools" to fit Customer's profile. IMS can
revise maintenance files within the different components of the system. For
example, if there are changes to rates or products, IMS can easily make those
changes by simply copying, saving, and updating the existing values.
14. ACCOUNTING
IMS will provide full accounting services (as specified in this Exhibit) for
Customer including day-to-day posting, balancing and control of premium
receivables, bank reconciliation and annual statement support.
14.1 PAYMENT PROCESSING
IMS will follow all binding guidelines established by Customer in order to
expedite the issuance of policies. While IMS prefers that Customer utilize
Electronic Funds Transfer ("EFT") as much as possible, IMS acknowledges that it
will be required to handle a range of payment processing, including:
o Checks
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o Credit card payments
o Reconciliation
Premium processing for payments related to installments, renewals, audit bills
and endorsements will be processed through multiple lock boxes via an
authorized Bank with a designated Customer Post Office Box. The lockbox to be
used on the remittance will be determined based on the insured's billing state.
(EFT and credit card payments will also be offered.) These payments will be
picked up early each morning and deposited the same day. Payments received with
a remittance coupon will be processed using optical OCR equipment that reads
the policy number electronically. Once lockbox data is transmitted and loaded,
the system will automatically process cash by applying payments and updating
policies.
Any payments collected via credit card will incur a processing fee. These fees
will be included with the policy premium where state guidelines allow a charge
to be passed back to the insured. Customer will promptly provide IMS with any
state-specific requirements for credit card processing.
Reinstatement and collection procedures will be established according to
Customer's guidelines. IMS will request these payments be sent directly to IMS'
office, EFT or through credit card payment.
IMS will actively support Customer's efforts to promote the utilization of EFT
with its Agents if Customer chooses this option. IMS will review the
requirements and attempt to address any legitimate concerns that the Agents may
present.
IMS will be responsible for the processing of all policy premiums direct
deposits. To facilitate this process the following controls are in place:
o Use of preprinted policy numbers on all documentation
o Daily review and comparison of system totals compared to total
cash transmitted and/or entered and any credit card receipts
transmitted
o Daily preparation and reviews of deposit slips and journal entry
forms
o Transactions not received through EFT will be deposited within 24
hours of receipt
Cash processing includes the application of payments to current policies as
well as the application of new business. Because the volume of payments can be
extensive, cash processing is completed in batches. Once a batch of payments is
entered either automatically or manually, the system assigns a control and
batch number. These identifiers are used to track data throughout the system.
The system supports full and partial cash entries. Full entries process a
variety of cash payments within a single batch. The full entry is also used to
process new business transactions. Through cash component processing, the new
policy number is automatically registered.
There is also a cash correction option that allows for cash revisions as well
as previous payment adjustments. Once retrieved, the cash correction option
provides a number of selections for making revisions. These include changes to
Agent, product, payor, and net amount information.
Cash processing activities such as non-sufficient funds processing, stop
payments and deposit corrections will be handled according to IMS' established
procedures unless Customer provides acceptable written specifications.
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14.2 COMMISSION PROCESSING
IMS will provide the ability to offer varying commission rates to Agents for
incentives such as utilizing the Internet to submit business versus faxing or
mailing a new business or renewal application. IMS will disburse commission
payments by the fifteenth (15th) calendar day of the following month. Payments
will be derived according to the commission structures instituted for eBOP and
for premiums collected through the previous month-end.
14.3 REINSURANCE PROCESSING
IMS will process all of Customer's reinsurance transactions. In order to
accomplish this task, data from Customer's claim and premium files will be
converted to the appropriate formats and using the predefined criteria provided
by Customer, IMS will calculate the concessions and match the transactions with
the reinsureds. Once this process is completed, IMS will store the results in a
database to use for generating disbursements and for billing invoices. In
addition, this database will also be used as necessary to apply cash to
recoverable balances. If a reinsurance contract requires loss notices, IMS will
produce those notices and mail those notices to the reinsurer.
14.4 BILLING PROCESSING
Customer will offer direct installment billing. IMS will handle this function
using IMS' AS/400 system that interacts with premium, cash, and return premium
processing and takes into account all requirements for agency accounting. IMS
can manage installment payments as well as additional premium processing. The
IMS "Direct ▇▇▇▇ System" allows billing based on verification of appropriate
minimum deposit, an outlined installment schedule, total premium amount, policy
term, or any combination of these features that may be requested in writing in
advance by Customer. Also, because the Direct ▇▇▇▇ System is fully integrated
with automatic forms IMS will be able to generate the appropriate printed
billing notices, such as direct ▇▇▇▇ installments, renewal notices and
additional premium notices.
IMS will utilize the Direct ▇▇▇▇ System to create a history record of every
transaction (installment notices sent and amounts paid) and send that record to
the activity screen of the applicable policy.
The Direct ▇▇▇▇ System allows IMS to design a number of different payment plans
based on Customer's required criteria for different companies, products and
states. Further, the Direct ▇▇▇▇ System will allow IMS to tailor settings to
meet Customer's specific needs:
o "COPYIMS" can create different billing cycles for various payment
plans.
o IMS can set minimum values for premium to qualify for specific
payment plans.
o Customer will define different new business and renewal down
payment percentages.
o Customer will have the ability to establish waive amounts that
prevent the system from billing beneath a certain threshold. Then
if an endorsement occurs, the system will add the previously
unpaid waive amount to the billing for the endorsement premium.
Billing for new business, renewals, change endorsements and installments will
be established upon receipt of Customer's payment plan schedule.
Audit Processing that results in an additional premium will be billed as such.
The additional monies will not be spread in remaining installments. An
Additional premium notice will be sent to the insured and Agent. IMS will
follow Customer's reasonably established collection guidelines if the
additional premium is not received in the given number of days.
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14.5 DISBURSEMENTS
All disbursement batches shall be reviewed and approved before they are
forwarded to IMS for check printing. IMS will verify that the requestor has the
authority documented on the invoice and that the check is issued to the correct
recipient.
To issue the disbursement IMS will utilize the I.T.'s disbursement system,
"CheckWriter". Checkwriter is designed to update, delete, approve, and track
handwritten or computer-generated return premium checks.
Although there are a number of different reasons that IMS may have to issue a
return premium check, the process is always the same. First, IMS indicates the
product and policy and then supplies payment information. CheckWriter tracks
Agent and payment information and maintains the insured's and/or payee's name
and address to ensure proper return premium check processing.
In addition to processing and printing, IMS uses CheckWriter to record manually
generated check information. This data is integrated directly into policy and
bank reconciliation records in the system. This feature helps maintain accurate
records for all check processing in a central location.
Again, using CheckWriter IMS processes both account information that is
transmitted directly from the bank, and manually keyed data to provide Customer
automatic check reconciliation. Check printing data is processed by the AS/400
and downloaded to a personal computer for printing on a MICR printer. This
method allows important banking information to be coded directly onto the
check, increasing accuracy in check clearance by the bank. Reports generated by
CheckWriter provide check number information, outstanding amounts, and policy
activity.
In addition to these more traditional functions, IMS will generate and transmit
daily "positive pay" files to IMS' banking partners on IMS' disbursement bank
accounts.
14.6 1099 REPORTING
IMS' "Producer System" will comply with all 1099 reporting requirements. Using
the Agent file component of the Producer System all information relative to an
Agent will be captured including the tax identification number and the social
security number. This component will act as a control file and provide the
necessary data to generate both the Agent statements as well as the 1099
reports.
14.7 PRODUCER
"I.T.'s Producer System" will manage detailed information for all Agents,
providing access to data ranging from the general--name, address, and Agent
number, to the specific--commission rates, products sold, and license
appointments. All vital Agent premium data needed to create month-end premium
production reports, Agent checks, and Agent statements in both detail and
summary will be integrated within the month-end IT's Producer System.
IMS will track all contracts by Agent and product, providing Customer with both
effective and expiration dates of those contracts. The IT's Producer System
will provide IMS with the capability to set up and maintain override
commissions for any Agent desiring that arrangement. In addition, an Agent
relationship file will allow Customer to request IMS assign Agents to a general
or reporting Agent. The IMS system also contains all the tables that run the
IT's Producer System so IMS can add new sales representatives, enter commission
rates, or add a new Agent type at the request of Customer.
15. USER DOCUMENTATION
To meet Customer's requirements for clear concise user documentation to support
its Agents, IMS will provide a reference guide, which will be available through
e-mail, and additional online reference information.
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The BOP Reference Guide will include the following:
o Introduction
o System overview
o Getting started
The additional information that will be available online will include:
o Underwriting responsibilities of the Agent
o New quote
o Unbound quotes
o Problem reporting
o Support site
o Questions and answers
In addition to the reference materials defined above, IMS will provide access
to Customer's eBOP Underwriting/ Agent manual online. To ensure that the
information remains current in these eBOP Underwriting/Agent online manuals,
Customer will promptly provide revised versions of the eBOP Underwriting/Agent
manual to IMS. Once this information is received by IMS, a service request will
be generated to archive the old version and provide the Agents with access to a
new online version as well as prior versions.
16. IT ENVIRONMENT
IMS will initially facilitate the Insurance Administration Services on an IBM
AS/400 model 9406-650 having 4GB of main storage and over 373GB of on-line
storage. Additional peripherals will initially include on 3995 model C42
Optical Tower, one IBM 3590 tape drive, one IBM 9348 1/2 inch reel tape drive,
and one IBM 6141 ASCII Workstation Controller which houses eight ports
dedicated for dial up access. Additionally, a second AS/400 will initially be
used for programming and testing of enhancements. The AS/400's currently run
IBM OS/400 Version 4, Release 2 as the operating system. The IMS system has
averaged over 99% availability for two consecutive years. Furthermore, greater
than 98% of transactions are completing in less than two seconds.
IMS has Local Area Network ("LAN") equipment consisting of more than fifty
Microsoft NT v4.0 servers running on rack mounted Compaq Proliant server class
computers and one RS6000. These servers are connected to the network backbone,
and eventually to the user workstations, via a combination of Token Ring and
100BaseT. The LAN infrastructure utilizes 3Com's LanPlex Switch as the
collapsed backbone, with Superstack II hubs used for workstation access.
Workstations are Compaq Pentium based computers running Microsoft Windows 95,
98, or NT as its operating system. The typical user workstation is installed
with Microsoft Office 97, Microsoft Outlook, and IBM Client Access 5250
emulation connecting to IMS' AS/400 via TCP/IP.
The servers on the IMS LAN run the full Microsoft Backoffice suite, including
Exchange that is used as the messaging server, and also as the repository for
E-Mail and calendars. Other servers run NT/SQL, SMS, SNA, Internet Information
Server, ViewStar Imaging, and TASC COLD.
The PBX used by IMS is the Northern Telecom option 81c, which includes features
such as Meridian Mail, Customer Controlled Routing, and Meridian Link. There
are over 1150 extensions in use currently.
IMS data center ("Data Center") is protected by a 65KVA Toshiba UPS that
provides additional processing time of one half hour under full load in the
event of a commercial power failure at the main processing site. The UPS
running at 50% load has a battery life of over one-hour. IMS will be running
the UPS at approximately 40% capacity, thereby increasing the battery life to
well over one hour in the event of a power failure. All equipment in the Data
Center, including AS/400, LAN, and phone equipment, will be protected by this
UPS. Additionally, during non-prime time, there is
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a backup of the entire system performed. The data tapes associated with both
the LAN and AS/400 are stored with an off-site data security vendor. IMS data
processing sites currently have disaster recovery plans, which are tested
either annually or bi-annually. When IMS executed its last mock disaster in
January 1999, IMS was able to restore all applications and data files and
establish remote connectivity within 16 hours at the IBM Business Recovery
Systems hot site in New York.
Policy, correspondence, and report printing functions are performed on four
Xerox 4890 Color Laser printers, each rated at 92 pages per minute. These
printers provide spot color capability for professional appearance of printed
output. The Xerox printers are connected to a ▇▇▇▇ system via bus and tag
cables, and in turn, the ▇▇▇▇ system is connected to the AS/400 via twinax
cable.
17. SECURITY REQUIREMENTS
IMS' "Point of Sale Internet Solution" has a "Security Model" that includes
authentication, access control, privacy, and data integrity for the web sites
and applications. The Security Model use digital certificates, encryption, user
ids and passwords to prevent unauthorized individuals from accessing the IMS'
systems.
Using Secure Socket Layer ("SSL") technology, IMS will provide encryption and
decryption of both request and response data being passed across network
connections, such as Agent information, policy data and credit card
information.
IMS is certified with the IBM e-business "▇▇▇▇" Program. The "▇▇▇▇" tells
Customer's customers and business partners that Customer is using IBM products
and services as part of Customer's e-business solution. It further communicates
those IBM products and services can help make a site more scalable, reliable
and secure.
17.1 APPLICATION SECURITY
The security component allows access levels to be set for each user of
Insurance Tools. When a user signs on, the system uses behind-the-scenes
processing to determine proper access levels. Depending on the security level,
a user can only access certain systems within Insurance Tools.
Insurance Tools requires a valid user ID and password before access is granted
to the system. This access is granted in varying degrees--for example, Customer
may give only a supervisor the security level to delete certain data.
The security component not only allows control over which systems an associate
can access, but it also defines access levels within each system. In some
instances, the user may view but not make any changes to certain options or
systems while, in others, the user cannot view certain options or systems at
all.
The security administrator can change access levels as needed. Adding new users
is relatively easy: simply select and copy a similar profile from another
employee. The ability to add, change, and delete security accesses is available
at any time.
18. SYSTEMS INTERFACES
CLEARANCE SYSTEM INTERFACE
This interface will be designed to ensure that no two Customer Agents are
competing for the same prospect. For new business submissions via the eBOP
system, a call will be made to the Customer host to determine if the account
already exists under the same product offering. The results of the search will
be returned to the eBOP system to allow the Agent to continue the submissions
or notify the Agent that the account is being serviced by another appointed
agency that is associated with Customer.
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An update to the record in Customer's system will be made at defined points
within the submission cycle and at policy renewal.
FARE SYSTEM INTERFACE
Businessowners building and contents premium file and claims file will be sent
monthly to Customer. This file layout has been provided to IMS for its review
and analysis. IMS will provide this capability.
CLAIM TPA INTERFACE
This interface will allow Claim TPA's selected by Customer to submit monthly
data files to IMS for processing into the IMS businessowners system. The claims
data fed to the IMS system will be used to provide the required information to
Customer in the monthly FARE, creation of policy loss run reports and for any
required statutory reporting requirements.
IMS will provide an interface to retrieve the following information from the a
third party vendor system:
o Public protection class
o Wind
o Crime grading
IMS will provide an interface to retrieve the following information from a
third party vendor system:
o Business established date
o Credit scoring
o SIC code verification
o Bankruptcy proceedings
o Duns number identification
IMS will offer Customer an interface to a third party vendor to be determined
by Customer, or integrate the third party vendor's database and calculation
algorithm, to perform an insurance-to-value calculation. IMS will provide a
time and material estimate upon receipt of the file specifications and business
requirements. DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF
THE AGREEMENT.
IMS will offer Customer an interface to the Hartford Steam Boiler Inspection
and Insurance Company for the purpose of submitting premium bordereaux and the
corresponding premium payments on a monthly basis within the days specified in
the treaty. IMS will provide a time and materials estimate to implement this
function. DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE
AGREEMENT.
IMS will offer Customer a data feed to Customer's catastrophe modeling system.
IMS will provide a time and materials estimate to implement this function.
DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE AGREEMENT.
18.1 ADDITIONAL SUPPORT FUNCTIONS
In addition to Internet access, a Customer-specific toll-free number,
Interactive Voice Response ("IVR") and voice mail will be used to service
Customer`s Agents and insureds. The IVR provides support for quick inquiries
with responses available for frequently asked questions, voicemail, access to
the IMS customer service and underwriting department, and the IMS IS support
center.
Information available through IVR includes:
o Last payment received
o Outstanding balance on account
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o Next payment due
o Renewal payment due
o Cancellation reason code
o Cancellation date
o Non-renewal reason code
SCREEN SPECIFICATIONS
PROTOTYPE
The Prototype screens provide a visual representation of the specific input
screens that will be developed by IMS to support the BOP business for Customer.
This approach does not allow for functional changes to the screens. Customer
will provide IMS with reasonable input regarding the "look and feel" of the
screens being developed. This input may include items such as the addition of
"drop down" boxes or cosmetic enhancements to the color scheme.
RESOURCES
IMS will provide the following resources necessary to perform the Insurance
Administration Services to be provided under the Agreement. IMS will identify
the "key" employees prior to the commencement of applicable Rollout Plan. If
additional resources are necessary, IMS will provide those resources as the
Insurance Administration Services to be provided under the Agreement reasonably
dictate.
TYPES OF RESOURCES
INFORMATION SERVICES
Account Manager
The Account Manager will provide overall technical management and have
accountability for all technical responsibilities associated with the
Customer's account. The Account Manager will determine project prioritization
within and across product lines and set project direction from analysis through
implementation. In addition, the Account Manager will provide assistance and
direction in utilizing the established system development methodology for
systems analysis and conceptual design. This individual will also assume
management responsibility for resource allocation, provide front-line
leadership to associates, assist in career development planning and conduct
performance reviews.
Business Systems Analyst
The Business Systems Analyst will be responsible for establishing and
maintaining relationships at the product level. The Business System Analyst
often has expertise in more than one product line and uses that knowledge to
participate in project prioritization within their specialized product lines.
The Business Systems Analyst will utilize the established system development
methodology during systems analysis and conceptual design to prepare and
present project deliverables. He or she will be expected to establish and
maintain effective communications, frequently acting as a liaison with both
business analysts representing the Customer and systems analysts representing
IMS during the project life cycle.
Systems Analyst AS400 / RPG
The System Analyst will be responsible for the analysis, design, construction,
testing and implementation of computer based programs/systems. He or she will
be expected to meet business/project objectives and conform to technical
standards and conventions. The System Analyst will provide programming support
to both end users and IS associates. He or she will also be responsible for
researching and correcting program and system failures.
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Forms Specialist
The Forms Specialist will be responsible for developing and administering
product support in the form of user and system documentation for all software
applications. This responsibility will include creating user guides, on-line
assistance, and other documentation whenever necessary. In addition, the Forms
Specialist will perform the tasks associated with the electronic design, setup,
and support of all insurance-related forms.
End User Support
End User Support will provide varying levels of end user support (for hardware,
software, telephony, and other computer related equipment as reasonably
required. He or she will be expected to have the ability to determine the
complexity of a problem and either take corrective action or ensure that any
additional resources necessary to correct the problem are notified.
Network Telecommunication Engineer
The Network Telecom Engineer will be responsible for investigating any issues
associated with the design, testing, integration and implementation of
computer, LAN/WAN, telephony equipment and all associated computer operating
systems. In further support of the corporate hardware and software
configuration, he or she will also be capable of performing the job functions
related to capacity planning, performance tuning, and systems production
support.
AS/400 Operations
The AS/400 Operator will be responsible for the processes required to run
production jobs (daily, weekly, and monthly), print various reports, process
data transmissions, and run systems back-ups. He or she also will process
special requests such as data restores, vary devices on/off, and emergency
print jobs.
CUSTOMER SERVICE
Commercial Lines Manager
The Commercial Lines Manager will be required to provide leadership for the
policy and call center administration unit and has primary accountability for
daily operations. The Commercial Lines Manager will make recommendations
relative to business plan strategies but will be primarily focused on the
execution of the plan as approved by senior management of IMS. Additionally,
the Commercial Lines Manager will have direct responsibility for IMS
supervisors and subordinate associates and will have shared responsibility for
the profit and loss experience of the department. The Commercial Lines Manager
will also assists in establishing and monitoring the performance objectives
that support the goals of IMS and Customer.
Customer Service Supervisor
The Customer Service Supervisor will provide front-line leadership to IMS
commercial line associates on a daily basis by providing assistance and
direction in career development. Although this individual has input regarding
budget planning, his or hers primary role will be to carryout business plan
objectives, manage the allocation of resources and respond to and implement the
directives from IMS management.
Product Coordinator
The Product Coordinator will be responsible for working closely with the
customer service representatives and IMS management to provide the technical
training required to support Customer's underwriting guidelines and rules. The
Product Coordinator will ensure that everyone associated with the eBOP program
is aware of system changes or enhancements. Other job responsibilities
associated with the Product Coordinator include: maintaining thorough product
knowledge and being able to relate that knowledge to the processing functions;
expertise in training department personnel; and monitoring the quality of
service that is provided to Customer.
Underwriter
The Underwriter will have experience and be capable of selecting and
identifying new and renewal at-risk business. The Underwriter will be required
to apply Customer's underwriting
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philosophy and standards when making decisions regarding acceptability of a
risk. The Underwriter will also be required to develop and maintain a
productive working relationship with Customer's Agents and underwriting
management staff. In addition, ensuring acceptable time service standards are
met relative to processing Customer's new business, renewals, audits, change
endorsements and cancellations will be part of the Underwriters' overall
responsibilities.
Test Analyst
The Test Analyst will provide technical support for major system test projects,
enhancements and corrections. The Test Analyst will have a level of technical
competence that will allow them to understand new requirements and develop
specific test plans that will support the proposed changes. The Test Analyst
will be required to execute a test plan and compare the results with the
requirements to determine if application is functioning as intended. The Test
Analyst will be responsible for notifying IMS' IS department of any
discrepancies discovered during the testing phase and will track the progress
of a project and provide management with regular status reports.
Quality Control Representative
The Quality Control Representative will be responsible for correcting policies
that are listed on the daily error report. The Quality Control Representative
will keep detailed record of error trends, and recommend and coordinate
appropriate action with the Product Coordinator and IMS management.
Additionally, the Quality Control Representative will perform quality reviews
on all functions in the IMS customer service department and will analyze and
process internal measurement reports on a daily, weekly and monthly basis.
Customer Service Representative
IMS will provide Customer with Customer Service Representatives ("CSR") that
will handle the Agent inquiries regarding Customer policies, or the occasional
policyholder, in a courteous, positive and professional manner. Each CSR
position is monitored to ensure time service, quality, productivity, telephone
availability and call time standards are being met. The CSR will also be
responsible for maintaining an in-depth knowledge of the rules and procedures
for processing all commercial line functions.
Accounting
IMS will provide an Accounting Manager for Customer who is responsible for
sign-off of all accounting reconciliation weekly and monthly financial reports.
Regulatory/Compliance Analyst.
IMS will provide a Regulatory/Compliance Analyst for Customer within six (6)
months from the effective date of the Agreement. He or she will be expected to
establish and maintain effective communication, acting as a liaison with both
Customer's Compliance Manager and IMS Operations and Development Teams to
ensure implementation of regulatory requirements as provided by Customer.
IMS Internal Audit Executive
IMS will, from time to time, involve its internal Audit Executive to review
IMS' compliance of Customer's pre-defined policies and procedures.
Premium Audit Analyst
The premium Audit Analyst will oversee the premium audit workflow to ensure
audits are ordered on a timely basis, audit response is received from audit
vendor within established timeframe, and instruct action on policy based on
agreed upon guidelines established between IMS and Customer. He or she will
communicate directly with audit vendor, Customer's audit manager, agents and
insureds where necessary.
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ORGANIZATIONAL APPROACH FOR
DEVELOPMENT & IMPLEMENTATION OF THE
FIRST STATE
The following chart depicts the types of resources required for developing the
BOP application, developing the interfaces and implementation of both.
ACCOUNT MANAGER
------------------ ------------------ ------------------- ------------- -----------------
Forms Statutory
___*___ Interfaces Reporting Development Reporting
------------------ ------------------ ------------------- ------------- -----------------
Business Systems Business Systems Business Systems Systems Business Systems
Analyst(s) Analyst(s) Analyst(s) Analyst(s) Analyst
------------------ ------------------ ------------------- ------------- -----------------
Systems Systems Systems Systems
Analyst(s) Analyst(s) Analyst(s) Analyst(s)
------------------ ------------------ ------------------- -----------------
IMS INFORMATION SERVICES
RESOURCES
The following chart depicts the types of resources required for developing the
state specific changes for the next ___*___ states. This will include
implementation of the BOP product in ___*___. Other states may take the place of
these states provided implementation is not more difficult and has not began for
the state being replaced.
ACCOUNT MANAGER
------------------ ------------------ ------------------- ------------------
___*___ ___*___ ___*___ ___*___
------------------ ------------------ ------------------- ------------------
Business Systems Business Systems Business Systems Business Systems
Analyst Analyst Analyst Analyst
------------------ ------------------ ------------------- -----------------
Systems Systems Systems Systems
Analyst(s) Analyst(s) Analyst(s) Analyst(s)
------------------ ------------------ ------------------- ------------------
IMS INFORMATION SERVICES
RESOURCES
The following chart depicts the types of resources required for developing the
state specific changes for the next ___*___ states. This will include
implementation of the BOP product in ___*___, and ___*___. Other states may take
the place of these
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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states provided implementation is not more difficult and has not began for the
state being replaced.
ACCOUNT MANAGER
------------------ ------------------ ------------------- ------------- -----------------
___*___ ___*___ ___*___ ___*___ ___*___
------------------ ------------------ ------------------- ------------- -----------------
Business Systems Business Systems Business Systems Business Systems Business Systems
Analyst Analyst Analyst Analyst Analyst
------------------ ------------------ ------------------- ----------------- -----------------
Systems Systems Systems Systems Systems
Analyst Analyst Analyst Analyst Analyst
------------------ ------------------ ------------------- ----------------- -----------------
SUPPORT RESOURCES
The following types of resources will be assigned as states are deployed. The
quantity of resources depends on the number of states that have been
implemented. As new states are moved into production and support needs
increase, additional resources will be utilized.
o Help desk
o Statutory reporting
o Engineering for infrastructure
o Forms specialist
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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IMS CUSTOMER SERVICE RESOURCES
The following chart depicts the resources required for servicing eBOP. As new
states are deployed and servicing needs increase, additional resources will be
utilized.
IMS Senior
Management
Commercial Lines
Management
Admin
Assistant
Customer Service Product
Supervisor Coordinator
Customer Service Underwriters
Representatives
Clerical Test Quality
Support Analysis Control
Representatives
IMPLEMENTATION APPROACH
NEW IMPLEMENTATION
The implementation of the applicable Roll Out Plan will begin once Customer has
received filing approval for eBOP product in the states that require insurance
department authorization for rates and forms. IMS will be in production with
the base system, interfaces, reporting, forms and statistical reporting for an
individual state in one hundred and fifty (150) calendar days after Customer's
signoff on the Detailed Business Requirements Document. After the one hundred
and fifty (150) calendar days and the completion of the implementation for the
first state, IMS can be in production with the base system for the next ___*___
states in sixty (60) calendar days, and a subsequent group of ___*___
states within sixty (60) calendar days. After the initial ___*___ states are
implemented, the states will be implemented in groups of ___*___ until
completion of all Authorized States. Customer will ensure the filings for each
state is completed prior to the start of the state applicable Rollout. (The
Rollout Plan is in APPENDIX A.)
The initial state to be implemented will be ___*___, unless any unforeseen
issues arise with the ___*___ State department of insurance approval process. If
any unforeseen issues arise, Customer will advise IMS of the alternate first
state, which will be no more complex to implement than ___*___. The first
___*___ states are intended to be a subset of the following and will be chosen
based on ease of implementation: ___*___. Other states may take the place of
these states provided implementation is not more difficult and has not began for
any state(s) being replaced.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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IMPLEMENTATION SERVICES
The IMS Implementation Team will provide product support and strategic
implementation services. The Implementation Team will provide the following
services:
o Project management services
PROJECT PLANNING
1. Definition of work requirements
2. Definition of quantity and quality of work
3. Definition of resources needed
PROJECT MONITORING
1. Tracking progress
2. Comparing actual outcome to estimated outcome
3. Analyzing impact
4. Making adjustments
o Implementation approach
o Electronic commerce strategies for property and casualty insurance
companies
o Electronic commerce application and system architecture development
o Data Center services
o Technical support services
ENHANCEMENTS/CHANGE CONTROL
Requests for changes and technical assistance will be handled through the IMS'
"Systems Development Life Cycle", as referenced in the Agreement. Customer will
submit a change request form to the IMS' Account Manager identifying the change
or technical assistance required. The IMS Account Manager will develop a "Quote
Sheet". The Quote Sheet will include initial time, cost estimates and initial
Project Plan. Once approval is received from Customer on the Quote Sheet, the
IMS Systems Analyst will perform design, development, and testing.
TRAINING
To assist in educating the Agents on the use of the Internet interface and the
IMS base system, IMS will provide two seminars in the first year of operation,
each at a single site. After the first year of the Agreement, a single seminar
will be provided at the request of Customer. IMS' preferred approach to
training is to "train the trainer." IMS anticipates that the Customer's field
Vice Presidents would most likely be the individuals with whom IMS would train
in the above referenced seminars.
In addition to the above referenced training, if Customer chooses to license
the Brio(R) reporting tool, IMS will provide additional training services for
this product on a time and material basis.
TECHNICAL SUPPORT
CUSTOMER SERVICE HOURS OF OPERATION
Monday through Friday, 8:00 a.m. to 8:00 p.m., Eastern Standard Daylight Time.
Arrangements can be made to accommodate extended hours of operation. Exclusions
from this time are IMS' corporate holidays. These holidays are:
New Year's Day
Memorial Day
Independence Day
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Labor Day
Thanksgiving Day
Day after Thanksgiving
Christmas Eve
Christmas Day
In the event the holiday falls on a weekend IMS will transfer the holiday to a
working day prior to or after the holiday.
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IMS BPO SERVICE STANDARDS LEVELS
In accordance with ARTICLE X (A) (d) of the Agreement, the following are the
"Service Standard Levels" that are applicable to the Commercial Lines Business
Owners (BOP) program (Authorized Line of Business):
HOURS OF OPERATION
The IMS commercial lines customer service department will provide service for
Customer, its Agents and insureds Monday through Friday 8:00 AM to 8:00 PM,
EST.
TELEPHONE SERVICE
IMS will respond to telephone inquiries from Customer's Agents and insureds at
a service level of eighty-five percent (85%) of all calls answered within
twenty-five (25) seconds or less.
A Meridian Total Service Factor ("TSF") report will be provided to Customer
every Monday (unless that Monday is a IMS corporate holiday, in which case the
TSF report will be provided the next Business Day) for the previous week's call
activity.
TSF is calculated by (calls answered + calls abandoned + direct calls In) - (#
Answered after threshold * # Abandoned after threshold) x 100 = divide answer
by total of first set of ( ).
PROCESSING
For policies handled through exception processing procedures:
Cash receipts one (1) Business Day
New business fourteen (14) Business Days
Renewals ten (10) Business Days or within
established state regulatory guidelines,
whichever is less.
Endorsements ten (10) Business Days
Cancellations two (2) Business Days or within
established state regulatory guidelines,
whichever is less
Correspondence five (5) Business Days
Exception quote one (1) Business Day from receipt
Premium audit billing ten (10) Business Days
For policy transactions submitted through the Internet:
Cash processing
(EFT, ACH, Credit Card) twenty-four (24) hours
New business twenty-four (24) hours
Endorsements twenty-four (24) hours
Cancellations twenty-four (24) hours
Renewals twenty-four (24) hours
Correspondence five (5) Business Days
Cash receipts one (1) Business Day
Commission checks will be issued by the fifteenth (15th)) calendar day of each
month for commission due on policies from the prior month.
ISO error corrections will be completed within the mandated timeframes for each
state.
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REGULATORY CHANGES
Fees to complete regulatory changes are included in the Insurance
Administration Services pricing. IMS will complete all regulatory changes
within the compliance date assuming IMS receives a minimum thirty (30) calendar
day prior written notification from Customer. In the event that IMS receives
less than thirty (30) calendar days written notification and/or the effort is
extraordinary, IMS will make every reasonable effort to complete the changes
within the compliance date.
SYSTEM ENHANCEMENTS LESS THAN 40 HOURS
Fees to complete minor enhancements are included within the Insurance
Administration Services Pricing. An initial scope assessment, with an
approximate estimate of hours, will be provided to Customer within ten (10)
Business Days from the date IMS receives notification of an enhancement
request. Based on signed approval of Detailed Business Requirements, IMS will
proceed with completion of the enhancement.
SYSTEM ENHANCEMENTS GREATER THAN 40 HOURS
Fees to complete sizable enhancements are at time and materials rate. An
initial scope assessment, with an approximate estimate of hours, will be
provided to Customer within ten (10) Business Days from the date IMS receives
notification of an enhancement request. For projects greater than two hundred
(200) hours, IMS will provide an estimate at the completion of Detailed
Business Requirements and give Customer the option of a "fixed" price project.
In either case, IMS will proceed based on signed approval of the "Detailed
Business Requirements".
DATA CENTER
IMS' Data Center goal for "up time" is 99%. It is IMS goal to provide this
standard to Customer.
The system availability is from 4:00 AM - 2:00 AM EST (22 hours).
NOTE: ALL SERVICE STANDARD LEVELS ARE MEASURED IN BUSINESS DAYS (UNLESS
OTHERWISE NOTED IN THE EXHIBIT) FROM THE DATE AN ERROR-FREE INTERNET
TRANSACTION, OR MAILED-IN OR FAXED DOCUMENT IS RECEIVED.
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EXHIBIT II
COMMERCIAL LINES UMBRELLA ONLINE PROGRAM
DEFINITIONS
Capitalized terms, not otherwise defined in the Agreement or in this Exhibit,
shall be construed as otherwise generally understood in the insurance and data
processing industry.
PLAN OF OPERATION
PROJECT ASSUMPTIONS
With the expansion of Customer's business plan incorporating its new Internet
Commercial Lines Umbrella Online program, Customer intends, over the short-term,
to use its current insurance sales Agent network. Ultimately, by expanding its
product offerings Customer represents that it will increase its distribution
channel and create the opportunity for significant premium growth.
In order to ensure that Customer is positioned to achieve its stated goals and
that it will be able to provide its insurance sales agents ("Agents") with an
Internet solution that is compatible with its current system capabilities, IMS
has developed the following system requirements. These requirements are based
upon information provided by Customer.
1. Customer's Commercial Lines Umbrella Online product will have a similar
"look and feel" to eBOP and move Cybercomp toward a seamlessly
integrated system.
2. Through this new program, Customer will make Umbrella coverage
available for underlying policies written in the eBOP program, or
written through other insurance companies. Acceptability for risks
placed with other companies will be based on that insurers' AM Best
Rating, business classifications, and application of underwriting
template.
3. IMS will implement, at a minimum, a system based on Customer's existing
Commercial Lines Umbrella Online product definition with the following
functionality for eBOP:
o Quick quote function
o User controlled editing to establish distinct underwriting
rules
o Use of customer filed forms
o Customized output with customer specific logo on forms
o Loading of rate files
o Receivables processing
o Automated renewal/endorsement process
o Cancellation processing
o Agency management reporting
o Premium and commissions accounting
o Generation of commission statements and checks
o Testing of all functions with Customer's data
o Controlled environment with Customer approval and sign-off of
test results
o Document packaging
o Cash processing
o Reinsurance processing
o Claims management reporting
o Interfaces for Customer's Clearance system and FARE
4. Customer will utilize IMS' document packaging for policy and billing
form distribution. To facilitate this packaging process, OCR lines must
be printed on all forms. Customer will identify those states in which
it will be required to re-file any policy forms.
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5. In order to develop the final system specifications and to complete the
business requirements document, IMS will require and Customer agrees to
promptly provide the following additional information:
STATE SPECIFIC INFORMATION:
o Cause of loss codes by coverage and state (if state
differences apply)
o State specific filed forms
GENERIC INFORMATION:
o Underwriting manuals
o Filed forms
o Cybercomp classification eligibility matrix
o Annual statement line of business by coverage
o Binding requirements and workflow
o Standard anti-fraud wording
o Endorsement business rules and workflow
o Cancellation business rules and workflow
o Reinstatement business rules and workflow
o Renewal business rules and workflow
6. The Customer underwriting group will provide IMS with the necessary
changes to the prototype screens in states where applicable. IMS will
apply these changes to the screens once they have been received from
Customer.
7. Customer has provided IMS with a sample Commercial Lines Umbrella
Online declaration page and schedule of underlying insurance. These
documents will be reviewed and modified as dictated by the Commercial
Lines Umbrella Online program requirements. Customer will promptly
provide copies of all general and state specific forms to IMS.
8. A list of the standard reports available from IMS has been provided to
Customer. Customer can choose the reports that it would like to receive
on a regular basis from this list.
9. Customer Agents will be required to input the liability limits of the
underlying policy, if the underlying policy is written through an
insurer other than Customer's eBOP program. Customer represents and
warrants to IMS that the underlying coverages do not need to be
reported to ISO if the underlying policy is an ISO BOP policy.
10. Customer will promptly provide IMS with a matrix of states where there
is a Ten Thousand Dollars ($10,000) retained limit and where no
retained limit applies.
11. Reinsurance will be applied in accordance with Customer's reinsurance
treaty agreements.
12. IMS assumes that the required underlying limits for the Customer
Commercial Lines Umbrella Online policy will be based on the basic
industry limits:
o $1,000,000 per occurrence
o $1,000,000 general aggregate
o $1,000,000 product/completed operations aggregate
Business Auto Liability
o $1,000,000 combined single limit
Employers Liability
o $100,000 bodily injury per accident
o $100,000 bodily injury by disease per employee
o $500,000 disease aggregate
13. Customer Umbrella Online policies are non-auditable, therefore IMS
processing services will not be required to support this function.
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14. Inspections are not required on the Umbrella Online policies, therefore
IMS processing services will not be required to support this function.
15. State calls are not required for Commercial Lines Umbrella Online.
However, IMS will assist Customer by providing Umbrella Online specific
data required for any special state calls as requested by Customer.
16. Customer Umbrella Online policies will be written on an occurrence
basis.
17. Rating algorithms do not vary by state for the Umbrella Online program.
18. IMS will correct the "Umbrella Online" online screens to ensure these
rating screens will have correct input capability for the Agents in
order to system generate the declaration pages and other required forms
for each issued policy.
19. Customer's Umbrella Online policies will be no less than monthly term
policies. The Umbrella Online program requires the GL underlying to be
concurrent with the Umbrella Online policy term. If the underlying GL
policy expires in less than (1) one year, the Umbrella Online policy
will be written as an annual term and cancelled upon request at the
expiration of the underlying GL policy.
20. The prototype screens developed are representative of the approach IMS
used for other products in the Cyber products family and will be
modified to represent the Customer Commercial Lines Umbrella Online
product requirements. IMS will re-scope these requirements before
finalizing the Detail Business Requirements.
21. Claims processing will be handled by Customer and will not require IMS
to develop an interface to the IMS system.
22. Customer will promptly provide to IMS on a timely basis, any special
data capture requirements for processing professional incidental
coverages.
23. Customer will promptly provide on a timely basis the data requirements
for any data not contained within the fifteen (15) file layouts
currently used by the Brio(R) reporting tool. IMS requires the data for
creating claims and additional accounting reports.
24. IMS will complete any "A" Rate filings where needed based on the
required data.
25. IMS will provide insured welcome letters ("Welcome Letter") to be
generated and mailed out of the IMS system. The Welcome Letter consists
of a one (1) page document that is mailed to the Insured. The Welcome
Letter will be mailed with the policy if the policy is mailed within
seven (7) Business Days of binding. If policy is not prepared for
mailing within seven (7) Business Days, the Welcome Letter will be
mailed separately.
26. IMS will provide time and material estimates to implement the various
components required for interfacing the Kokopelli designed web-site to
the IMS system as the detail specifications are provided by Customer.
DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT. These
components are as follows:
o RFP - IMS will be given an opportunity to respond to the RFP
for hosting the web system.
o Agency profile and set up will be done on Kokopelli front-end.
Customer will require that the Agent have a logon for
Kokopelli and a separate logon to the IMS application as an
additional security layer. Agent will be required to input
password to access quote and support application. IMS will
develop the interface/integration between the IMS security
system and Kokopelli.
o IMS will develop a https protocol between Kokopelli and the
IMS producer system and the PDS' Agent master when agency
appointment is approved, updated, cancelled. Customer will
need to
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establish the procedures for handling sub-producers via the
Kokopelli system or other defined process.
o IMS will provide a daily file containing policy status
information to the Kokopelli system. The insureds access is
limited based on whether an in-force policy exists for them.
o IMS will provide insured access to the loss run reports
provided to the Agents via the support site. The navigation
should be streamlined to eliminate the selection choices and
display only the loss run report for the insured's policy.
o Customer will promptly provide IMS screen prints of the
Kokopelli web-site in order to develop a similar look and feel
for the product sites being developed. The color scheme and
background layout of the Kokopelli site should be similar in
the product sites. All other functions will be specific to the
product application or follow the current Workers Comp
Internet application.
o IMS will provide separate time and material estimates for
components listed above based on whether IMS is the web
hosting vendor or not.
o In the event the Kokopelli solution for Agent appointment is
not in production prior to the implementation of the first
state rollout on the IMS system, an alternate solution for
establishing the Agent data in the IMS system will be
developed.
27. IMS will provide Customer a time and materials estimate to implement an
interface to a premium finance company for retrieving a finance quote
and establishing financing at binding. DELIVERY OF SUCH FUNCTION IS
OUTSIDE THE SCOPE OF THE AGREEMENT.
28. IMS will provide the ability for the Agents to process premium and
non-premium endorsements to in-force policies via the Internet
application.
29. The IMS system will provide the ability to process Umbrella Online
policies with up to three (3) underlying policies per coverage.
30. In order to accommodate for policies issued on the "Umbrella Online"
application prior to the implementation of the IMS system, IMS will
provide data entry services to input all upcoming renewals in order for
the Agent to renew the business via the Internet application. This
service will be provided at the contracted data entry rate specified in
Schedule B. IMS will support any merging of data prior to the renewal
at the time and materials rate. DELIVERY OF SUCH FUNCTION IS OUTSIDE
THE SCOPE OF THE AGREEMENT.
31. IMS will provide Customer the capability to offer its Agents
installment agency billing for Agents' Umbrella Online Policies. With
the cooperation of Customer, this function will be made available to
Customer no later than twelve (12) months from Customer's request to
implement this function.
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REQUIREMENTS DEFINITION
BUSINESS REQUIREMENTS
THIS SECTION DETAILS THE APPLICABLE STIPULATIONS OF THE INSURANCE ADMINISTRATION
SERVICES TO BE PROVIDED UNDER THE AGREEMENT BASED ON THE CATEGORIES LISTED
BELOW.
1. DOCUMENT PACKAGING REQUIREMENTS NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
IMS uses automated, system-generated forms, from policy declaration pages to
Agent statements, and maintains the necessary form information: form names,
recipients, and printer instructions, including variable information such as
company name and address. The IMS system not only catalogs all current forms in
use, but also stores previous versions of forms should IMS need to retrieve them
for Customer's legal or auditing purposes.
STANDARD FORMS AND DISTRIBUTION:
-----------------------------------------------------------------------------------------------------------------
DOCUMENT
FORM PACKAGING
FORM DESCRIPTION RECIPIENT RECIPIENT DISTRIBUTION
-----------------------------------------------------------------------------------------------------------------
Declarations I,A,L,X I,A,L,X Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Optional Endorsements ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Installment Due Notice I,L,X I, L, X Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Schedule of Payments A only A only Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Short Down Payment Notice I,A,L,X I,A,L,X Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Adjusted Premium Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Cancel Underwriting (reason codes on I,A,L,X A,L,X Insured's copy goes proof of mail to
back) insured
-----------------------------------------------------------------------------------------------------------------
Notice of Cancellation (reason codes on I,A,L,X A,L,X Insured's copy goes proof of mail to
back) insured
-----------------------------------------------------------------------------------------------------------------
Notice of Nonrenewal (reason codes on I,A,L,X A,L,X Insured's copy goes proof of mail to
back) insured
-----------------------------------------------------------------------------------------------------------------
Confirmation of Cancellation I,A,L,X A,L,X Insured's copy goes proof of mail to
insured
-----------------------------------------------------------------------------------------------------------------
Cancellation Nonpay (has coupon on back) I,A,L,X A,L,X Insured's copy goes proof of mail to
insured
-----------------------------------------------------------------------------------------------------------------
Cancel Policy Financial Status A only A only Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Notice of Reinstatement ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Notice of No Coverage I,A,L,X A,L,X Insured's goes proof of mail to insured
-----------------------------------------------------------------------------------------------------------------
Additional Premium Due ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Premium Due Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Past Due Premium Notice I,A,L,X I,A,L,X Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Balance Due Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Balance Due Final Notice I,A,L,X I,A,L,X Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Renewal Notice/Payment Schedule ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Final Renewal Notice ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
BAS/Corr Letterhead ▇,▇,▇,▇ ▇,▇,▇,▇ Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
All coverage forms I only I only Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Legend: I = Insured, A = Agent, L = Lender, X = Additional Interest
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2. IMAGING REQUIREMENTS NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
The IMS underwriting department has access to all documents that are sent to IMS
and all document packaging output documents related to a policy through an
electronic form archive. As a standard procedure all system-generated documents
are transmitted to the imaging system via Computer Output to Laser Disc
("COLD"). These stored images are duplicates of the original documents sent to
the policyholders, Agents and other respective parties and can be reproduced for
Customer, its auditors and reinsurers, and its Agents upon request. IMS does not
retain hard copy documents once the IMS records management department scans the
images into the system.
3. INPUT REQUIREMENTS
The information required for quoting and binding a policy will be input into the
Internet system by Customer's Agents. IMS' underwriting department will handle
exception processing that may occur based on procedures as defined by Customer.
An individual Agent will be able to enter the same quote within a predefined
number of attempts. If this number is exceeded, that Agent will not be allowed
to continue the process and will automatically be referred to IMS' customer
service department for assistance. The production quote count would not be
affected by an unsuccessful quote attempt.
The input requirements, as defined in the Agreement, are based solely on the
information provided by Customer. During the implementation of the Rollout Plan,
as the detailed underwriting information for each state is determined,
additional requirements will be incorporated into the project scope. IMS will
complete the detail analysis to determine all required fields for quoting and
binding based on the forms and distribution documents, the bureau reporting
requirements and any Customer Commercial Lines Umbrella Online specific
underwriting rules. The completion of this analysis is dependent upon receipt of
all completed Commercial Lines Umbrella Online underwriting rules and guidelines
from Customer.
4. MANAGEMENT REPORTING REQUIREMENTS NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
The reports that Customer has provided to IMS have been analyzed and compared to
the IMS standard reports to ensure that the information Customer requires is
available. This analysis and a list of IMS' standard reports have been provided
eBOP to Customer and Customer acknowledges receipt thereof.
IMS will send a weekly e-mail with the Weekly Data File Report that represents
an Agent's Umbrella Online book of business to each Marketing/Field
Representative. IMS will also send this information to Customer's Accounting
Group via e-mail. In addition, IMS will provide Customer with an accounting
group report that contains all Umbrella Online books of business sorted by
Customer's Marketing/Field Representative.
5. AD HOC REPORTING REQUIREMENTS NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
IMS utilizes a third party ad hoc reporting tool called Brio(R).
Brio(R) report provides the enterprise reporting tools and technology that
Customer will need to develop and process a complete range of reports, from
small reports to mission-critical operational reports that access large volumes
of data in production databases, legacy applications, and data warehouses.
Output from Brio(R) report can range from high-volume printed reports to highly
interactive reports delivered via the Web.
BRIO(R) CAPABILITIES
The following is a list of Brio(R) capabilities that Customer may choose to
utilize. The use of these features is determined at the end user level.
o Merge premium data with loss data
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o Read only so that the data can be changed
o Drill down into the data 0 Intelligent method for subtotaling and
totaling
o Can filter the data by year to date, week to date, etc.
o Time Service Report--e-mailed or static on the Customer's web site
o Running the month end process on a weekly basis
o Fifteen (15) file layouts for reporting against month end
o Three to five (3- 5) additional file layouts based on specific data
reporting requirements to be provided by Customer
NOTE: In order for Customer to realize the full benefits of the Brio(R)
reporting tool, it would be necessary for Customer to establish a dedicated line
into the IMS system. This would allow Customer to access Brio(R) and
Customer-specific data.
6. FORMS
Customer has provided IMS with its Commercial Lines Umbrella Online declaration
page and schedule of underlying insurance. IMS will provide the capability to
generate these documents as required with all pertinent information from IMS'
Umbrella Online system. As previously stated, upon receipt of the coverage form
from Customer, IMS will complete the detail analysis to confirm all information
required on the form is being captured via the system.
7. OUTPUT AT AGENT'S OFFICE NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
In response to Customer's request that specific forms be available to print in
the Agent's office IMS agrees to provide the following:
o Quote
o Memorandum of coverage
o Application
o Binder
o Billing status information
o Policy status information
o Employer limits information
o State specific program underwriting forms
o Policy loss run report
o Premium finance agreement (creation of the finance agreement
requires an interface with a premium finance company. THIS
INTERFACE IS OUTSIDE THE SCOPE OF THE AGREEMENT.)
Upon receipt of these documents from Customer, IMS and Customer will cooperate
to co-develop the output so that forms will meet the Umbrella Online program
requirements. Customer will provide IMS with sample layouts for each document.
All data necessary to automatically generate the document(s) will be input by
the Agent or retrieved through another agreed upon means.
IMS EVENTUALLY EXPECTS TO PROVIDE A COMBINED QUOTE AND APPLICATION TO THE AGENT
WHEN PROCESSING MULTI-LINE SUBMISSIONS VIA THE IMS SYSTEM. INITIALLY, HOWEVER,
THE OUTPUT WILL REMAIN PRODUCT SPECIFIC UNTIL SUCH TIME AS THE COMBINED OUTPUT
CAN BE SCOPED AND AN IMPLEMENTATION PLAN IS PRESENTED TO CUSTOMER. IMS WILL
PROVIDE CUSTOMER AN IMPLEMENTATION PLAN FOR COMBINING THE BOP AND UMBRELLA
ONLINE PRODUCTS WITHIN SIX (6) MONTHS OF THE COMPLETION THE LAST STATE ROLLOUT
UNDER THE BOP ROLLOUT PLAN.
8. STATISTICAL, FEDERAL, AND STATE REPORTING REQUIREMENTS
IMS understands that Customer is not required to file its Umbrella Online rates;
however, for each policy issued there is a rate form that must be completed and
reported by state. IMS will provide "A" rate form(s)
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for the Umbrella Online program on a quarterly basis or as dictated by the state
reporting requirements. Customer will provide IMS with the data fields that need
to be captured on the "A" Rate form(s) such as policy number, effective and
expiration dates, and description of coverage.
9. STATUTORY REQUIREMENTS
IMS recognizes that statutory requirements will vary by state. IMS will analyze
and document any necessary requirements based upon receipt of Customer's "Stat
Plan". IMS will then identify whether or not changes are needed for the
Commercial Lines Umbrella Online program.
10. UNDERWRITING REQUIREMENTS
The underwriting decisions for the Commercial Lines Umbrella Online program will
be completed utilizing an underwriting template provided by Customer. IMS'
system will allow Customer's Agents to select the Commercial Lines Umbrella
Online Liability Policy for quoting and submission online, upon completion of
the BOP quote or as a stand-alone quote. The online system will also allow for
automatic rejection of applications that do not meet the defined underwriting
guidelines.
When a fax or mail-in submission is received, the IMS commercial underwriting
department will use the Internet screens and the predefined Customer rates,
rules and guidelines in the system to issue or reject the policy.
IMS' system will accommodate rating Umbrella Online policies for Customer's
defined types of underlying coverage(s). These were defined as:
o Employers liability
o Automobile liability
o Commercial general liability
The IMS system will provide the ability to process Umbrella Online policies with
up to three (3) underlying policies per coverage.
IMS will also provide Customer's Agents with the ability to accept Umbrella
Online policies on risks whose primary coverage is written through another
insurer. If a submission for Umbrella Online is not in conjunction with a
related Customer BOP or Workers Compensation quote, IMS' system will prompt for
entry of the required schedule of underlying limits of insurance. The prompt may
also include, but is not limited to, the following information:
o Insurance carrier
o Policy number
o Policy effective/expiration date
o Type of coverage
o Limits of insurance
o Bodily Injury
o Physical Damage
o CSL
Customer may require a third or fourth carrier to be captured if incidental
professional coverages are underlying. Customer will promptly provide IMS with
the requirements for determining when the additional carrier information is
required.
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AUDITS
Customer's Commercial Lines Umbrella Online policies are non-auditable and do
not require IMS processing services to support this function.
INSPECTIONS
Customer has notified IMS that inspections are not required on the Umbrella
Online policies. Therefore, IMS processing services are not required to support
this function.
REINSTATEMENT WITH A LAPSE IN COVERAGE NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
The IMS system will allow the user to reinstate an Umbrella Online policy with
or without a lapse in coverage. Approval of any reinstatements will be subject
to the guidelines set by Customer and mutually agreed upon by IMS.
EXCEPTION PROCESSING NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
Submissions that fall outside of the Customer Umbrella Online underwriting
guidelines that result in a disputed rejection, will be handled according to an
"Exception Processing" document that will be created and mutually approved by
Customer and IMS.
10.1 ACCEPTABLE CLASSIFICATION NO CHANGE TO THE UMBRELLA ONLINE PROGRAM.
Customer will promptly provide IMS the Customer classes eligible for the
Umbrella Online program. Customer will then provide a matrix to IMS for use
during policy processing in determining eligible classes, cross-editing of
classes and generation of class specific forms.
10.2 POLICY LEVEL GUIDELINES
Customer's specific underwriting rules will be displayed on a customized data
entry screen. The system will be designed to ensure that the Customer specific
criteria are met before the risk is accepted. The eligibility guidelines will
not vary by state but will be specific to the Type of business selected by the
Agent. IMS will provide these guidelines in the form of underwriting questions,
as shown in the Commercial Lines Umbrella Online prototype. The resulting
response from the Agent will determine the acceptability of the risk
10.3 RISK SCORING
Risk scoring does not apply to the Customer's Commercial Lines Umbrella Online
program. Customer has indicated all Umbrella Online policies will be issued
under Reliance National Indemnity, as determined in the underwriting rules and
guidelines for the Umbrella Online program.
10.4 COVERAGES
Customer will promptly provide the following limits of liability under the
Commercial Lines Umbrella Online program. A quote will be offered for each
layer, with the Agent selecting the specific layer for binding. Customer will
promptly provide IMS with a matrix of states where a Ten Thousand Dollars
($10,000) self-insured retention applies and where no retained limit applies.
o $1,000,000
o $2,000,000
o $3,000,000
o $4,000,000
o $5,000,000
o $6,000,000
o $7,000,000
o $8,000,000
o $9,000,000
o $10,000,000
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MANDATORY COVERAGES
The Commercial Lines Umbrella Online Policy will, at a minimum, include the
following underlying coverages:
o $1,000,000 per occurrence
o $1,000,000 general aggregate
o $1,000,000 product/completed operations aggregate
Business Auto Liability
o $1,000,000 combined single limit
Employers Liability
o $100,000 bodily injury per accident
o $100,000 bodily injury by disease per employee
o $500,000 disease aggregate
11. RATING REQUIREMENTS
CUSTOMER HAS PROVIDED IMS WITH RATING DEVELOPMENT GUIDELINES THAT WILL BE
INCORPORATED INTO THE RATING ALGORITHMS.
11.1 GENERAL RATING RULES
o Factors or multipliers are to be applied consecutively and not
added together unless otherwise specified.
o Round rates, factors and multipliers after the final calculation to
three decimal places. Five-tenths or more of a mill shall be
considered one mill, for example, .1245 = .125.
11.2 PREMIUM DEVELOPMENT
o Customer has provided the following rating schematic for
determining premium for policies submitted under the Customer
Commercial Lines Umbrella Online program.
o For the first million requested the following rating algorithm is
used.
o Add ___*___ of the (general liability premium + the greater of
[___*___ of auto liability premium OR calculated unit rate])
o For contractors classes substitute ___*___ for ___*___
o The result must be no less than $___*___.
For each additional million requested, the following rating algorithm is used.
o Use the Increased "Limit Factor" factoring table for each million
requested.
Increased Limits Factor Factoring Table
Layer % For Layer
----- -----------
1M
2M ___*___
3M ___*___
4M ___*___
5M ___*___
6M ___*___
7M ___*___
8M ___*___
9M ___*___
10M ___*___
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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o The result (for each million) must be no less than $___*___.
o To Calculate the Unit Rate the following is used.
For each type of motor vehicle, sum the dollar value of all vehicles.
Type Multiplication Factor
---- ---------------------
Private cars $___*___ per unit
Light Trucks $___*___ per unit
Medium Trucks $___*___ per unit
Heavy Trucks $___*___ per unit
o If the underlying policy is BOP, the Agent must enter the BOP
premium. The IMS system will calculate the GL premium based on
___*___ of the BOP premium entered.
12. PROPOSED DETAILED INTERNET WORK FLOW
The following proposed detailed workflow provides an outline of the tasks that
would need to be completed by an Agent in order to enter a new Umbrella Online
policy. As part of the Commercial Lines Umbrella Online project it will be
necessary for IMS to develop the screens and processes to support these
functions.
IMS encourages the processing of cash through Electronic Funds Transfer (EFT),
which is IMS' preferred method for processing cash quickly and efficiently. At
least initially, Customer would like to have the ability to process checks and
credit card payments in addition to EFT. To support this request, IMS will
initially make all three of these methods available.
(Work flow diagrams for renewals, endorsements, cancellations, and
reinstatements will require further review and discussion with Customer before
being finalized. However, similar or like work flow processes are anticipated
for these transactions.)
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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12.1 CUSTOMER COMMERCIAL LINES UMBRELLA ONLINE PROPOSED INTERNET NEW BUSINESS
PROCESS DIAGRAM
Entrance Screen
New Quote
Support Flow Support Quote of
Support
Quote No Continue
Working
State Selection / Effective date
Modify
Eligibility
Eligible Proposal
Yes
Continue Quote / Premium Print
Working
Bind Quote
Binding Anti-Fraud Binding System Application Agent
Information Instructions Marks faxes
Policy EFT
Pending to
Cash IMS
Binder
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12.2 CUSTOMER PROPOSED CASH PROCESS DIAGRAM NO CHANGE TO THE UMBRELLA
ONLINE PROGRAM.
IMS Entering Cash
Initiates Cash
Process
Check Retrieve Funds ACH Sweep Account
Check Received Bounced ACH Funds
Credit Card Charged to Agent/ No Transferred
Insured
IMS Continues
collection efforts No Check clears Sweep Account
Credit
Processed Yes
Yes
Notify Reliance Via Bounced ACH
Email charged to Agent/ No Funds Automatic Policy
Insured Transferred Issuance
IMS Issues Policy
Yes
No
IMS Cancel Policy Submit
Credit Card # No Cancel Policy
w/in 24 hrs.
Yes
System generages Output Dec
Premium deposited in Reliance
Account Policy Issuance
Notice to Agent
Reliance funds transferred to Reliance
operating account
IMS will draw fee from Reliance
operating account
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13. CUSTOMER SERVICE
IMS understands that the Customer Agents will be encouraged to utilize the
Internet for submitting an Umbrella Online Policy. However, IMS is prepared to
quote these policies if a submission is faxed or mailed into IMS' offices.
IMS' Commercial Lines staff will quote submissions and bind coverage if an Agent
accepts, based on verification of the program guidelines, required underlying
limits of insurance and any applicable exclusion(s).
The IMS commercial lines customer service department associates will undergo
comprehensive product training that will include Customer's Umbrella Online
policy guidelines.
13.1 POLICY PROCESSING
IMS' customer service department will utilize IMS' "Policy Processing System"
for Umbrella Online policy quoting, which will be integrated with the Customer's
BOP policy information. The Policy Processing System will also allow the
Customer's underwriters to quote an Umbrella Online policy based on a
stand-alone request. As set forth in Exhibit I, eBOP system edits are built
based on the Customer Commercial Lines Umbrella Online program underwriting and
rating guidelines. IMS will automatically determine risk acceptability based on
these edits.
13.2 CUSTOMER SERVICE NEW BUSINESS PROCESS NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
The diagram on the next page provides a high level overview of IMS' workflow, as
established for processing Customer's mailed-in or faxed new business
applications. This basic workflow will also apply to renewal, endorsement and
cancellation processing for the Customer Commercial Lines Umbrella Online
program.
13.3 QUALITY CONTROL SELF AUDIT
Customer will perform initial quality control functions during the first six (6)
months of live production processing. During this time, Customer will develop a
self audit process to be implemented by IMS, the terms of which will be mutually
agreeable to IMS and Customer and are to be negotiated separately from this
Agreement.
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IMS CUSTOMER SERVICE DEPARTMENT
NEW BUSINESS PROCESS DIAGRAM
IMS Mailroom
Receives Umbrella
Submission
Route to
Commercial
Department
Underwriter
Companies
Automated
Quote
Acceptability No Decline
Met?
Yes
Quote Emailed or
Faxed to Agent
Agent No Archive
Accepts Quote
Quote?
Yes
Bind
Coverage
upon Receipt
of Funds
Funds No Process
Received? Cancellation
Yes
Customer
Service
Issues Policy
through
AS/400
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13.4 CORRESPONDENCE NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
When dealing with Agents, insureds, claimants, and lenders IMS' customer service
representatives utilize IMS' "Correspondence System". IMS will create and send
custom form letters, track outgoing correspondence, and log incoming
correspondence. IMS create the form letter templates, which then reside in the
Correspondence System for repeated use based on the guidelines provided by
Customer.
IMS will save a copy of the letter online and create a history record showing
that a letter was sent.
IMS will produce user activity reports from the Correspondence System that
assist in tracking outgoing correspondence created by an individual user or
group of users on any date. These reports provide IMS with another opportunity
to review correspondence transactions for clarity and consistency and will be
shared with Customer upon request.
13.5 CUSTOMER INFORMATION NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
The Customer search option allows IMS to view all the policies belonging to a
specific policyholder.
The Customer update option allows IMS to change general insured information
(e.g., addresses, telephone numbers, etc.). Entering this insured information
one time applies the information to all products under that insured.
13.6 POLICY HISTORY AND NOTES NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
IMS will be able to respond to requests that involve historical data through the
history option found within the IMS system. This option allows IMS to view
policy transactions and forms in detail. Selecting the history option reveals
the policy activity screen, which displays the entire history of the current
policy. This function provides IMS with the ability to respond more effectively
to Agents and policyholders.
Additionally, when policy processing deviates from the norm, documenting these
differences for future reference through the "Comments Processor" is standard
procedure. This function provides an internal notebook, attached to a policy
that alerts the user to important information.
13.7 APPLICATION SUPPORT TABLES NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
Over six hundred (600) files contained in the "Application Support Tables" that
allow IMS to customize Insurance Tools to fit Customer's profile.
IMS can revise maintenance files within the different components of the system.
For example, if there are changes to rates or products, IMS can make those
changes by simply copying, saving, and updating the existing values.
14. ACCOUNTING NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
Accounting services for the Customer's Commercial Lines Umbrella Online program
will include:
o Payment processing
o Commission processing
o Billing processing
o Premium and claims reinsurance processing and reporting
o Disbursements
o 1099 reporting
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IMS will support payment processing on the above listed functions as established
for the eBOP program. This includes EFT, credit card and lockbox payment
processing. (See eBOP Exhibit I for complete details.)
PRODUCER
The "I.T.'s Producer System" will manage detailed information for Customer's
Agents, providing access to data ranging from the general--name, address, and
Agent number, to the specific--commission rates, products sold, anD license
appointments. All vital Agent premium data needed to create month-end premium
production reports, Agent checks, and Agent statements in both detail and
summary is integrated with the month-end system.
IMS will track all contracts by Agent and product, providing Customer with both
effective and expiration dates of those contracts.
The I.T.'s Producer System provides IMS with the capability to set up and
maintain override commissions for any Agent desiring that arrangement. In
addition, an Agent relationship file will allow Customer to request IMS assign
Agents to a general or reporting Agent. The I.T.'s Producer System also contains
all the tables that run the Producer System so IMS can add new sales
representatives, enter commission rates, or add a new Agent type at the request
of Customer.
15. USER DOCUMENTATION NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
To meet Customer's requirements for clear concise user documentation to support
its Agents, IMS will provide a reference guide, which will be available through
e-mail, and additional online reference information.
The "Umbrella Online reference guide" will include the following:
o Introduction
o System overview
o Getting started
The additional information that will be available online will include:
o Underwriting responsibilities of the Agent
o New quote
o Unbound quotes
o Problem reporting
o Support site
o Questions and answers
In addition to the reference materials defined above, IMS will provide access to
Customer's Umbrella Online Underwriting / Agent manual online. The online
Umbrella Online Manual will contain a product description, claims procedures,
and contacts list. To ensure that the information remains current in the online
Umbrella Online Manual, Customer will promptly provide revised versions of
Customer's Umbrella Online Underwriting/Agent manual to IMS. Once this
information is received by IMS, a service request will be generated to archive
the old version and provide the Agents with access to a new online Umbrella
Online Manual as well as prior versions.
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16. IT ENVIRONMENT NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
IMS will initially facilitate the Insurance Administration Services on an IBM
AS/400 model 9406-650 having 4GB of main storage and over 373GB of on-line
storage. Additional peripherals include on 3995 model C42 Optical Tower, one IBM
3590 tape drive, one IBM 9348 1/2 inch reel tape drive, and one IBM 6141 ASCII
Workstation Controller which houses eight ports dedicated for dial up access.
Additionally, initially a second AS/400 is used for programming and testing of
enhancements. The AS/400's currently run IBM OS/400 Version 4, Release 2 as the
operating system. The system has averaged over 99% availability for two
consecutive years. Furthermore, greater than 98% of transactions are completing
in less than two seconds.
IMS has Local Area Network ("LAN") equipment consisting of more than fifty
Microsoft NT v4.0 servers running on rack mounted Compaq Proliant server class
computers and one RS6000. These servers are connected to the network backbone,
and eventually to the user workstations, via a combination of Token Ring and
100BaseT. The LAN infrastructure utilizes 3Com's LanPlex Switch as the collapsed
backbone, with Superstack II hubs used for workstation access. Workstations are
Compaq Pentium based computers running Microsoft Windows 95, 98, or NT as their
operating system. The typical user workstation is installed with Microsoft
Office 97, Microsoft Outlook, and IBM Client Access 5250 emulation connecting to
IMS' AS/400 via TCP/IP.
The servers on the IMS LAN run the full Microsoft Backoffice suite, including
Exchange that is used as the messaging server, and also as the repository for
E-Mail and calendars. Other servers run NT/SQL, SMS, SNA, Internet Information
Server, ViewStar Imaging, and TASC COLD.
The PBX used by IMS is a Northern Telecom option 81c, which includes features
such as meridian mail, customer controlled routing, and meridian link. There are
over 1150 extensions in use currently.
The IMS Data Center ("Data Center") is protected by a 65KVA Toshiba UPS that
provides additional processing time of one half hour under full load in the
event of a commercial power failure at the main processing site. The UPS running
at 50% load has a battery life of over one-hour. IMS will be running the UPS at
approximately 40% capacity, thereby increasing the battery life to well over one
hour in the event of a power failure. All equipment in the Data Center,
including AS/400, LAN, and phone equipment, will be protected by this UPS.
Additionally, during non-prime time, there is a backup of the entire system
performed. The data tapes associated with both the LAN and AS/400 are stored
with an off-site data security vendor. IMS data processing sites currently have
disaster recovery plans, which are tested either annually or bi-annually. When
IMS executed its last mock disaster in January 1999, IMS was able to restore all
applications and data files and establish remote connectivity within 16 hours at
the IBM Business Recovery Systems hot site in New York.
Policy, correspondence, and report printing functions are performed on four
Xerox 4890 Color Laser printers, each rated at 92 pages per minute. These
printers provide spot color capability for professional appearance of printed
output. The Xerox printers are connected to a ▇▇▇▇ system via bus and tag
cables, and in turn, the ▇▇▇▇ system is connected to the AS/400 via twinax
cable.
17. SECURITY REQUIREMENTS NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
IMS' "Point of Sale Internet Solution" has a "Security Model" that includes
authentication, access control, privacy, and data integrity for the web sites
and applications. The Security Model use digital certificates, encryption, user
ids and passwords to prevent unauthorized individuals from accessing IMS'
systems.
Using Secure Socket Layer ("SSL") technology, IMS will provide encryption and
decryption of both request and response data being passed across network
connections, such as Agent information, policy data and credit card information.
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IMS is certified with the IBM e-business "▇▇▇▇" program. The "▇▇▇▇" tells
Customer's customers and business partners that Customer is using IBM products
and services as part of Customer's e-business solution. It further communicates
those IBM products and services can help make a site more scalable, reliable and
secure.
APPLICATION SECURITY
The security component allows access levels to be set for each user of Insurance
Tools. When a user signs on, the system uses behind-the-scenes processing to
determine proper access levels. Depending on the security level, a user can only
access certain systems within Insurance Tools.
Insurance Tools requires a valid user ID and password before access is granted
to the system. This access is granted in varying degrees--for example, Customer
may give only a supervisor the security level to delete certain data.
The security component not only allows control over which systems an associate
can access, but it also defines access levels within each system. In some
instances, the user may view but not make any changes to certain options or
systems while, in others, the user cannot view certain options or systems at
all.
The security administrator can change access levels as needed. Adding new users
is relatively easy: simply select and copy a similar profile from another
employee. The ability to add, change, and delete security accesses is available
at any time.
18. SYSTEMS INTERFACES
CLEARANCE SYSTEM INTERFACE - This interface will be designed to ensure that no
two Customer Agents are competing for the same prospect. For new business
submissions via the Customer Commercial Lines Umbrella Online system, a call
will be made to the Customer host to determine if the account already exists
under the same product offering. The results of the search will be returned to
the Customer Commercial Lines Umbrella Online system to allow the Agent to
continue the submissions or notify the Agent the account is being serviced by
another appointed agency that is associated with Customer.
An update to the record in the Customer system will be made at defined points
within the submission cycle and at policy renewal.
FARE SYSTEM INTERFACE - Premium file and claims file sent monthly to Customer.
This file layout has been provided to IMS for our review and analysis. IMS will
provide this capability.
19. ADDITIONAL SUPPORT FUNCTIONS NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
In addition to Internet access, a Customer-specific toll-free number,
interactive voice response ("IVR") and voice mail will be used to service
Customer's Agents and insureds. The IVR provides support for quick inquiries
with responses available for frequently asked questions, voicemail, access to
IMS' customer service and underwriting department, and the IS support center.
Information available through IVR includes:
o Last payment received
o Outstanding balance on account
o Next payment due
o Renewal payment due
o Cancellation reason code
o Cancellation date
o Non-renewal reason code
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SCREEN SPECIFICATIONS
PROTOTYPE
The prototype screens provide a visual representation of the specific input
screens that will be developed by IMS to support the Umbrella Online business
for Customer. This approach does not allow for functional changes to the
screens. Customer will provide IMS with reasonable input regarding the "look and
feel" of the screens being developed. This input may include items such as the
addition of "drop down" boxes or cosmetic enhancements to the color scheme.
RESOURCES
IMS will not require additional executive level management for the Customer's
Commercial Lines Umbrella Online program. Every attempt will be made to leverage
the resources assigned to the eBOP program for the Customer Commercial Lines
Umbrella Online program. In IMS' best effort to maximize returns, it is our
expectation that this will be a singular commercial lines business unit.
IMPLEMENTATION APPROACH
NEW IMPLEMENTATION
IMS can be in production with Customer's Commercial Lines Umbrella Online
System, interfaces, reporting, forms and statistical reporting for all filed
states at the commencement of this agreement within one hundred twenty (120)
calendar days after Customer's sign-off on the Detailed Business Requirements
document. After the one hundred and twenty (120) calendar days and the
completion of the implementation for the first state, IMS can be in production
with Customer's Umbrella Online system for and each subsequent filed state
within thirty (30) days until completion of all states. (The Rollout Plan is in
Appendix B.)
IMPLEMENTATION SERVICES
The IMS Implementation Team will provide product support and strategic
implementation services for Customer. This Implementation Team will provide the
following services:
o Project management services
Project planning
1. Definition of work requirements
2. Definition of quantity and quality of work
3. Definition of resources needed
Project monitoring
1. Tracking progress
2. Comparing actual outcome to estimated outcome
3. Analyzing impact
4. Making adjustments
o Implementation approach
o Electronic commerce strategies for property and casualty
insurance companies
o Electronic commerce application and system architecture
development
o Data Center services
o Technical support services
ENHANCEMENTS/CHANGE CONTROL
Requests for changes and technical assistance will be handled through the IMS
Systems Development Life Cycle, as referenced in the Agreement. Customer will
submit a change request form to the IMS
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Account Manager identifying the change or technical assistance required. The IMS
Account Manager will develop a "Quote Sheet". The Quote Sheet will include
initial time, cost estimates and initial Project Plan.
Once approval is received from Customer on the Quote Sheet, the IMS Systems
Analyst will perform design, development, and testing.
TRAINING NO CHANGE TO THE UMBRELLA ONLINE PROGRAM.
To assist in educating the Agents on the use of the Internet interface and the
IMS base system IMS will provide two seminars in the first year of operation
each at a single site. After the first year of the agreement a single seminar
will be provided at the request of Customer. IMS' preferred approach to training
is to "train the trainer." IMS anticipates that the Customer's field Vice
Presidents would most likely be the individuals with whom IMS train in the above
referenced seminars.
In addition to the above referenced seminars, if Customer chooses to license the
Brio(R) reporting tool, IMS will provide additional training services for this
product on a Time and Material basis.
TECHNICAL SUPPORT NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.
CUSTOMER SERVICE HOURS OF OPERATION:
Monday through Friday, 8:00 a.m. to 8:00 p.m., Eastern Standard Daylight Time.
Arrangements can be made to accommodate extended hours of operation. Exclusions
from this time are IMS' Corporate Holidays. These holidays are:
o New Year's Day
o Memorial Day
o Independence Day
o Labor Day
o Thanksgiving Day
o Day after Thanksgiving
o Christmas Eve
o Christmas Day
In the event the holiday falls on a weekend IMS will transfer the holiday to a
working day prior to or after the holiday.
IMS BPO SERVICE STANDARD LEVELS
In accordance with ARTICLE X (A) (d) of the Agreement, the following are the
"Service Standard Levels" that are applicable to the Commercial Lines Umbrella
Online program (Authorized Line of Business):
HOURS OF OPERATION
The IMS commercial lines customer service department will provide service for
Customer, its Agents and insureds Monday through Friday 8:00 AM to 8:00 PM, EST.
TELEPHONE SERVICE
IMS will respond to telephone inquiries from Customer's Agents and insureds at a
service level of eighty-five percent (85%) of all calls answered within
twenty-five (25) seconds or less.
A Meridian Total Service Factor ("TSF") report will be provided to Customer
every Monday (unless that Monday is a IMS corporate holiday, in which case the
TSF report will be provided the next Business Day) for the previous week's call
activity. The calculation for this report is based on the following.
TSF is calculated by (calls Answered + calls abandoned + direct calls In) - (#
answered after threshold * # abandoned after threshold) x 100 = divide answer by
total of first set of ( ).
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PROCESSING
For policies handled through exception processing procedures:
Cash receipts one (1) Business Day
New business four (4) Business Days from
receipt of complete, accurate and
valid Underlying Policy information
from the Customer Agent.
Renewals ten (10) Business Days or within
established state regulatory
guidelines, whichever is less.
Endorsements ten (10) Business Days
Cancellations two (2) Business Days or within established
state regulatory guidelines, whichever is
less.
Correspondence five (5) Business Days
Exception quote one (1) Business Day from receipt of
complete, accurate and valid Commercial
Lines Umbrella Online submission for rate
information.
For policy transactions submitted through the Internet:
Cash processing
(EFT, ACH, credit card) twenty-four (24) hours
New business twenty-four (24) hours
Endorsements twenty-four (24) hours
Cancellations twenty-four (24) hours
Renewals twenty-four (24) hours
Correspondence five (5) Business Days
Cash receipts one (1) Business Day
Commission checks will be issued by the fifteenth (15th) calendar day of each
month for commission due on Umbrella Online policies from the prior month.
Bureau error corrections for "A" Rate form filing will be completed within the
state mandated timeframes.
REGULATORY CHANGES
Fees to complete regulatory changes are included in the Insurance Administration
Services pricing. IMS will complete all regulatory changes within the compliance
date assuming IMS receives a minimum thirty (30) calendar days prior written
notification from Customer. In the event that IMS receives less than thirty (30)
calendar days written notification and/or the effort is extraordinary, IMS will
make every reasonable effort to complete the changes within the compliance date.
SYSTEM ENHANCEMENTS LESS THAN 40 HOURS
Fees to complete minor enhancements are included within the Insurance
Administration Services pricing. An initial scope assessment, with an
approximate estimate of hours, will be provided to Customer within ten (10)
Business Days from the date IMS receives notification of an enhancement request.
Based on signed approval of Detailed Business Requirements, IMS will proceed
with completion of the enhancement.
SYSTEM ENHANCEMENTS GREATER THAN 40 HOURS
Fees to complete sizable enhancements are at time and materials rate. An initial
scope assessment, with an approximate estimate of hours, will be provided to
Customer within ten (10) Business Days from the date IMS receives notification
of an enhancement request. For projects greater than 200 hours, IMS will provide
an estimate at the completion of Detailed Business Requirements and give
Customer the option of a "fixed" price project. In either case, IMS will proceed
based on signed approval of detailed business requirements.
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DATA CENTER
IMS' Data Center goal for "up time" is 99%. It is IMS' goal to provide this
standard to Customer.
The system availability is from 4:00 AM - 2:00 AM EST (22 hours).
NOTE: ALL SERVICE STANDARD LEVELS ARE MEASURED IN BUSINESS DAYS (UNLESS
OTHERWISE NOTED IN THE EXHIBIT) FROM THE DATE AN ERROR FREE INTERNET TRANSACTION
OR MAILED-IN OR FAXED DOCUMENT IS RECEIVED.
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EXHIBIT III
COMMERCIAL LINES WORKERS COMPENSATION PROGRAM
DEFINITIONS
Capitalized terms, not otherwise defined in the Agreement or in this Exhibit,
shall be construed as otherwise generally understood in the insurance and data
processing industry.
PLAN OF OPERATION
PROJECT ASSUMPTIONS
1. To meet Customer's existing business objectives IMS will implement a
Workers Compensation system, based on Customer's existing Workers
Compensation product definitions, with the following functionality:
o Quick quote function
o User controlled editing to establish distinct underwriting rules
o Use of Customer filed policy forms
o Customized output with customer specific logo on forms
o Loading of rate files
o Use of bureau published rates/approved loss cost multipliers
o Use of state mandated legal wording on policy
forms/correspondence
o Receivables processing
o Automated renewal processing
o Endorsement processing
o Cancellation/reinstatement processing
o Audit processing
o Premium and commissions accounting
o Generation of commission statements and checks
o Reinsurance processing
o Agency management reporting
o Claims data management
o Coverage verification for Customer's claims third party
administrators ("Claim TPA")
o Compliance of statutory reporting
o Loss control survey request ordering
o Inspection ordering
o Testing of all functions with Customer's data
o Controlled environment with Customer's approval and sign-off of
test results
o Document packaging
o Cash processing
o Interfaces for Claims TPA's, Customer's clearance system and FARE
2. Applications may be submitted by appointed Customer agents ("Agents")
via the Internet for real-time quoting and binding.
3. The Internet screens will be designed as a mirror image of the current
Cybercomp Workers Compensation Internet Solution. Upon completion of
the Detail Business Requirements document IMS will provide, for
Customer's reasonable approval, revised screens that incorporate any
process/workflow improvements to streamline the data entry process by
the Agent.
4. IMS will provide an interface to the Customer's "Clearance System" for
Internet and faxed quote submissions and renewal business.
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5. Customer is currently affiliated with NCCI and the Independent Bureaus
and will provide IMS with the necessary authority to obtain the
required policy processing data and underwriting rules on Customer's
behalf. Where available, information will be provided to IMS
electronically.
6. IMS will at least initially have to rely on Customer to provide IMS
with regulatory requirements as dictated by NCCI or Independent
Bureau(s). IMS will assess and apply the change to ensure compliance
of the change(s) upon receipt of the information from Customer.
7. In order to utilize document packaging, OCR lines must be printed on
all forms. Some states may require that Customer re-file its forms for
approval before adding the OCR line. Customer will identify those
states in which it will be required to re-file any policy forms.
8. Customer will promptly provide all underwriting rules and guidelines
based on the program plan in each state. Any deviation from these
rules and guidelines will be considered for exception processing
following the mutually agreed upon exception processing policies and
procedures defined by Customer. Customer and IMS will cooperate to
automate any manual processing where possible.
9. Customer Workers Compensation policies will be no less than monthly
term policies.
10. Customer will promptly provide IMS with all information pertinent for
establishing new Agents in the IMS Workers Compensation system for
policy processing.
11. Customer will combine its existing Small Business Employers Plan" and
the "Business Solution Plans" into a single plan by introducing class
minimum premium for each state plan.
12. Customer will provide a minimum of 10 business days advance notice to
IMS prior to the effective date of changes to its underwriting program
and policies and procedures.
13. IMS will follow the accounting processing (receivables and audit)
rules and guidelines as defined by Customer and mutually agreed upon
by IMS for audit, billing and collections, cancellation and
reinstatement processing. Customer and IMS will cooperate to automate
any manual processing where reasonably possible; provided, however, if
automation is not reasonably possible IMS shall manually perform any
accounting processing that is not automated in accordance with the
Agreement and this Exhibit.
14. Audits will be ordered on an interim and annual basis on behalf of
Customer for cancelled or expired policies as per Customer's
guidelines.
15. Premium and claims reinsurance will be applied in accordance with
Customer's reinsurance treaty agreements. Customer will promptly
provide new definitions at the close of each calendar year in order
for IMS to apply changes prior to the first month-end cycle of each
calendar year.
16. Commissions are paid once a month, at mid-month. The commission check
is based on the premium collected in the previous month multiplied by
the commission rate. A commission statement will be provided to every
Agent that details the transaction by policy.
17. Customer will promptly provide IMS the commission rates for new Agents
or changes to existing Agents along with the effective date of the
change.
18. Customer will promptly provide the necessary resources to handle the
reporting required for state-specific calls based on the data provided
by IMS through FARE.
19. IMS will order loss control surveys for all issued policies as per
Customer's guidelines. It will be necessary for Customer to provide
IMS access to the Customer's EMS database in LotusNotes. (It is the
intent of IMS to automate the input of the data into the Customer EMS
system. THE EFFORT ASSOCIATED WITH THIS DATA FEED IS OUTSIDE THE SCOPE
OF THE AGREEMENT.)
20. Customer Claims TPA's are responsible for submitting accurate data in
the correct position, size, type and format and with the correct
values as assigned by NCCI, Independent Bureaus or IMS. All data
formats will be edited prior to submission to IMS.
21. Customer Claims TPA's will submit one (1) file monthly to IMS by tape
cartridge or as ASCII files attached to e-mail by a predefined
timeframe to be mutually determined after the completion of the Detail
Business Requirements.
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22. IMS will provide an error report of claims rejected by the interface
due to incorrect data being submitted. The report will be provided on
a monthly basis after processing the current month claims file from
the Claims TPA. Claims that do not pass all edits will be rejected in
their entirety. Rejected claims will be corrected and resubmitted with
all data previously rejected, including all financial transactions.
All resubmitted transactions should be included with the next Claims
TPA file transmission. All claims passing edits will be processed to
IMS' system.
23. IMS will provide Customer with the required policy/claims data for
calculating Claims TPA's processing fees.
24. Customer will pay all Claims TPA fees as per contract between Customer
and the Claims TPA. Any services offered by IMS for third party
administration" data processing beyond the contracted services will be
charged to Customer per Servicing contract based upon prior approval
from Customer.
25. IMS will create a policy transaction file to be provided on-line to
the Claims TPA's for coverage verification. It is IMS' intent to
provide the coverage verification data file to the Claims TPA's and
Cybercomp on a daily basis by posting the data file to the web-enabled
front-end for the Claims TPA's to access only Customer's data. It will
be the responsibility of the Claims TPA to download the data on a
daily or interim basis. IMS will hold the daily files for a period to
be agreed upon by Cybercomp and IMS. As a transitional phase for the
Claims TPA's retrieving the claims data from the Internet, IMS will
provide the data files to the Claims TPA's via e-mail.
26. Customer is looking to acquire the services of a single toll free
vendor ("Toll Free Vendor") for claims reporting. The Toll Free Vendor
will also need a copy of the policyholder coverage information to
confirm coverage, locations and forms and provide the necessary data
to the Claims TPA for administering the claims. It is IMS' intent to
provide the Toll Free Vendor access to the coverage verification data
needed through the web-enabled front-end. The Toll Free Vendor will
need access to more policy data than the Claims TPA. The IMS security
levels will define the data to be accessed by the Toll Free Vendor or
the Claims TPA and allow the Toll Free Vendor access to all policy
data irrespective of the Claims TPA assigned.
27. IMS will order state inspections on behalf of Customer as per the
state requirements. Currently Arizona and South Dakota require
inspections.
28. Customer will promptly provide the data requirements for any data not
contained within the fifteen (15) file layouts currently used by the
(third party) Brio(R) ad hoc reporting tool. IMS will create up to
five (5) additional files within the scope of this Exhibit. The data
requested is needed for creating ad hoc underwriting analysis, claims
and additional accounting reports.
29. IMS shall, where cost effective to IMS and after consultation with
Customer, automate all data interfaces between IMS and any third party
administrator utilized by Customer for processing and handling of the
Workers Compensation policies being serviced by IMS. Customer will
promptly provide IMS the necessary support to work with the Claims
TPA's in defining and implementing such automation of data transfers
into or out of the IMS Workers Compensation system.
30. In order to develop the final system specifications and to complete
the Detail Business Requirements Document, Customer will provide IMS
in a timely manner the following additional information:
STATE SPECIFIC INFORMATION:
o Underwriting rules and guidelines
o State specific filed forms
o Binding requirements and workflow
GENERIC INFORMATION:
o Customer specific filed forms
o Annual statement line of business by coverage
o New business rules and workflow
o Endorsement business rules and workflow
o Cancellation business rules and workflow
o Reinstatement business rules and workflow
o Renewal business rules and workflow
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o Audit business rules and workflow
o Billing/collection business rules and workflow
31. IMS will provide Insured "Welcome Letters" to be generated and mailed
out of the IMS system. The Welcome Letters consists of a one (1) page
document that is mailed to the Insured. The Welcome Letter will be
mailed with the policy if the policy is mailed within seven (7)
Business Days of binding. If policy is not prepared for mailing within
seven (7) Business Days, the Welcome Letter will be mailed separately.
32. IMS will provide time and material estimates to implement the various
components required for interfacing the Kokopelli designed web-site to
the IMS system as the detail specifications are provided by Customer.
DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT. These
components are as follows:
o RFP - IMS will be given an opportunity to respond to the RFP for
hosting the web system.
o Agency profile and set up will be done on Kokopelli front-end.
Customer will require that the Agent have a logon for Kokopelli
and a separate logon to the IMS application as an additional
security layer. Agent will be required to input his or her
password to access quote and support application. IMS will
develop the interface/integration between the IMS' security
system and Kokopelli.
o IMS will develop a https protocol between Kokopelli and the IMS
producer system and the PDS' agent master when agency appointment
is approved, updated, or cancelled. Customer will need to
establish the procedures for handling sub-producers via the
Kokopelli system or other defined process.
o IMS will provide a daily file containing policy status
information to the Kokopelli system. The insureds access will be
limited based on whether an in-force policy exists for the
insured.
o IMS will provide insured access to the loss run reports provided
to the Agents via the support site. The navigation should be
streamlined to eliminate the selection choices and display only
the loss run report for the insured's policy.
o Customer will promptly provide IMS screen prints of the Kokopelli
web-site in order to develop a similar look and feel for the
product sites being developed. The color scheme and background
layout of the Kokopelli site should be similar in the product
sites. All other functions will be specific to the product
application or follow the current Workers Compensation Internet
application.
o IMS will provide separate time and material estimates for
components listed above based on whether IMS is the web hosting
vendor or not.
o In the event the Kokopelli solution for Agent appointment is not
in production prior to the implementation of the first state
rollout on the IMS system, an alternate solution for establishing
the Agent data in the IMS system will be developed.
33. IMS will provide Customer a time and materials estimate to implement
an interface to a premium finance company for retrieving a finance
quote and establishing financing at binding. DELIVERY OF SUCH FUNCTION
IS OUTSIDE THE SCOPE OF THE AGREEMENT.
34. IMS will offer Customer the capability of tracking the Claims TPA
take-over process in the claims data interface. The additional
processes for providing data extracts and reports for the current and
new Claims TPA, will be estimated by IMS on a time and material basis.
DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE
AGREEMENT.
35. IMS will provide the ability for Agents to process premium and
non-premium endorsements to in-force policies via the Internet
application.
36. IMS will provide the management of the inspection and audit vendors
selected by Customer for responding to service requests. The
management of these vendors will be based on the defined rules and
guidelines established by Customer. IMS and Customer will jointly
share in the efforts to develop an automated solution for the vendor
management process in the IMS system.
37. In addition to the other functionalities defined within this Exhibit
and the Agreement, IMS will provide Customer with the ability to
support the following functions within the IMS Workers Compensation
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system. Customer will promptly provide IMS detail specifications and
business requirements to implement these functions within the
implementation time schedule.
o Nevada transitional rating for new business and converted
in-force business
o Agency better business commission option
o By state by class minimum premiums
o Employers liability stop gap coverage for monopolistic states
o Anniversary date edits
o Edit quote effective date edits
o Multi-company rating capability
o Application of multiple plans per state, county or zip code
o Scoring system for general information questions
o Revised quote layout
o Experience mod history scoring
o Multiple plan effective dates
o Access to special rating guidelines associated with eligibility
questions
o Data capture capability for requesting take out credits
o Produce posting notices as per state requirements
o Merit rating
38. IMS will offer Customer the ability to support dividend processing for
the following functions:
o PAR dividend plans
o Deferral dividend plans
o Dividend disclosure statements
o Minimum dividend plans
IMS will provide a time and materials estimate upon receipt of the
detail business requirements. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE
SCOPE OF THE AGREEMENT.
39. IMS will offer Customer the ability to support an interface to a
payroll distribution company. IMS will provide a time and materials
estimate upon receipt of the detail specifications and business
requirements. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE
AGREEMENT.
40. Customer's policy data will be converted from Customer's existing
(immediately prior to the execution of the Agreement) Workers
Compensation policy system to the IMS' system for policy handling. IMS
will analyze the effort associated with the conversion of the data and
provide Customer a time and materials estimate. Customer will promptly
provide IMS the necessary data file layouts to develop the estimate
and the conversion logic. ALL EFFORTS ASSOCIATED WITH THE ANALYSIS,
CONVERSION LOGIC DEVELOPMENT, RECONCILIATION AND DATA CLEAN-UP (AND
DELIVERY OF THE RESULTING DATA CONVERSION) IS OUTSIDE THE SCOPE OF THE
AGREEMENT.
41. IMS will provide a time and material estimate to implement an
automated solution for Deductible Billing. DELIVERY OF SUCH FUNCTION
IS OUTSIDE THE SCOPE OF THE AGREEMENT.
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REQUIREMENTS DEFINITION
BUSINESS REQUIREMENTS
THIS SECTION DETAILS THE APPLICABLE STIPULATIONS OF THE INSURANCE
ADMINISTRATION SERVICES TO BE PROVIDED UNDER THIS AGREEMENT BASED ON THE
CATEGORIES LISTED BELOW.
1. DOCUMENT PACKAGING REQUIREMENTS NO CHANGE FOR THE CYBERCOMP PROGRAM
IMS uses automated, system-generated forms, from policy declaration pages to
Agent statements, and maintains all the necessary form information: form names,
recipients, and printer instructions, including variable information such as
company name and address. The IMS system not only catalogs all current forms in
use, but also stores previous versions of forms should IMS need to retrieve
them for Customer's legal or auditing purposes.
Customer will promptly provide IMS the distribution requirements for all
correspondence to complete the Detail Business Requirements Document.
2. IMAGING REQUIREMENTS NO CHANGE FOR THE CYBERCOMP PROGRAM
The IMS Underwriting department will be provided access to all documents that
are sent to IMS, and all document packaging output documents related to a
policy, through an electronic form archive. As a standard procedure, all
system-generated documents are transmitted to the imaging system via Computer
Output to Laser Disc ("COLD"). These stored images are duplicates of the
original documents sent to the policyholders, Agents and other respective
parties and can be reproduced for Customer, its auditors, reinsurers, and its
Agents upon request. IMS does not retain hard copy documents once the IMS
records management department scans the images into the IMS system.
3. INPUT REQUIREMENTS
The information required for quoting and binding a policy will be input into
the system by Customer's Agents using the Internet. IMS' underwriting
department will be prepared to handle exception processing that may occur based
on procedures as defined by Customer and mutually agreed upon by IMS.
An individual Agent will be able to enter the same quote within a predefined
number of attempts. If this number is exceeded, that Agent will not be allowed
to continue the process and will automatically be referred to IMS' customer
service department for assistance. The production quote count would not be
affected by an unsuccessful quote attempt.
The input requirements, as defined in this Exhibit, are based solely on the
information provided by Customer to IMS. During the implementation of the
Rollout Plan, as the detailed underwriting information for each state is
determined, additional requirements will be incorporated into the project
scope. IMS will complete the detail analysis to determine all required fields
for quoting and binding based on the forms and distribution documents, the
bureau reporting requirements and any Customer Workers Compensation
underwriting rules as currently defined in Customer's existing Cybercomp
system. The completion of this analysis is dependent upon receipt of all
completed Workers Compensation underwriting rules and guidelines from Customer.
4. MANAGEMENT REPORTING REQUIREMENTS
Customer has provided IMS with a sample of reports that it had received from
its existing (immediately prior to the execution of this Agreement) Workers
Compensation system. The reports received from Customer are not inclusive of
all Customers' reporting requirements. Customer will promptly provide IMS with
sample copies of all required reports received/generated from the existing
Workers Compensation system. Upon receipt of these reports, IMS will review
each report to determine if the report or a similar report is currently being
generated through the IMS system. IMS will provide up to 15 additional reports
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that are not currently provided in IMS' base system, to satisfy the current
Customer's reporting requirements.
IMS will send a weekly e-mail with the "Weekly Data File Report" that
represents an Agent's Workers Compensation book of business to each
Marketing/Field Representative. IMS will also send this information to
Customer's accounting group via e-mail. In addition, IMS will provide an
"Accounting Group Report" that contains all Workers Compensation books of
business sorted by Marketing/Field Representative.
5. AD HOC REPORTING REQUIREMENTS NO CHANGE FOR THE CYBERCOMP PROGRAM
IMS utilizes a third party ad hoc reporting tool called Brio(R). Brio(R) report
provides the enterprise reporting tools and technology that Customer will nEed
to develop and process a complete range of reports, from small reports to
mission-critical operational reports that access large volumes of data in
production databases, legacy applications, and data warehouses. Output from
Brio(R) report can range from high-volume printed reports to highly interactivE
reports delivered via the Web.
BRIO(R) CAPABILITIES
The following is a list of Brio(R) capabilities that Customer may choose to
utilize. The use of these features is determined at the end user level.
o Merge premium data with loss data
o Read only so that the data can be changed
o Drill down into the data
o Intelligent method for subtotaling and totaling
o Can filter the data by year to date, week to date, etc.
o Time Service Report--e-mailed or static on the Customer web site
o Running the month end process on a weekly basis
o Fifteen (15) file layouts for reporting against Month End
o Up to five (5) additional file layouts based on specific data
reporting requirements to be provided by Customer
NOTE: In order for Customer to realize the full benefits of the Brio(R)
reporting tool, it would be necessary for Customer to establish a dedicated
line into the IMS system. This would allow Customer to access Brio(R) and
Customer-specific data.
6. FORMS
IMS will support the creation of all policy form/documents as required by state
bureau requirements and any Customer specific forms.
7. OUTPUT AT AGENT'S OFFICE
In response to Customer's request that specific forms and certain Internet data
information be available to print in the Agent's office, IMS agrees to provide
the following:
o Quote
o Confirmation letter
o Preliminary installment schedule
o Declination letter
o Billing status information
o Policy status information
o Employer limits information
o Policy loss run report
o State specific program underwriting forms
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o Premium finance agreement (creation of the finance agreement
requires an interface with a premium finance company. DELIVERY OF
SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT.)
8. COMPLIANCE/BUREAU REPORTING
IMS will ensure compliance with all State and Bureau entity mandated
requirements for unit statistical reporting, State mandates, NCCI PIC/POCS,
DCI, ICR, and Bureau Criticism responses.
Data calls from regulatory entity shall not be completed by IMS. Customer will
respond based on data interfaced from the IMS' system to FARE.
9. UNDERWRITING
The underwriting decisions for the Workers Compensation insurance product will
be completed utilizing an underwriting template provided by Customer. The
underwriting will take place online via specially designed screens and will
provide automatic rejection of applications that do not meet the defined
underwriting guidelines.
When a fax or mail-in submission is received, the IMS commercial underwriting
department will use the Internet screens and the predefined Customer rates,
rules and guidelines in the IMS system to issue or reject the policy.
PREMIUM AUDIT
Customer uses a third-party audit vendor for performing physical premium
audits. IMS will order on behalf of Customer, physical premium audits, process
the results of the premium audits and associated billing based on the
procedures defined by Customer and mutually agreed upon by IMS.
INSPECTIONS
IMS' Commercial underwriting department will order, on behalf of Customer,
underwriting inspections from Customer's inspection administrator as required
by state mandates or Customer's underwriting rules and guidelines. IMS will
process the resulting policy updates, as outlined in Customer's underwriting
manual, such as cancellations or documentation on the policy.
REINSTATEMENT WITH A LAPSE IN COVERAGE NO CHANGE FOR THE CYBERCOMP PROGRAM.
IMS will process reinstatements subject to the guidelines set by Customer.
EXCEPTION PROCESSING NO CHANGE FOR THE CYBERCOMP PROGRAM.
Submissions that fall outside of Customer's Workers Compensation underwriting
guidelines and that result in a disputed rejection, will be handled according
to an "Exception Processing" document that will be created and approved by
Customer with consultation and input from IMS.
10. POLICY LEVEL GUIDELINES
Customer's specific underwriting eligibility rules will be displayed on a
customized data entry screen. The system will be designed to ensure that the
Customer specific criteria will be met before the risk is accepted. The
underwriting eligibility rules will vary by state and may be modified by
Customer on an interim basis for competitive pricing reasons. The following is
an example of Customer's minimum guidelines:
o Is 75% of the payroll assignable to employees domiciled in the
primary state?
o Is the applicable or most recent experience modification less
than or equal to "maximum limit for state?"
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o Is the payroll assignable to less than 5 states?
o Is the manual, unmodified premium greater than "minimum limit for
state or governing class template minimum if available"?
o Are all of the classes "eligible classifications"? (a class is
determined to be "eligible" if not listed under the ineligible
class list.)
o Is your current coverage with a company not affiliated with a
Customer's Group Holding Company?
o Has there been a cancellation/lapse in coverage due to
non-payment of premium in the past 18 months?
o Is the employer currently uninsured for workers compensation?
o Are the insured's operations "restricted" as defined in the
governing classification template?
o If "restricted" operations apply, does the employer pay less than
an average of $6 per hour to employees in the governing class?
o Additional state specific underwriting eligibility questions may
be applied based on Customer's underwriting guidelines for the
primary state.
10.1 RISK SCORING
IMS will use criteria defined by Customer to score the risk and determine the
appropriate Issuing Company. Based on Customer's requirements, IMS will decline
the risk for being outside the underwriting eligibility guidelines if a score
is generated that is outside the risk score range (example provided is <0).
The risk scoring function in the system will allow for different criteria range
thresholds for each Authorized State and automatically make premium adjustment
assignments by state based on responses to the criteria questions.
Additionally, an effective and expiration date will be used in the AS/400
system tables to allow changes within the state set up.
Customer has two (2) types of underwriting plans. These include:
o A "Percentage Plan" where the application criteria response is a
percentage amount that is totaled and compared to the Risk
State's mandated schedule modification minimum and maximum
limits. If the total risk score exceeds the minimum or maximum
state schedule modification limit, the minimum or maximum is
used. The calculated score is applied to the premium as the
schedule modification credit or debit. Only one Issuing Company
will be available for the Percentage Plans.
o A "Point Plan" where the application criteria response is a point
score that is totaled and compared to a score range to determine
the Issuing Company.
An example of the Point Plan risk criteria that IMS will use for the
development of the risk scoring mechanism is shown below (as provided
by Customer):
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------------------------------------------ --------------------------------------------- --------------------
CRITERIA RANGE POINTS
------------------------------------------ --------------------------------------------- --------------------
Average weekly wage rating (A, B, C, D) * *
for employees in governing classification
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
Experience modification history * *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
------------------------------------------ --------------------------------------------- --------------------
CRITERIA RANGE POINTS
------------------------------------------ --------------------------------------------- --------------------
Does the employer financially * *
contribute to an employee medical
benefit plan?
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
Does the insured qualify for a class * *
specific preferred operation adjustment?
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
An example of the Issuing Company criteria for the above Point Plan criteria is
provided below (as provided by Customer):
---------------------- ------------------------------------ ------------ ------------------------
SCORES ISSUING COMPANY DEVIATION PREMIUM DISCOUNT TABLE
---------------------- ------------------------------------ ------------ ------------------------
0 - 9 Reliance Insurance Company * *
---------------------- ------------------------------------ ------------ ------------------------
10 - 14 United Pacific Insurance Company * *
---------------------- ------------------------------------ ------------ ------------------------
>/= 15 Reliance National Insurance Company * *
---------------------- ------------------------------------ ------------ ------------------------
An example of the Percentage Plan risk criteria that IMS will use for the
development of the risk scoring mechanism is shown below (as provided by
Customer):
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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------------------------------------------ --------------------------------------------- --------------------
CRITERIA RANGE POINTS
------------------------------------------ --------------------------------------------- --------------------
Average weekly wage rating (A, B, C, D) * *
for employees in governing
classification
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
Experience modification history * *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
Does the employer financially
contribute to an employee medical * *
benefit plan?
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
Does the insured qualify for a class * *
specific preferred operation adjustment?
------------------------------------------ --------------------------------------------- --------------------
* *
------------------------------------------ --------------------------------------------- --------------------
The Issuing Company for the above example would be Reliance Insurance Company
with applicable premium discount from "Table 9".
10.2 RATING REQUIREMENTS
IMS will follow all state mandated rating algorithms as published by NCCI or
the Independent State bureau as it relates to Customer's specific underwriting
rules and guidelines.
11. PROPOSED DETAILED INTERNET WORK FLOW
The following proposed detailed workflow provides an outline of the tasks that
would need to be completed by an Agent in order to enter a new Workers
Compensation policy. As part of the Cybercomp project it will be necessary for
IMS to develop the screens and processes to support these functions with a
similar " look and feel" to the current Cybercomp Workers Compensation Internet
solution.
(Workflow diagrams for renewals, endorsements, cancellations, reinstatements
and audits will require further review and discussion with Customer before
being finalized. However, similar or like workflow processes are anticipated
for these transactions.)
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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11.1. CYBERCOMP PROPOSED INTERNET NEW BUSINESS PROCESS DIAGRAM:
Entrance Screen
New Quote
Support Flow Support Quote of
Support
Quote No Continue
Working
State Selection / Effective date
Modify
Eligibility
Eligible
Yes
Continue Quote / Premium Print Quote
Working
Bind
Binding Binding Verification System Agent
Information Instructions Process/Quality Marks faxes
Control Policy EFT
Pending to
Cash IMS
Confirmation/
Installment
Schedule
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11.2. CUSTOMER PROPOSED CASH PROCESS DIAGRAM:
IMS Entering Cash
Initiates Cash
Process
Check Retrieve Funds ACH Sweep Account
Check Received Bounced ACH Funds
Credit Card Charged to Agent/ No Transferred
Insured
IMS Continues
collection efforts No Check clears Sweep Account
Credit
Processed Yes
Yes
Notify Reliance Via Bounced ACH
Email charged to Agent/ No Funds Automatic Policy
Insured Transferred Issuance
IMS Issues Policy
Yes
No
IMS Cancel Policy Submit
Credit Card # No Cancel Policy
w/in 24 hrs.
Yes
System generates Output Dec
Premium deposited in Reliance
Account Policy Issuance
Notice to Agent
Reliance funds transferred to Reliance
operating account
IMS will draw fee from Reliance
operating account
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13. CUSTOMER SERVICE NO CHANGE FOR THE CYBERCOMP PROGRAM.
IMS understands that the Customer's Agents will be encouraged to utilize the
Internet for submitting a Workers Compensation Insurance policy. However, IMS
is prepared to quote these policies if a submission is faxed or mailed into
IMS' offices.
IMS' commercial lines staff will quote submissions and bind coverage if an
Agent accepts, based on verification of the program guidelines, required
underlying limits of insurance and any applicable exclusion(s).
The IMS commercial lines customer service department associates will undergo
comprehensive product training that will include a review of Customer's Workers
Compensation policy guidelines.
13.1. UNDERWRITING SERVICE
The underwriting decisions for the Workers Compensation insurance product will
be completed utilizing an underwriting template provided by Customer. The
underwriting will take place online via specially designed screens and will
provide automatic rejection of applications that do not meet the defined
underwriting guidelines.
When a fax or mail-in submission is received, the IMS commercial underwriting
department will use the Internet screens and the predefined Customer rates,
rules and guidelines in the system to issue or reject the policy.
IMS will provide policy underwriting for non-internet submissions, rating and
policy issuance as defined in Customer's underwriting, rating and policy
processing procedures and guidelines. IMS will follow NCCI's or other bureau
reporting entity's rating rules and guidelines.
13.2. POLICY PROCESSING
IMS will provide the following policy processing services for Customer's
Workers Compensation business submitted via the Cybercomp program. Customer and
IMS will reasonably and mutually define the policies and procedures to be
followed by the IMS service staff to meet Customer's Workers Compensation
program requirements.
o Review of bound submitted information for completeness and
accuracy. This includes validation of experience modification,
class code, payroll, Federal Employment Identification Number
(FEIN), and risk address. (It is IMS' intention to automate this
function for NCCI states by utilizing the electronic mod
distribution solution currently being offered by NCCI. Customer
will promptly provide the necessary resources and authority to
complete this process as quickly as possible.)
o Issuing and distributing policies
o Issuing and distributing billing invoices
o Processing agent/Customer/insured requested endorsements
o Issuing and distributing cancellation notices
o Distributing required state and Customer specific policy forms
o Distributing State and Customer required correspondence
o Process required state filings and reporting
o Issue required state certificate of insurance
o Respond to policy inquiries from insureds, Customer's appointed
Agents and Customer's staff
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14. CUSTOMER SERVICE NEW BUSINESS PROCESS
The diagram that follows provides a high level overview of IMS's workflow, as
established for processing Customer's mailed-in or faxed new business
applications. This basic workflow will also apply to renewal, endorsement and
cancellation processing for the Cybercomp program.
IMS CUSTOMER SERVICE DEPARTMENT
NEW BUSINESS PROCESS DIAGRAM
IMS Mailroom
Receives Umbrella
Submission
Route to
Commercial
Department
Underwriter
Companies
Automated
Quote
Acceptability No Decline
Met?
Yes
Quote Emailed or
Faxed to Agent
Agent No Archive
Accepts Quote
Quote?
Yes
Bind
Coverage
upon Receipt
of Funds
Funds No Process
Received? Cancellation
Yes
Customer
Service
Issues Policy
through
AS/400
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15. ACCOUNTING
Accounting services for the Customer Cybercomp Workers Compensation Program
will include:
o Payment processing
o Commission processing
o Billing processing
o Disbursements
o 1099 reporting
o Premium and claims reinsurance processing and reporting
o IMS will support payment processing on the above listed functions
as established for the eBOP and Commercial Lines Umbrella Online
program. This includes EFT, credit card and lockbox payment
processing.
PAYMENT PROCESSING
IMS will follow all binding guidelines established by Customer in order to
expedite the issuance of policies. While IMS prefers that Customer utilize
Electronic Funds Transfer (EFT) as much as possible, IMS acknowledges that it
will be required to handle a full range of payment processing, including:
o Checks
o Credit card payments
o Reconciliation
Premium processing for payments related to installments, renewals, audit bills
and endorsements will be processed through multiple lockboxes via an authorized
bank with a designated Customer Post Office Box. The lockbox to be used on the
remittance will be determined based on the insured's billing state. (EFT and
credit card payments will also be offered.) These payments will be picked up
early each morning and deposited the same day. Payments received with a
remittance coupon will be processed using optical OCR equipment that reads the
policy number electronically. Once lockbox data is transmitted and loaded, the
system will automatically process cash by applying payments and updating
policies.
Any payments collected via Credit Card will incur a processing fee. These fees
will be included with the policy premium where state guidelines allow a charge
to be passed back to the insured. Customer will promptly provide IMS with any
state specific requirements for credit card processing.
Reinstatement and collection procedures will be established according to
Customer's guidelines. IMS will request these payments be sent directly to our
office, EFT or through credit card payment.
IMS will support Customer's efforts to promote the utilization of EFT with its
Agents and insureds if it chooses this option. IMS will review the requirements
and address any concerns that the Agents may present.
The IMS accounting department will process all policy premium direct deposits.
To facilitate this process the following controls will be in place:
o Use of preprinted policy numbers on all documentation
o Daily review and comparison of system totals compared to total
cash transmitted and/or entered and any credit card receipts
transmitted
o Daily preparation and reviews of deposit slips and journal entry
forms
o Transactions not received through EFT will be deposited within
twenty four (24) hours of receipt
Cash processing includes the application of payments to current policies as
well as the application of new business. Because the volume of payments can be
extensive, cash processing will be completed in
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batches. Once a batch of payments is entered either automatically or manually,
the system assigns a control and batch number. These identifiers are used to
track data throughout the IMS system.
Cash processing activities such as non-sufficient funds processing, stop
payments and deposit corrections will be handled according to IMS' established
procedures or Customer's specifications.
COMMISSION PROCESSING
IMS will provide the ability to offer varying commission rates for incentives
such as utilizing the Internet to submit business versus faxing or mailing a
new business or renewal application. IMS will disburse commission payments by
the fifteenth (15th) calendar day of the following month. Payments will be
derived according to the commission structures instituted for Cybercomp and for
premiums collected through the previous month-end.
BILLING PROCESSING
Customer has requested the ability to offer direct installment billing with
some agency billing for specific agencies. IMS will process installment
payments as well as additional premium processing for new business, renewals
and change endorsements.
Billing will be established upon receipt of Customer's payment plan schedule as
per Customer's procedures and guidelines.
Audit processing that results in an additional premium will be billed as per
Customer's procedures and guidelines.
DISBURSEMENTS
IMS will provide return premium processing as per Customer's established
guidelines and procedures. Disbursement processing will include the processing
and issuance of the return premium and the bank reconciliation. IMS will also
generate and transmit daily "positive pay" files to IMS' banking partners on
IMS' disbursement bank accounts.
1099 REPORTING
IMS' "Producer System" complies with all 1099 reporting requirements. Using the
Agent file component of the Producer System, all information relative to an
Agent is captured including tax identification number and social security
number. This component will act as a control file and provides the necessary
data to generate both the Agent statements as well as the 1099 reports.
PRODUCER
"I.T.'s Producer System" will manage detailed information for all Agents,
providing access to data ranging from the general--name, address, and Agent
number, to the specific--commission rates, products sold, and license
appointments. All vital Agent premium data needed to create month-end premium
production reports, Agent checks, and Agent statements in both detail and
summary is integrated with the month-end system.
IMS will tracks all contracts by Agents and product, providing Customer with
both effective and expiration dates of those contracts
The I.T.'s Producer System provides IMS with the capability to set up and
maintain override commissions for any Agent desiring that arrangement. In
addition, an Agent's relationship file will allow Customer to request IMS
assign Agents to a general or reporting Agent. The I.T.'s System also contains
all the tables that run the Producer System so IMS can add new sales
representatives, enter commission rates, or add a new Agent type at the request
of Customer.
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16. USER DOCUMENTATION NO CHANGE FOR THE CYBERCOMP PROGRAM.
To meet Customer's requirements for clear concise user documentation to support
its Agents, IMS will provide a reference guide, which will be available through
email, and additional online reference information.
The "Cybercomp Workers Compensation Reference Guide" will include the
following:
o Introduction
o System overview
o Getting started
The additional information that will be available online will include:
o Underwriting responsibilities of the Agent
o New quote
o Unbound quotes
o Problem reporting
o Support site
o Questions and answers
In addition to the reference materials defined above, IMS will provide access
to Customer's Cybercomp Underwriting/ Agent Manual online. To ensure that the
information remains current in these online Cybercomp manuals, Customer will
promptly provide revised versions of the Cybercomp Underwriting/Agents manual
to IMS. Once this information is received by IMS, a service request will be
generated to archive the old version and provide the Agents with access to a
new online version as well as prior versions.
17. IT ENVIRONMENT NO CHANGE FOR THE CYBERCOMP PROGRAM.
IMS will initially facilitate the Insurance Administration Services on an IBM
AS/400 model 9406-650 having 4GB of main storage and over 373GB of on-line
storage. Additional peripherals will initially include a 3995 model C42 Optical
Tower, one IBM 3590 tape drive, one IBM 9348 1/2 inch reel tape drive, and one
IBM 6141 ASCII Workstation Controller which houses eight ports dedicated for
dial up access. Additionally, a second AS/400 is used for programming and
testing of enhancements. The AS/400's currently run IBM OS/400 Version 4,
Release 2 as the operating system. The system has averaged over 99%
availability for two consecutive years. Furthermore, greater than 98% of
transactions are completing in less than two seconds.
IMS has Local Area Network equipment consisting of more than sixty Microsoft NT
v4.0 servers running on rack mounted Compaq Proliant server class computers and
one RS6000. These servers are connected to the network backbone, and eventually
to the user workstations, via a combination of Token Ring and 100BaseT. The
network infrastructure utilizes 3Com's LanPlex Switch as the collapsed
backbone, with Superstack II hubs used for workstation access. Workstations are
Compaq Pentium based computers running Microsoft Windows 95, 98, or NT as its
operating system. The typical user workstation is installed with Microsoft
Office 97, Microsoft Outlook, and IBM Client Access 5250 emulation connecting
to IMS' AS/400 via TCP/IP.
The servers on the IMS LAN run the full Microsoft BackOffice suite, including
Exchange that is used as the messaging server, and also as the repository for
e-mail and calendars. Other servers run NT/SQL, SMS, SNA, Internet Information
Server, ViewStar Imaging, and TASC COLD.
The PBX used by IMS is a state of the art Northern Telecom option 81c, which
includes advanced features such as Meridian Mail, Customer Controlled Routing,
and Meridian Link. There are over 1150 extensions in use currently.
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The IMS data center ("Data Center") is protected by a 65KVA Toshiba UPS that
provides additional processing time of one half hour under full load in the
event of a commercial power failure at the main processing site. The UPS
running at 50% load has a battery life of over one-hour. IMS will be running
the UPS at approximately 40% capacity, thereby increasing the battery life to
well over one hour in the event of a power failure. All equipment in the Data
Center, including AS/400, LAN, and phone equipment, will be protected by this
UPS. Additionally, during non-prime time, there is a backup of the entire
system performed. The data tapes associated with both the LAN and AS/400 are
stored with an off-site data security vendor. IMS data processing sites
currently have disaster recovery plans, which are tested either annually or
BI-annually. When IMS executed its last mock disaster in January 1999, IMS was
able to restore all applications and data files and establish remote
connectivity within 16 hours at the IBM Business Recovery Systems hot site in
New York.
Policy, correspondence, and report printing functions are performed on four
Xerox 4890 Color Laser printers, each rated at 92 pages per minute. These
printers provide spot color capability for professional appearance of printed
output. The Xerox printers are connected to a ▇▇▇▇ system via bus and tag
cables, and in turn, the ▇▇▇▇ system is connected to the AS/400 via twinax
cable.
18. SECURITY REQUIREMENTS NO CHANGE FOR THE CYBERCOMP PROGRAM.
IMS' current "Point of Sale Internet Solution" has a "Security Model" that
includes authentication, access control, privacy, and data integrity for the
web sites and applications. The Security Model use digital certificates,
encryption, user ids and passwords to prevent unauthorized individuals from
accessing the IMS' systems.
Using Secure Socket Layer ("SSL") technology, IMS will provide encryption and
decryption of both request and response data being passed across network
connections, such as Agent information, policy data and credit card
information.
IMS is certified with the IBM e-business "▇▇▇▇" Program. The "▇▇▇▇" tells your
customers and business partners that Customer is using IBM products and
services as part of your e-business solution. It further communicates that IBM
products and services can help make a site more scalable, reliable and secure.
APPLICATION SECURITY
The security component allows access levels to be set for each user of IMS'
Workers Compensation system. When a user signs on, the system uses
behind-the-scenes processing to determine proper access levels. Depending on
the security level, a user can only access certain menu options and functions.
IMS' Workers Compensation system requires a valid user ID and password before
access is granted to the system. This access is granted in varying degrees.
The security component not only allows control over which functions an
associate can access, but it also defines access levels within each functional
component. In some instances, the user may view but not make any changes to
certain options or functions while, in others, the user cannot view certain
options or functions at all.
The security administrator can change access levels as needed. The ability to
add, change, and delete security accesses is available at any time.
19. SYSTEMS INTERFACES
CLEARANCE SYSTEM INTERFACE -- This interface will be designed to ensure that no
two Customer Agents are competing for the same prospect. For new business
submissions via the Cybercomp system, a call will be made to the Customer host
to determine if the account already exists under the same product offering. The
results of the search will be returned to the Cybercomp system to allow the
Agent to continue the submissions or notify the Agent that the account is being
serviced by another appointed agency associated with Customer.
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An update to the record in the Customer's system will be made at defined points
within the submission cycle and at policy renewal.
FARE SYSTEM INTERFACE -- Premium file and Claims file sent monthly to Customer.
This file layout has been provided to IMS for our review and analysis. IMS will
provide this capability.
CLAIMS TPA INTERFACE -- This interface will allow Claims TPA's selected by
Customer to submit monthly data files to IMS for processing into the IMS
Workers Compensation system. The claims data fed to the IMS system will be used
to provide the required information to Customer in the monthly FARE, creation
of policy loss run reports and for any required statutory reporting
requirements.
20. ADDITIONAL SUPPORT FUNCTIONS NO CHANGE FOR THE CYBERCOMP PROGRAM.
In addition to Internet access, a Customer-specific toll-free number,
interactive voice response ("IVR") and voice mail will be used to service
Customer Agents and insureds. The IVR provides support for quick inquiries with
responses available for frequently asked questions, voicemail, access to the
IMS' customer service and underwriting department, and the IMS' IS support
center.
Information available through IVR includes:
o Last payment received
o Outstanding balance on account
o Next payment due
o Renewal payment due
o Cancellation reason code
o Cancellation date
o Non-renewal reason code
o Screen specifications
PROTOTYPE
The Internet screens will be designed as a mirror image of the Customer's
existing (immediately prior to the execution of the Agreement) Cybercomp
Workers Compensation Internet solution. Upon completion of the Detail Business
Requirements document IMS will provide for Customer's approval, revised screens
that incorporate any process/workflow improvements to streamline the data entry
process by the Agent.
RESOURCES NO CHANGE FOR THE CYBERCOMP PROGRAM.
IMS will provide the internal qualified resources required for the overall
management of the Insurance Administration Services to be provided to Customer
under this Agreement. IMS will identify the key employees prior to
implementation of the applicable Rollout Plan. If additional resources are
necessary, IMS will provide those resources as the Insurance Administration
Services to be provided Customer under this Agreement reasonably dictate.
TYPES OF RESOURCES
INFORMATION SERVICES
Account Manager
The Account Manager assigned to this position will provide overall technical
management and have accountability for all technical responsibilities
associated with the Customer account. The Account Manager will determine
project prioritization within and across product lines and set project
direction from analysis through implementation. In addition, the account
manager will provide assistance and direction in utilizing the established
system development methodology for systems analysis and conceptual design. This
individual will also assume management responsibility for resource allocation,
provide front-line leadership to associates, assist in career development
planning and conduct performance reviews.
Business Systems Analyst
The Business Systems Analyst will be responsible for establishing and
maintaining relationships at the product level. The Account Manager often has
expertise in more than one product line and uses that
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knowledge to participate in project prioritization within Customer's
specialized product lines. A Business Systems Analyst will utilize the
established system development methodology during systems analysis and
conceptual design to prepare and present project deliverables. He or she will
be expected to establish and maintain effective communications, frequently
acting as a liaison with both business analysts representing the Customer and
systems analysts representing the IMS development center, during the project
life cycle.
Systems Analyst AS400 / RPG
A System Analyst will be responsible for the analysis, design, construction,
testing and implementation of computer based programs/systems. He or she will
be expected to meet business/project objectives and conform to technical
standards and conventions. The System Analyst will provide programming support
to both end users and IS associates. He or she will also be responsible for
researching and correcting program and system failures.
Forms Specialist
The Forms Specialist will be responsible for developing and administering
product support in the form of user and system documentation for all software
applications. This responsibility will include creating user guides, on-line
assistance, and other documentation whenever necessary. In addition, the Forms
Specialist will perform the tasks associated with the electronic design, setup,
and support of all insurance-related forms.
End User Support
The End User Support will provide varying levels of end user support for
hardware, software, telephony, and other computer related equipment as
required. He or she will be expected to have the ability to determine the
complexity of a problem and either take corrective action or ensure that any
additional resources necessary to correct the problem are notified.
Network Telecommunication Engineer
The Network Telecom Engineer will be responsible for investigating any issues
associated with the design, testing, integration and implementation of
computer, LAN/WAN, telephony equipment and all associated computer operating
systems. In further support of the corporate hardware and software
configuration, he or she will be capable of performing the job functions
related to capacity planning, performance tuning, and systems production
support.
AS/400 Operations
The AS/400 Operator will be responsible for the processes required to run
production jobs (daily, weekly, and monthly), print various reports, process
data transmissions, and run systems back-ups. He or she also will process
special requests such as data restores, vary devices on/off, and emergency
print jobs.
CUSTOMER SERVICE
Commercial Lines Manager
The Commercial Lines Manager will be required to provide leadership for the
policy and call center administration unit and has primary accountability for
daily operations. The Commercial Lines Manager will make recommendations
relative to business plan strategies but will be primarily focused on the
execution of the plan as approved by senior management of IMS. Additionally,
the Commercial Lines Manager will have direct responsibility for IMS
supervisors and subordinate associates and will have shared responsibility for
the profit and loss experience of the department. The Commercial Lines Manager
will also assist in establishing and monitoring the performance objectives that
support the goals of IMS and Customer.
Customer Service Supervisor
The Customer Service Supervisor will provide front-line leadership to IMS
commercial line associates on a daily basis by providing assistance and
direction in career development. Although the Customer Service Supervisor has
input regarding budget planning, his or her primary role will be to carryout
business plan objectives, manage the allocation of resources and respond to and
implement the directives from IMS management.
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Product Coordinator
The Product Coordinator will be responsible for working closely with the
customer service representatives and IMS management, to provide the technical
training required to support Customer's underwriting guidelines and rules. The
Product Coordinator will ensure that everyone associated with the Cybercomp
program is aware of system changes or enhancements. Other job responsibilities
associated with the Product Coordinator position include: maintaining thorough
product knowledge and being able to relate that knowledge to the processing
functions; expertise in training department personnel; and monitoring the
quality of service that will be provided to Customer.
Underwriter
An Underwriter will have experience and be capable of selecting and identifying
new and renewal at-risk business. The Underwriter will be able to apply
Customer's underwriting philosophy and standards when making decisions
regarding acceptability of a risk. The Underwriter will also be required to
develop and maintain a productive working relationship with Customer's Agents
and IMS' underwriting management staff. Ensuring acceptable time service
standards are met relative to processing new business, renewals, audits, change
endorsements and cancellations will be part of the Underwriters' overall
responsibilities.
Test Analyst
The Test Analyst will provide technical support for major system test projects,
enhancements and corrections. The Test Analyst will have a level of technical
competence that will allow him or her to understand new requirements and
develop specific test plans that will support the proposed changes. In
addition, the Test Analyst will be required to execute a test plan and compare
the results with the requirements to determine if application is functioning as
intended. The Test Analyst will be responsible for notifying IMS' IS department
of any discrepancies discovered during the testing phase and will track the
progress of a project and provide IMS management with regular status reports.
Quality Control Representative
The Quality Control Representative will be responsible for correcting policies
that are listed on the Daily Error Report. The Quality Control Representative
will keep detailed record of error trends, and recommend and coordinate
appropriate action with the Product Coordinator and IMS management.
Additionally, the Quality Control Representative will perform quality reviews
on all functions in the IMS customer service department and will analyze and
process internal measurement reports on a daily, weekly and monthly basis.
Customer Service Representative
IMS will provide Customer with Customer Service Representatives ("CSR") that
will of handle the Agents inquiries regarding Customer's policies, or the
occasional policyholder, in a courteous, positive and professional manner. Each
CSR position is monitored to ensure time service standards, quality,
productivity, telephone availability and call time service standards are being
met. The CSR will also be responsible for maintaining an in-depth knowledge of
the rules and procedures for processing all commercial line functions.
Accounting
IMS will provide an Accounting Manager for Customer who is responsible for
sign-off of all accounting reconciliation weekly and monthly financial reports.
IMS will consult with Customer on the qualifications and experience
requirements of the IMS Accounting Manager Candidate.
Regulatory/Compliance Analyst
IMS will provide a Regulatory/Compliance Analyst for Customer within six (6)
months from the effective date of the Agreement. He or she will be expected to
establish and maintain effective communication, acting as a liaison with both
Customer's Compliance Manager and IMS Operations and Development Teams to
ensure implementation of regulatory requirements as provided by Customer.
IMS Internal Audit Executive
IMS will, from time to time, involve its internal Audit Executive to review
IMS' compliance of Customer's pre-defined policies and procedures.
Premium Audit Analyst
The premium Audit Analyst will oversee the premium audit workflow to ensure
audits are ordered on a timely basis, audit response is received from audit
vendor within established timeframe, and instruct
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action on policy based on agreed upon guidelines established between IMS and
Customer. He or she will communicate directly with audit vendor, Customer's
audit manager, agents and insureds where necessary.
IMPLEMENTATION APPROACH
NEW IMPLEMENTATION
The implementation of the applicable Rollout Plan will begin once Customer has
agreed to the terms of the Workers Compensation proposal. IMS will implement
new business processing for Customer's Cybercomp program for all NCCI states
and the Independent Bureau states simultaneously. The above includes the
required interfaces, reporting, forms and statistical reporting.
IMPLEMENTATION SERVICES NO CHANGE FOR THE CYBERCOMP PROGRAM.
The IMS Implementation Team will provide product support and strategic
implementation services to Customer. The Implementation Team will provide the
following:
o Project management services
Project Planning
1. Definition of work requirements
2. Definition of quantity and quality of work
3. Definition of resources needed
Project Monitoring
1. Tracking progress
2. Comparing actual outcome to estimated outcome
3. Analyzing impact
4. Making adjustments
o Implementation approach
o Electronic commerce strategies for property and casualty
insurance companies
o Electronic commerce application and system architecture
development
o Data Center services
o Technical support services
ENHANCEMENTS/CHANGE CONTROL
Requests for changes and technical assistance will be handled through the IMS'
"Systems Development Life Cycle", as referenced in the Agreement. Customer will
submit a change request form to the IMS' Account Manager identifying the change
or technical assistance required. The IMS Account Manager will develop a Quote
Sheet. The Quote Sheet will include initial time, cost estimates and initial
yProject Plan. Once approval is received from Customer on the Quote Sheet, the
IMS' Systems Analyst will perform design, development, and testing.
TRAINING NO CHANGE FOR THE CYBERCOMP PROGRAM.
To assist in educating the Agents on the use of the Internet interface and the
IMS base system, IMS will provide two seminars in the first year of operation
each at a single site. After the first year of the Agreement, a single seminar
will be provided at the request of Customer. IMS' preferred approach to
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training is to "train the trainer." IMS anticipates that the Customer field
Vice Presidents would most likely be the individuals with whom IMS would train
in the above referenced seminars.
In addition to the above referenced training, if Customer chooses to license
the Brio(R) reporting tool, IMS will provide additional training services for
this product on a time and materials basis.
TECHNICAL SUPPORT NO CHANGE FOR THE CYBERCOMP PROGRAM.
CUSTOMER SERVICE HOURS OF OPERATION:
Monday through Friday, 8:00 a.m. to 8:00 p.m., Eastern Standard Daylight Time.
Arrangements can be made to accommodate extended hours of operation. Exclusions
from this time are IMS' Corporate Holidays. These holidays are:
o New Year's Day
o Independence Day
o Labor Day
o Thanksgiving Day
o Day after Thanksgiving
o Christmas Eve
o Christmas Day
In the event the holiday falls on a weekend IMS will transfer the holiday to a
working day prior to or after the holiday.
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IMS BPO SERVICE STANDARD LEVELS
In accordance with ARTICLE X (A) (D) of the Agreement, the following are the
"Service Standard Levels" that are applicable to the Workers Compensation
program (Authorized Line of Business):
HOURS OF OPERATION
The commercial lines customer service department will provide service for
Customer, its Agents and insureds Monday through Friday 8:00 AM to 8:00 PM,
EST.
TELEPHONE SERVICE
IMS will respond to telephone inquiries from Customer Agents and insureds at a
Service Level of eighty-five (85%) of all calls answered within twenty-five
(25) seconds or less.
A Meridian Total Service Factor ("TSF") Report will be provided to Customer
every Monday (unless that Monday is a IMS corporate holiday, in which case the
TSF report will be provided the next Business Day) for the previous weeks call
activity.
TSF is calculated by (Calls Answered + Calls Abandoned + Direct Calls In) - (#
Answered after threshold * # Abandoned after threshold) x 100 = divide answer
by total of first set of ( ).
PROCESSING
The following standards apply to policy processing functions performed by the
IMS Operations Center:
o Non-electronic Quotes one (1) Business Days
o Cash Receipts one (1) Business Days
o New Business fourteen (14) Business Days
o Renewals ten (10) Business Days or within
established state regulatory guidelines,
whichever is less
o Non-renewals ten (10) Business Days or within
established state regulatory guidelines,
whichever is less
o Endorsements twenty (20) Business Days
o Cancellations ten (10) Business Days
o Reinstatements five (5) Business Days
o Audit Billing twenty (20) Business Days
o Correspondence five (5) Business Days
o Bureau Criticisms fifteen (15) Business Days from IMS'
receipt of the criticism, or as required
by the regulatory entity, a response
will be provided to regulatory entity
Commission checks will be issued by the fifteenth (15th) calendar day of each
month for commission due on policies from the prior month.
REGULATORY CHANGES: Fees to complete Regulatory Changes are included in the
Insurance Administration Services pricing. IMS will complete all regulatory
changes within the compliance date assuming IMS receives a minimum thirty (30)
calendar day prior written notification from Customer. In the event that IMS
receives less than thirty (30) calendar days written notification and/or the
effort is extraordinary, IMS will make every reasonable effort to complete the
changes within the compliance date. Within six (6) months from the effective
date of the Agreement, IMS will consult with Customer to identify regulatory
changes that affect Customer's business and agree on the process required to
comply with the affected changes.
SYSTEM ENHANCEMENTS LESS THAN 40 HOURS: Fees to complete minor enhancements are
included within the Insurance Administrative Services pricing. An initial scope
assessment, with an approximate estimate of hours, will be provided to Customer
within ten (10) Business Days from the date IMS receives
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notification of an enhancement request. Based on signed approval of Detailed
Business Requirements, IMS will proceed with completion of the enhancement.
SYSTEM ENHANCEMENTS GREATER THAN 40 HOURS: Fees to complete sizable
enhancements are at time and materials rate. An initial scope assessment, with
an approximate estimate of hours, will be provided to Customer within ten (10)
Business Days from the date IMS receives notification of an enhancement
request. For projects greater than two hundred (200) hours, IMS will provide an
estimate at the completion of Detailed Business Requirements and give Customer
the option of a "fixed" price project. In either case, IMS will proceed based
on signed approval of Detailed Business Requirements.
DATA CENTER
IMS' Data Center goal for "up time" is 99%. It is IMS' goal to provide this
standard for Customer.
The system availability is from 4:00 AM - 2:00 AM EST (22 hours).
NOTE: ALL SERVICE STANDARD LEVELS ARE MEASURED IN BUSINESS DAYS (UNLESS
OTHERWISE NOTED IN THE EXHIBIT) FROM THE DATE AN ERROR FREE INTERNET
TRANSACTION OR MAILED-IN OR FAXED DOCUMENT IS RECEIVED.
26
113
APPENDIX A
BUSINESS OWNERS STATE ROLL-OUT PLAN
NOTE: Dates will be adjusted based on the start time*
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ROLL-OUT PLAN
NOTE: Dates will be adjusted based on the start time*
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
▇▇▇
▇▇▇▇▇▇▇▇ ▇
WORKERS' COMPENSATION ROLL-OUT PLAN
NOTE: Dates will be adjusted based on the start time*
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
116
APPENDIX D
CYBERCHOICE (BOP) PROGRAM
1. INTERNET FEATURE REQUIREMENTS:
o Access and Data Security
o Quote Process
o User Controlled Editing to Establish Distinct Underwriting
Rules
o Internet Renewal
o Internet Endorsement Process
o On Line Clearing and Reserving of new accounts through the
Customer's Clearance System
o Loss Runs
o Installment Invoice
o Underwriting Data Validation Interfaces (ISO, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Hartford Steam)
2. ACTUARIAL & COMPLIANCE REQUIREMENTS:
o Loading of Rate Files
o Use of Customer Rates/Loss Cost Multipliers
o Compliance of Statutory Reporting
o Support state-specific calls based on the data provided
through FARE.
o Quarterly Catastrophe Modeling Interface
3. FINANCIAL & ACCOUNTING REQUIREMENTS:
o Cash Processing (EFT, Credit Card, ACH Debit)
o Receivables Processing
o Premium and Commissions Accounting
o Generation of Commission Statements and Checks
o Internet Premium Finance Quoting interface
o Monthly transmission of Premiums, Claims and Reinsurance
activity to FARE
o Weekly Production Reporting System
4. UNDERWRITING REQUIREMENTS:
o Cancellation Processing
o Reinsurance Processing
o Exception Processing guidelines for submissions that fall
outside the underwriting guidelines
5. CLAIMS REQUIREMENTS:
o Claims Data Management
o Aggregate Claims Tracking
o On Line access to policy coverage information to the claims
TPA's
o Data for calculating claims TPA's processing fees
6. AGENCY/AUDIT/LOSS CONTROL REQUIREMENTS:
o Agency Management Reporting
o Audit/Inspection Processing/Vendor Management
o Standard Reports currently available from IMS
7. INFRASTRUCTURE REQUIREMENTS:
o Data Communications Line connecting Customer to IMS' network
o Ad Hoc Reporting Tool and Data Warehouse
o Agency and Insured data interfaces to the Point Click and Bind
portal system
o Testing of All Functions with Customer's Data
o Controlled Environment with Customer Approval and Sign-Off of
Test Results
117
o Document Packaging
o Use of Customer's Company Specific Policy Forms
o Customized Output with Customer Specific Logo on Forms
COMMERCIAL UMBRELLA PROGRAM
1. INTERNET FEATURE REQUIREMENTS:
o Access and Data Security
o Quote Process
o User Controlled Editing to Establish Distinct Underwriting
Rules
o Internet Renewal
o Internet Endorsement Process
o On Line Clearing and Reserving of new accounts through the
Customer's Clearance System
o Loss Runs
o Installment Invoice
2. ACTUARIAL & COMPLIANCE REQUIREMENTS:
o Loading of Rate Files
o Use of Customer's Rates/Loss Cost Multipliers
3. FINANCIAL & ACCOUNTING REQUIREMENTS:
o Cash Processing (EFT, Credit Card, ACH Debit)
o Receivables Processing
o Premium and Commissions Accounting
o Generation of Commission Statements and Checks
o Internet Premium Finance Quoting interface
o Monthly Premium Interface to Wins, for satisfying FARE
requirements
o Weekly Production Reporting System
4. UNDERWRITING REQUIREMENTS:
o Cancellation Processing
o Reinsurance Processing
o Exception Processing guidelines for submissions that fall
outside the underwriting guidelines
5. CLAIMS REQUIREMENTS:
o Monthly Interface to Wins, for satisfying policy coverage
information to claims TPAS
6. AGENCY/AUDIT/LOSS CONTROL REQUIREMENTS:
o Agency Management Reporting
o Standard Reports currently available from IMS
7. INFRASTRUCTURE REQUIREMENTS:
o Ad Hoc Reporting Tool and Data Warehouse
o Agency and Insured data interfaces to the Point Click and Bind
portal system 0
o Testing of All Functions with Customer's Data
o Controlled Environment with Customer's Approval and Sign-Off
of Test Results
o Document Packaging
o Use of Customer's Company Specific Policy Forms
o Customized Output with Customer Specific Logo on Forms
118
WORKERS COMPENSATION PROGRAM
1. INTERNET FEATURE REQUIREMENTS:
o Access and Data Security
o Quote Process
o User Controlled Editing to Establish Distinct Underwriting
Rules
o Internet Renewal
o Internet Endorsement Process
o On Line Clearing and Reserving of new accounts through the
Customer's Clearance System
o Loss Runs
o Installment Invoice
o Dividend Plan Rules
2. ACTUARIAL & COMPLIANCE REQUIREMENTS:
o Loading of Rate Files
o Use of Customer's Rates/Loss Cost Multipliers
o Compliance of Statutory Reporting
o Support state-specific calls based on the data provided through
FARE.
3. FINANCIAL & ACCOUNTING REQUIREMENTS:
o Cash Processing (EFT, Credit Card, ACH Debit)
o Receivables Processing
o Premium and Commissions Accounting
o Generation of Commission Statements and Checks
o Internet Premium Finance Quoting interface
o Automated Payroll Payment interface
o Monthly transmission of Premiums, Claims and Reinsurance
activity to FARE
o Weekly Production Reporting System
o Dividend Deferral Process
4. UNDERWRITING REQUIREMENTS:
o Cancellation Processing
o Reinsurance Processing
o Exception Processing guidelines for submissions that fall
outside the underwriting guidelines
o Underwriting Account Data Validation Interfaces (NCCI, ETC.)
5. CLAIMS REQUIREMENTS:
o Claims Data Management
o On Line access to policy coverage information to the claims
TPA's
o Data for calculating claims TPA's processing fees
6. AGENCY/AUDIT/LOSS CONTROL REQUIREMENTS:
o Agency Management Reporting
o Audit/Inspection Processing/Vendor Management
o Standard Reports currently available from IMS
7. INFRASTRUCTURE REQUIREMENTS:
o Ad Hoc Reporting Tool and Data Warehouse
o Agency and Insured data interfaces to the Point Click and Bind
portal system
o Testing of All Functions with Customer's Data
o Controlled Environment with Customer's Approval and Sign-Off of
Test Results
o Document Packaging
o Use of Customer's Company Specific Policy Forms
o Customized Output with Customer Specific Logo on Forms
▇▇▇
▇▇▇▇▇▇▇▇ ▇
CUSTOMER'S REQUIREMENTS DOCUMENTATION
CUSTOMER'S CYBERCOMP (WC) REQUIREMENTS DOCUMENTATION
--------------------------------------------------------------------------------
ITEM # ITEM DESCRIPTION
--------------------------------------------------------------------------------
1 Provide access to Reliance National's Partner Connections website
--------------------------------------------------------------------------------
2 Provide current WC underwriting procedures and workflows (new business,
renewals, endorsements, quoting)
--------------------------------------------------------------------------------
3 Provide current WC accounting procedures and workflows (Audit
processing, Billing/collections, commission processing, reinsurance)
--------------------------------------------------------------------------------
4 Provide proposed Claims TPA interface file layout
--------------------------------------------------------------------------------
5 Provide coverage verification data requirements
--------------------------------------------------------------------------------
6 Provide TPA fee calculation data requirements
--------------------------------------------------------------------------------
7 Provide Clearance file layout requirements
--------------------------------------------------------------------------------
8 Provide FARE file layout requirements
--------------------------------------------------------------------------------
9 Provide Underwriting rules and guidelines by state
--------------------------------------------------------------------------------
10 Provide CyberComp specific forms
--------------------------------------------------------------------------------
11 Provide data dump from existing WC system
--------------------------------------------------------------------------------
12 Provide WC Claims TPA data management procedures and workflow
--------------------------------------------------------------------------------
13 Provide management reporting requirements w/data definitions for
required data
--------------------------------------------------------------------------------
14 Provide current Audit processing workflows and procedures
--------------------------------------------------------------------------------
15 Provide Underwriting workflow and procedures
--------------------------------------------------------------------------------
16 Provide TPA selection criteria and data requirements for TPA monthly
report
--------------------------------------------------------------------------------
17 Provide Dividend processing report formats
--------------------------------------------------------------------------------
18 Provide Endorsement pages for Dividend plans
--------------------------------------------------------------------------------
19 Provide copies of the dividend disclosure statements for all 10
dividend states
--------------------------------------------------------------------------------
20 Provide multi-state processing requirements for dividend processing
--------------------------------------------------------------------------------
21 Provide mailing of receipients copies specifications
--------------------------------------------------------------------------------
22 Decide if the 1st of each month is acceptable for installment due dates
--------------------------------------------------------------------------------
23 Provide requirements for self reporting/CRI interface
--------------------------------------------------------------------------------
24 Provide requirements for dividend referrals
--------------------------------------------------------------------------------
25 Provide requirements for setting up sub-producers via Kokopelli or
manual
--------------------------------------------------------------------------------
26 Provide requirements for premium finance interface
--------------------------------------------------------------------------------
27 Provide requirements on need to differentiate primary and secondary
state licenses.
--------------------------------------------------------------------------------
28 Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------
120
CUSTOMER CYBERCHOICE (BOP) REQUIREMENTS DOCUMENTATION
--------------------------------------------------------------------------------
ITEM # ITEM DESCRIPTION
--------------------------------------------------------------------------------
1 Provide underwriting manuals and guidelines
--------------------------------------------------------------------------------
2 Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3 Provide state specific and generic filed forms
--------------------------------------------------------------------------------
4 Provide copy of Reliance Stat Plan
--------------------------------------------------------------------------------
5 Annual statement line by coverage
--------------------------------------------------------------------------------
6 Binding requirements
--------------------------------------------------------------------------------
7 Standard Anti-Fraud wording
--------------------------------------------------------------------------------
8 Endorsement business rules and processing
--------------------------------------------------------------------------------
9 Cancellation business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
10 Reinstatement business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
11 Audit business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
12 Inspection business rules and processing
--------------------------------------------------------------------------------
13 Provide Cyberbop specific requirements for standard forms and
distribution
--------------------------------------------------------------------------------
14 Determine legality issues surrounding imaging of documents and
destroying original
--------------------------------------------------------------------------------
15 Provide data requirements for any data not captured in the 15 file
layouts used by Brio
--------------------------------------------------------------------------------
16 Provide Loss runs data requirements
--------------------------------------------------------------------------------
17 Provide RMS CAT model file layout
--------------------------------------------------------------------------------
18 Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
19 Provide service standards for system changes
--------------------------------------------------------------------------------
20 Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
21 Provide commission processing requirements
--------------------------------------------------------------------------------
22 Provide FARE interface file layout
--------------------------------------------------------------------------------
23 Provide Claims interface file layout
--------------------------------------------------------------------------------
24 Provide Claims coverage verification requirements
--------------------------------------------------------------------------------
25 Provide Clearance file layout requirements
--------------------------------------------------------------------------------
26 Provide TPA selection criteria and data requirements for TPA monthly
report
--------------------------------------------------------------------------------
27 Research development of combined billing for BOP and Umbrella
--------------------------------------------------------------------------------
28 Provide documentation for schedule rating guidelines required by state
--------------------------------------------------------------------------------
29 Determine capability of printing policy in agents office and/or email
to agent
--------------------------------------------------------------------------------
30 Provide mapping for zip code, region, territory for inflation guard
--------------------------------------------------------------------------------
31 Provide list of states that IMS has experienced difficulties with
filing forms
--------------------------------------------------------------------------------
32 Provide rating algorithm and worksheets
--------------------------------------------------------------------------------
33 Research possibility of combining all products through document
packaging
--------------------------------------------------------------------------------
34 Provide screen mock ups with field mapping along with underwriting
edits
--------------------------------------------------------------------------------
35 Research feasibility of prohibiting binding of risks in areas under a
moritirum
--------------------------------------------------------------------------------
36 Research commission level down to a class code level
--------------------------------------------------------------------------------
37 Provide IMS implementation timeframe for field specific on-line
documentation
--------------------------------------------------------------------------------
38 Provide Renewal business rules and processing include mini and 3 yr
template rules
--------------------------------------------------------------------------------
39 Provide class code mapping from Reliance codes to ISO to statistical
--------------------------------------------------------------------------------
40 Provide zip code to Reliance territory to ISO territory.
--------------------------------------------------------------------------------
41 Provide mapping information for Hartford Steam Boiler
--------------------------------------------------------------------------------
42 Provide business rules and processing for 3 year policies
--------------------------------------------------------------------------------
43 Provide BOP logo to be used on correspondence and screens
--------------------------------------------------------------------------------
121
44 Provide cover letters for policy mailing and matrix for determining
which letter to send
--------------------------------------------------------------------------------
45 Determine workflow for providing access to coverage form content for
the Claims TPA's
--------------------------------------------------------------------------------
46 Provide file layouts and requirements for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ interface
--------------------------------------------------------------------------------
47 Provide quote business rules and processing
--------------------------------------------------------------------------------
48 Research capability of credit card processing via Kokopelli front end
--------------------------------------------------------------------------------
49 Provide copies of cancellation and collection letter forms
--------------------------------------------------------------------------------
50 Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------
122
CUSTOMER UMBRELLA REQUIREMENTS DOCUMENTATION
--------------------------------------------------------------------------------
ITEM # ITEM DESCRIPTION
--------------------------------------------------------------------------------
1 Provide state rollout grouping
--------------------------------------------------------------------------------
2 Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3 Provide underwriting rules and guidelines
--------------------------------------------------------------------------------
4 Provide state specific and generic filed forms
--------------------------------------------------------------------------------
5 Provide Reliance class code listing
--------------------------------------------------------------------------------
6 Annual statement line of business by coverage
--------------------------------------------------------------------------------
7 Binding requirements and workflow
--------------------------------------------------------------------------------
8 Standard Anti-Fraud wording
--------------------------------------------------------------------------------
9 Endorsement business rules and workflow
--------------------------------------------------------------------------------
10 Cancellation business rules and workflow
--------------------------------------------------------------------------------
11 Reinstatement business rules and workflow
--------------------------------------------------------------------------------
12 Renewal business rules and workflow
--------------------------------------------------------------------------------
13 Validate bureau reporting requirements for ISO BOP underlying coverages
--------------------------------------------------------------------------------
14 Confirm required underlying limits for Auto liability - CSL
--------------------------------------------------------------------------------
15 Provide example of A Rate form
--------------------------------------------------------------------------------
16 Provide special data capture requirements for Incidential Professional
Coverages
--------------------------------------------------------------------------------
17 Provide requirements for TBD policy dates on underlying policy
information
--------------------------------------------------------------------------------
18 Determine legality issues surrounding imaging of documents and
destroying original
--------------------------------------------------------------------------------
19 Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
20 Provide service standards for system changes
--------------------------------------------------------------------------------
21 Provide data requirements for any data not captured in the 15 file
layouts used by Brio
--------------------------------------------------------------------------------
22 Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
23 Provide FARE interface requirements
--------------------------------------------------------------------------------
24 Provide Clearance file layout requirements
--------------------------------------------------------------------------------
25 Provide commission processing requirements
--------------------------------------------------------------------------------
26 Determine capability of printing policy in agents office and/or email
to agent
--------------------------------------------------------------------------------
27 Provide list of states that IMS has experienced difficulties with
filing forms
--------------------------------------------------------------------------------
28 Research possibility of combining all products through document
packaging
--------------------------------------------------------------------------------
29 Research feasibility of prohibiting binding of risks in areas under a
moritirum
--------------------------------------------------------------------------------
30 Research commission level down to a class code level
--------------------------------------------------------------------------------
31 Provide IMS implementation timeframe for field specific on-line
documentation
--------------------------------------------------------------------------------
32 Provide copies of cancellation and cancellation letter forms
--------------------------------------------------------------------------------
33 Provide quote business rules and processing
--------------------------------------------------------------------------------
34 Provide Logos for correspondence and screens
--------------------------------------------------------------------------------
35 Provide rules for handling inforce business once IMS product live
--------------------------------------------------------------------------------
36 Provide decision on whether WINS or FARE interface will be used
--------------------------------------------------------------------------------
37 Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------
▇▇▇
▇▇▇▇▇▇▇▇ ▇
CUSTOMER'S REQUIREMENTS DOCUMENTATION
CUSTOMER'S CYBERCOMP (WC) REQUIREMENTS DOCUMENTATION
--------------------------------------------------------------------------------
ITEM # ITEM DESCRIPTION
--------------------------------------------------------------------------------
1 Provide access to Reliance National's Partner Connections website
--------------------------------------------------------------------------------
2 Provide current WC underwriting procedures and workflows (new business,
renewals, endorsements, quoting)
--------------------------------------------------------------------------------
3 Provide current WC accounting procedures and workflows (Audit
processing, Billing/collections, commission processing, reinsurance)
--------------------------------------------------------------------------------
4 Provide proposed Claims TPA interface file layout
--------------------------------------------------------------------------------
5 Provide coverage verification data requirements
--------------------------------------------------------------------------------
6 Provide TPA fee calculation data requirements
--------------------------------------------------------------------------------
7 Provide Clearance file layout requirements
--------------------------------------------------------------------------------
8 Provide FARE file layout requirements
--------------------------------------------------------------------------------
9 Provide Underwriting rules and guidelines by state
--------------------------------------------------------------------------------
10 Provide CyberComp specific forms
--------------------------------------------------------------------------------
11 Provide data dump from existing WC system
--------------------------------------------------------------------------------
12 Provide WC Claims TPA data management procedures and workflow
--------------------------------------------------------------------------------
13 Provide management reporting requirements w/data definitions for
required data
--------------------------------------------------------------------------------
14 Provide current Audit processing workflows and procedures
--------------------------------------------------------------------------------
15 Provide Underwriting workflow and procedures
--------------------------------------------------------------------------------
16 Provide TPA selection criteria and data requirements for TPA monthly
report
--------------------------------------------------------------------------------
17 Provide Dividend processing report formats
--------------------------------------------------------------------------------
18 Provide Endorsement pages for Dividend plans
--------------------------------------------------------------------------------
19 Provide copies of the dividend disclosure statements for all 10
dividend states
--------------------------------------------------------------------------------
20 Provide multi-state processing requirements for dividend processing
--------------------------------------------------------------------------------
21 Provide mailing of receipients copies specifications
--------------------------------------------------------------------------------
22 Decide if the 1st of each month is acceptable for installment due dates
--------------------------------------------------------------------------------
23 Provide requirements for self reporting/CRI interface
--------------------------------------------------------------------------------
24 Provide requirements for dividend referrals
--------------------------------------------------------------------------------
25 Provide requirements for setting up sub-producers via Kokopelli or
manual
--------------------------------------------------------------------------------
26 Provide requirements for premium finance interface
--------------------------------------------------------------------------------
27 Provide requirements on need to differentiate primary and secondary
state licenses.
--------------------------------------------------------------------------------
28 Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------
124
CUSTOMER CYBERCHOICE (BOP) REQUIREMENTS DOCUMENTATION
--------------------------------------------------------------------------------
ITEM # ITEM DESCRIPTION
--------------------------------------------------------------------------------
1 Provide underwriting manuals and guidelines
--------------------------------------------------------------------------------
2 Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3 Provide state specific and generic filed forms
--------------------------------------------------------------------------------
4 Provide copy of Reliance Stat Plan
--------------------------------------------------------------------------------
5 Annual statement line by coverage
--------------------------------------------------------------------------------
6 Binding requirements
--------------------------------------------------------------------------------
7 Standard Anti-Fraud wording
--------------------------------------------------------------------------------
8 Endorsement business rules and processing
--------------------------------------------------------------------------------
9 Cancellation business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
10 Reinstatement business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
11 Audit business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
12 Inspection business rules and processing
--------------------------------------------------------------------------------
13 Provide Cyberbop specific requirements for standard forms and
distribution
--------------------------------------------------------------------------------
14 Determine legality issues surrounding imaging of documents and
destroying original
--------------------------------------------------------------------------------
15 Provide data requirements for any data not captured in the 15 file
layouts used by Brio
--------------------------------------------------------------------------------
16 Provide Loss runs data requirements
--------------------------------------------------------------------------------
17 Provide RMS CAT model file layout
--------------------------------------------------------------------------------
18 Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
19 Provide service standards for system changes
--------------------------------------------------------------------------------
20 Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
21 Provide commission processing requirements
--------------------------------------------------------------------------------
22 Provide FARE interface file layout
--------------------------------------------------------------------------------
23 Provide Claims interface file layout
--------------------------------------------------------------------------------
24 Provide Claims coverage verification requirements
--------------------------------------------------------------------------------
25 Provide Clearance file layout requirements
--------------------------------------------------------------------------------
26 Provide TPA selection criteria and data requirements for TPA monthly
report
--------------------------------------------------------------------------------
27 Research development of combined billing for BOP and Umbrella
--------------------------------------------------------------------------------
28 Provide documentation for schedule rating guidelines required by state
--------------------------------------------------------------------------------
29 Determine capability of printing policy in agents office and/or email
to agent
--------------------------------------------------------------------------------
30 Provide mapping for zip code, region, territory for inflation guard
--------------------------------------------------------------------------------
31 Provide list of states that IMS has experienced difficulties with
filingmforms
--------------------------------------------------------------------------------
32 Provide rating algorithm and worksheets
--------------------------------------------------------------------------------
33 Research possibility of combining all products through document
packaging
--------------------------------------------------------------------------------
34 Provide screen mock ups with field mapping along with underwriting
edits
--------------------------------------------------------------------------------
35 Research feasibility of prohibiting binding of risks in areas under a
moritirum
--------------------------------------------------------------------------------
36 Research commission level down to a class code level
--------------------------------------------------------------------------------
37 Provide IMS implementation timeframe for field specific on-line
documentation
--------------------------------------------------------------------------------
38 Provide Renewal business rules and processing include mini and 3 yr
template rules
--------------------------------------------------------------------------------
39 Provide class code mapping from Reliance codes to ISO to statistical
--------------------------------------------------------------------------------
40 Provide zip code to Reliance territory to ISO territory.
--------------------------------------------------------------------------------
41 Provide mapping information for Hartford Steam Boiler
--------------------------------------------------------------------------------
42 Provide business rules and processing for 3 year policies
--------------------------------------------------------------------------------
43 Provide BOP logo to be used on correspondence and screens
--------------------------------------------------------------------------------
125
44 Provide cover letters for policy mailing and matrix for determining
which letter to send
--------------------------------------------------------------------------------
45 Determine workflow for providing access to coverage form content for
the Claims TPA's
--------------------------------------------------------------------------------
46 Provide file layouts and requirements for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ interface
--------------------------------------------------------------------------------
47 Provide quote business rules and processing
--------------------------------------------------------------------------------
48 Research capability of credit card processing via Kokopelli front end
--------------------------------------------------------------------------------
49 Provide copies of cancellation and collection letter forms
--------------------------------------------------------------------------------
50 Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------
126
CUSTOMER UMBRELLA REQUIREMENTS DOCUMENTATION
--------------------------------------------------------------------------------
ITEM # ITEM DESCRIPTION
--------------------------------------------------------------------------------
1 Provide state rollout grouping
--------------------------------------------------------------------------------
2 Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3 Provide underwriting rules and guidelines
--------------------------------------------------------------------------------
4 Provide state specific and generic filed forms
--------------------------------------------------------------------------------
5 Provide Reliance class code listing
--------------------------------------------------------------------------------
6 Annual statement line of business by coverage
--------------------------------------------------------------------------------
7 Binding requirements and workflow
--------------------------------------------------------------------------------
8 Standard Anti-Fraud wording
--------------------------------------------------------------------------------
9 Endorsement business rules and workflow
--------------------------------------------------------------------------------
10 Cancellation business rules and workflow
--------------------------------------------------------------------------------
11 Reinstatement business rules and workflow
--------------------------------------------------------------------------------
12 Renewal business rules and workflow
--------------------------------------------------------------------------------
13 Validate bureau reporting requirements for ISO BOP underlying coverages
--------------------------------------------------------------------------------
14 Confirm required underlying limits for Auto liability - CSL
--------------------------------------------------------------------------------
15 Provide example of A Rate form
--------------------------------------------------------------------------------
16 Provide special data capture requirements for Incidential Professional
Coverages
--------------------------------------------------------------------------------
17 Provide requirements for TBD policy dates on underlying policy
information
--------------------------------------------------------------------------------
18 Determine legality issues surrounding imaging of documents and
destroying original
--------------------------------------------------------------------------------
19 Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
20 Provide service standards for system changes
--------------------------------------------------------------------------------
21 Provide data requirements for any data not captured in the 15 file
layouts used by Brio
--------------------------------------------------------------------------------
22 Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
23 Provide FARE interface requirements
--------------------------------------------------------------------------------
24 Provide Clearance file layout requirements
--------------------------------------------------------------------------------
25 Provide commission processing requirements
--------------------------------------------------------------------------------
26 Determine capability of printing policy in agents office and/or email
to agent
--------------------------------------------------------------------------------
27 Provide list of states that IMS has experienced difficulties with
filing forms
--------------------------------------------------------------------------------
28 Research possibility of combining all products through document
packaging
--------------------------------------------------------------------------------
29 Research feasibility of prohibiting binding of risks in areas under a
moritirum
--------------------------------------------------------------------------------
30 Research commission level down to a class code level
--------------------------------------------------------------------------------
31 Provide IMS implementation timeframe for field specific on-line
documentation
--------------------------------------------------------------------------------
32 Provide copies of cancellation and cancellation letter forms
--------------------------------------------------------------------------------
33 Provide quote business rules and processing
--------------------------------------------------------------------------------
34 Provide Logos for correspondence and screens
--------------------------------------------------------------------------------
35 Provide rules for handling inforce business once IMS product live
--------------------------------------------------------------------------------
36 Provide decision on whether WINS or FARE interface will be used
--------------------------------------------------------------------------------
37 Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------
127
APPENDIX F
IMS SYSTEMS ENHANCEMENT LIQUIDATED DAMAGES SCHEDULE
Liquidated Liquidated Liquidated Liquidated Liquidated Liquidated
Project Size Grace Damages Damages Damages Damages Damages Damages
(Time & Cost) Period per day per day per day per day per day per day
(weeks) 1 wk late 2 wks late 3 wks late 4 wks late 5 wks late >5 wks late
------------------------------------------------------------------------------------------------------------------------
< 4 wks, > $___*___ ONE ___*___ ___*___ ___*___
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
4-8 wks, > $___*___ ONE ___*___ ___*___ ___*___ ___*___
4-8 wks, > $___*___ TWO n/a ___*___ ___*___ ___*___ ___*___ ___*___
4-8 wks, > $___*___ THREE n/a n/a ___*___ ___*___ ___*___ ___*___
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
8-16 wks, > $___*___ TWO n/a ___*___ ___*___ ___*___ ___*___ ___*___
8-16 wks, > $___*___ THREE n/a n/a ___*___ ___*___ ___*___ ___*___
8-16 wks, > $___*___ FOUR n/a n/a n/a ___*___ ___*___ ___*___
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
> 16 wks, > $___*___ TWO n/a ___*___ ___*___ ___*___ ___*___ ___*___
> 16 wks, > $___*___ THREE n/a n/a ___*___ ___*___ ___*___ ___*___
> 16 wks, > $___*___ FOUR n/a n/a n/a ___*___ ___*___ ___*___
> 16 wks, > $___*___ FIVE n/a n/a n/a n/a ___*___ ___*___
------------------------------------------------------------------------------------------------------------------------
A week is defined as five Business Days
Maximum Liquidated Damages amount is ___*___ of Total Project Cost
Maximum One Week liquidated damages is $___*___
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
▇▇▇
▇▇▇▇▇▇▇▇ ▇
IMS SYSTEMS ENHANCEMENT EXTENSION SCHEDULE
DELAY IN THE DELIVERY OF DOCUMENTATION, DATA AND/OR INFORMATION:
Project Size Received Received Received Received Received
(Time & Cost) within within within within greater than
1 week 2 weeks 3 weeks 4 weeks 5 weeks
after due after due after due after due after due
date date date date date
------------------------------------------------------------------------------------------------
< 4 wks, > $___*___ ___*___ ___*___ ___*___ ___*___
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
4-8 wks, > $___*___ ___*___ ___*___ ___*___ ___*___ ___*___
4-8 wks, > $___*___ ___*___ ___*___ ___*___ ___*___ ___*___
4-8 wks, > $___*___ ___*___ ___*___ ___*___ ___*___ ___*___
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
8-16 wks, > $___*___ ___*___ ___*___ ___*___ ___*___ ___*___
8-16 wks, > $___*___ ___*___ ___*___ ___*___ ___*___ ___*___
8-16 wks, > $___*___ ___*___ ___*___ ___*___ ___*___ ___*___
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
> 16 wks, > $___*___ No impact No impact ___*___ ___*___ ___*___
> 16 wks, > $___*___ No impact ___*___ ___*___ ___*___ ___*___
> 16 wks, > $___*___ No impact ___*___ ___*___ ___*___ ___*___
> 16 wks, > $___*___ No impact ___*___ ___*___ ___*___ ___*___
------------------------------------------------------------------------------------------------
A week is defined as five Business Days
The specified % shall be multiplied times the number of Business Days that the
documentation, data and/or information was delivered late and the total shall
equal the number of Business Days that the due date for the System Enhancement
Project is extended.
EXAMPLE: Necessary data or Information is received from CyberComp ___*___
Business Days late on a (> ___*___ week project that is >$___*___) System
Enhancement Project. Therefore, IMS shall be given an ___*___ additional
Business Days (___*___ Business Days = ___*___ Business Days) in which to
complete the System Enhancement Project.
* Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
129
APPENDIX H
SYSTEMS DEVELOPMENT LIFE CYCLE
IMS will utilize the Systems Development Life Cycle ("SDLC") and the appropriate
phase specific processes as defined herein to accomplish and complete all of the
tasks ("Task") delineated within the Rollout Plans (contained within Appendices
A, B and C), in accordance with the Specifications, and to complete any System
Enhancement Project authorized pursuant to Article XIII of the Agreement. The
SDLC will identify the appropriate phase level activities and deliverables that
would be recommended prior to completing a Task delineated within a Rollout
Plan.
Phase reviews will be conducted at major project milestones or checkpoints
defined by the Customer and IMS. At that time, both Customer and IMS will have
the opportunity to review the status of the project, consider alternative
opportunities, resolve outstanding issues, and verify the accuracy of the
existing estimates.
Customer accepts responsibility for signing off at the completion of a Task
delineated within a Rollout Plan before proceeding to next specified Task
delineated within that Rollout Plan, and IMS and Customer shall assure that
resources required for the next phase are committed and available.
Specifically, if IMS deems that a Rollout Plan Task has been properly completed
by IMS, in accordance with the Specifications and the SDLC, and is ready for
live production, IMS shall provide the Customer Liaison a written notice
("Completion Notice") that it has completed the specified Task and IMS shall
provide Customer with all relevant test results. Customer will then have a
reasonable amount of time following the date of the Completion Notice within
which to test the Task for acceptance purposes.
Customer shall exercise good faith in promptly testing and accepting IMS'
completion of each Task within the Rollout Plan prior to moving that completed
Task to live production. IMS shall cooperate with Customer, upon request, in its
testing of any completed Task. If Customer determined that a completed Task
contains defects ("Defects"), IMS shall make a good faith effort to correct any
Defects within a reasonable amount of time of being notified by Customer.
Customer shall provide IMS with written approval ("Acceptance Notice") of its
acceptance of each Task within the Rollout Plan if such task is in substantial
compliance with all material requirements in accordance with the System
Development Life Cycle and the Specifications. Acceptance of the Task by
Customer shall not be deemed to waive any of IMS' warranties or Customer and
IMS' other remedies as may be provided in the Agreement. Further, by definition,
the completion and acceptance of each task delineated within the Rollout Plan
also includes the completion and acceptance of the integration of each new task
with previously completed, accepted and deployed rollout Plan task.
For the purpose of accurate auditing, Customer agrees that all communication for
requesting specification changes within the Task delineated within the Rollout
Plan will be made to the Account Manager in writing and will not be directed to
any other member of the IMS project team.
The Account Manager will evaluate requested changes to specifications and
discuss the impact of the changes with the Customer Liaison. The Account Manager
will define, in writing, any estimates which will result in a cost overrun, a
delay to a Rollout Plan milestone or an adjustment to resource assignments. The
written adjustments will be presented to Customer for acceptance and approval by
Customer.
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DELIVERABLES
Phase I - Analysis
Phase I SDLC is the analysis phase and is the most crucial part of the systems
development methodology. The focus of this phase is on defining business events
and the overall business processes that drive those events.
To collect this information, IMS project team members will chair
information-gathering meetings, with the appropriate Customer counterparts, to
gather relevant business requirements. The deliverable, called the Detailed
Business Requirements ("DBR") document shall contain all collected information
required to complete a Task delineated within a Rollout Plan and shall be
written without any technical assumptions.
Phase II - Design
Phase II of the SDLC is the design phase. The DBR produced in Phase I will
functionally describe the system to be designed and will be used as a basis to
compile a technical design. In this task, a set of guidelines shall be developed
to ensure the application interaction procedures are consistently designed, are
as re-usable as possible and are tailored to the technology environments within
which they are to be implemented. The deliverable from this phase, called the
Technical Design Specifications ("TDR"), shall be used to perform all
development/enhancement tasks required to meet the DBR.
Phase III - Development and Unit / Integration Testing
Phase III of the SDLC is the development and unit / integration testing phase of
all executables of the application-databases, screens, programs, control
libraries, transaction definitions and to generate the physical design and
implementation of the database.
All components and aspects of the application will be tested to ensure all DBR
have been met. At this stage, smaller components will be tested to ensure they
are free from defects prior to integration with larger modules of the
development package and prior to quality assurance testing procedures in the
next phase. The main deliverables from this phase are the tested program modules
that will be required for systems and quality assurance testing for the next
phase.
Phase IV - Integration Testing, Quality Assurance (QA) Review and System Testing
In this phase, system integrity and functional testing of the application shall
be conducted by the IMS (Quality Assurance team) prior to moving the system into
the IMS Model Office. This process will continue through elimination of all
defects by testing application integrity and validating all functions by quality
assurance prior to releasing to IMS Model Office.
Phase V - Model Office Testing
The purpose of this phase is to test and verify all objectives defined in the
DBR. Test plans shall be developed to test various possible scenarios and to
test the application utilizing the IMS Model Office environment and resources.
These testing components are comprised of the following:
o Security testing will verify all security requirements and
issues are resolved.
o Compatibility and conversion testing will verify the system is
compatible with other systems' architecture and any conversion
process from other systems' architecture works properly.
o Performance testing will be performed to verify that customer
specific and all modules meet all performance standards.
o Recovery testing will also be performed to verify that the
system meets any program-defined error recovery standards.
o Procedural testing encompasses any human procedure for which
this automation is a part of, and will be tested so that the
whole of the procedure remains intact.
o Installability testing will verify that the system can be
installed across the range of platforms for which it is
intended, most specifically, the internet components.
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o Volume testing and stress testing will be performed to verify
that the system can handle the anticipated workload and that
the system performs within standards under peak loads.
Phase VI - Deployment
Phase VI of the SDLC is deployment of the application following the successful
completion of IMS Model Office testing. At this stage, any data conversion
required will be implemented as well as the installation of hardware/software
systems required to meet the project objectives. The implementation can take the
form of a phased rollout based on customer and product requirements and as a
result, the deployment phase may be performed more than once. The main
deliverable for this phase is the Deployed System.
Upon completion of Phase VI, for each particular Task within the Rollout Plan,
IMS shall deliver to the Customer Liaison a Completion Notice as specified
above.