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Exhibit 10.4
INSURANCE ADMINISTRATION SERVICES AGREEMENT
THIS INSURANCE ADMINISTRATION SERVICES AGREEMENT ("Agreement") is made
and effective as of the 22nd day of June, 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
INSTANT INSURANCE HOLDINGS, INC. ("Instant"), a corporation organized and
existing under the laws of the State of Delaware with its principal place of
business located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ and
its designated or wholly owned subsidiaries, collectively INSTANT AUTO INSURANCE
COMPANY ("Instant Auto"), a corporation organized and existing under the laws of
the State of Delaware with its principal place of business located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Where used in this Agreement,
the term "Customer" shall include within it's meaning both Instant and Instant
Auto.
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; and
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, and intending to be legally bound hereby, 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. For purposes of legal notice only, "Business Day" means any day other
than a Saturday, Sunday or other day which is a bank holiday for
Florida State Banks or an IMS paid holiday (New Year's Day, Memorial
Day, Independence Day, Thanksgiving Day, day after Thanksgiving,
Christmas Eve (after 12 P.M. Eastern Standard Time) and 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 hereto to any third party that is not an
affiliate of such 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 Exhibit I hereto in the Authorized States in
accordance with the terms of the Agreement, and all applicable laws and
regulations.
G. "Insurance Program" means the Customer's insurance products within the
Authorized Line(s) of Business to be offered within the Authorized
States.
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H. 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
The term of the Agreement shall commence on the Effective Date and shall have a
minimum operating term ("Minimum Operating Term") of thirty (30) full calendar
months. Either party may provide written notice to the other party of its intent
to renew the Agreement, no later than six (6) months before the end of the
Minimum Operating Term.
ARTICLE III. RESPONSIBILITIES OF IMS
A. IMS shall dedicate the amount of human, equipment and computer
resources necessary to provide Customer with the Insurance
Administration Services, during the term of this Agreement, for the
Insurance Program and Authorized States specified in Schedule A.
B. 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 shall provide written and/or oral
communication of the status of administration of the Insurance
Administration Services as agreed to by and between Account Manager and
Customer.
C. 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 files which 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 its expense; provided, however, that IMS shall be
entitled to retain copies thereof. It is specifically agreed and
understood between the parties that all records referred to in this
paragraph "C" constitute sole and exclusive property of Customer, and
shall be treated as such by IMS.
ARTICLE IV. RESPONSIBILITIES OF CUSTOMER
A. During the term of this Agreement, Customer shall provide to IMS, in a
timely manner, any and all data, information and other items, including
but not limited to policy forms, prior claim files and supporting
documents, policy coverage information, corporate logos for use on
forms, and other data related to claim files and adjustment of claims
to enable IMS to perform the Insurance Administration Services
specified in Exhibit I of this Agreement. Customer represents and
warrants to IMS that it owns and possesses all property rights to its
corporate and subsidiary logos and hereby grants and warrants to 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, and that
such a delay in performing the Insurance Administration Services shall
not be deemed a breach of the Agreement.
B. CUSTOMER ACKNOWLEDGES AND AGREES THAT IMS ASSUMES NO INSURANCE RISK FOR
THE BUSINESS PROCESSED UNDER THIS AGREEMENT.
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C. Customer shall designate manager level employee(s) of sufficient status
and binding decision making authority to act as liaisons with IMS and
to facilitate Customer's role as IMS performs the Insurance
Administration Services enumerated in Exhibit I of this Agreement.
ARTICLE V. CUSTOMER ACCESS TO RECORDS / CONFIDENTIAL INFORMATION
A. At Customer's expense, Customer will be permitted access (as set forth
herein) to all records and information maintained by IMS on behalf of
Customer (excluding, specifically, proprietary technical design
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, and (iii) verify IMS' overall compliance
with the material terms of this Agreement and applicable laws and
regulations. Customer will bear all costs of access to records
maintained on behalf of Customer including travel, personnel, computer
hardware and software, and data line charges.
Access to IMS' records, for the foregoing purposes, will be provided
during normal business hours upon five (5) 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 the case of regulatory
inquiry, in which case access will be granted within twenty four (24)
hours of written notice to IMS.
At Customer's expense, Customer will be permitted to copy (using a copy
service of Customers choice) those IMS records subject to audit in
accordance with this Article.
Upon five (5) days written request by Customer, and at Customer's
expense (based on IMS' actual expense), IMS will promptly mail or fax
to Customer supporting documentation concerning any specific
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 disrupt IMS' ongoing business activities.
B. The recipient ("Recipient") of confidential data and/or information
pursuant to this Agreement 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 at Article VII, A 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 underwriting rules and guidelines, the identity
of Customer's clients, the identity of Customer's insureds and
beneficiaries, claims, benefits, rates and agents, which will be deemed
"Confidential
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Information" under this Agreement, regardless of whether marked as
such). 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 who require the information to perform or
facilitate the Insurance Administration Services under this Agreement.
Each party hereto, as a Recipient, warrants to the other that
appropriate measures shall be taken by Recipient to safeguard the
confidentiality of the Confidential Information, 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, agents or
representatives 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.
Disclosing Party shall retain title to all Confidential Information
(whether tangible or intangible) delivered thereby 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, except those copies kept in
the regular course of business, or that are required to be kept
pursuant to any state or federal administrative, regulatory or
statutory mandates. 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.
C. For purposes of Article V.B, Recipient and Disclosing Party shall
include within their meaning all respective subsidiaries, agents, or
affiliates of the Recipient and Disclosing Party.
D. The obligations of Customer and IMS under this Article V shall continue
and remain in effect after termination of this agreement.
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ARTICLE VI. EXPENSES AND FEES
A. In consideration of IMS providing Insurance Administration Services as
described herein, Customer shall pay IMS, in addition to any other fees
and expenses specified herein, servicing fees (collectively "Service
Fees"), as specified in Schedule B. The Miscellaneous Fees specified in
Article XIII and all Service Fees specified in Schedule B hereto may be
increased by IMS effective as of each anniversary of the Effective Date
by no more than the percentage increase in the United States Consumer
Price Index for all Urban Users (CPI-U) 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. In the event that a vendor supplying a service or product to
IMS, which service or product is used by IMS to provide the Insurance
Administration Services to Customer, increases its rates charged to
IMS, IMS may increase the Service Fees and Miscellaneous Fees set forth
herein only by the amount of the actual vendor increase to incorporate
such increased costs and will provide Customer with documentation
verifying the increase.
B. Customer shall reimburse IMS for actual travel, living and
out-of-pocket expenses incurred by IMS personnel, provided such
expenses are approved in writing by Customer. Customer shall not pay
IMS for IMS' travel time.
C. Customer agrees to pay any and all tariffs and taxes that are now or
may become applicable to the Insurance Administration Services rendered
hereunder, including, but 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 or storage of data used by IMS solely
for Customer, but excluding taxes on the net income of IMS.
D. Subject to the terms of this Agreement, all fees and expenses to be
payable by Customer to IMS or any third party, such as subcontractors
IMS may hire on behalf of Customer or at the direction of Customer,
under this Agreement shall be paid within thirty (30) calendar days
after Customer's receipt of IMS' monthly statement for all services
provided to Customer under this Agreement. IMS will calculate the fee
owed to IMS by Customer and will send a statement to Customer within
two (2) weeks of the last day of the month for which fees are owed.
Customer's failure to pay all fees and expenses when due shall be
considered a material breach of this Agreement. IMS shall notify
Customer of any such breach within thirty (30) days of the breach.
E. For purposes of paying claims and claim related expenses, IMS shall
establish and maintain an independent bank account in the name of
Instant Auto ("Claims Account").
F. Customer, at all times during the term of this Agreement, shall fund
the Claims Account in amounts necessary to pay all claims and
"allocated loss adjustment expenses" (which term, as used in this
Agreement, shall mean claim adjustment costs and expenses incurred by
IMS and allocated by it to the investigation, adjustment and settlement
or defense of a claim for benefits under Customer's policies, including
without limitation, costs and expenses incurred by IMS and related to
the investigation and defense of claims or the protection and
collection of Customer's subrogation rights). Every week IMS will
provide Customer's accounting firm the amount necessary to fund the
account.
G. Customer shall maintain a balance in the Claims Account that is
necessary for IMS to perform the Claim Administration Services on a
day-to-day basis. Every week IMS will provide Customer's accounting
firm the amount necessary to fund the account. Customer shall be
responsible for maintenance of unclaimed checks, and paying charges,
interest or penalties resulting from Customer's failure to maintain a
positive Claim Account balance.
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H. Prior to any renewal of this Agreement, 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 costs or expenses in performing the Insurance Administration
Services). Any modification of SCHEDULE B shall be proposed to Customer
at least eight (8) months prior to the expiration of the term of this
Agreement.
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
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 to
use portions of the Proprietary System as necessary for IMS to perform
the Insurance Administration Services under this Agreement. Further, no
provision within this Agreement shall be interpreted as prohibiting IMS
from selling or licensing its Proprietary System to any other customer
or prospective customer of IMS.
B. Other than the limited rights to use the Proprietary System, as
provided in Article VII.A. above, this Agreement grants to Customer no
right to possess or reproduce, download, reverse engineer, or obtain
any other interest in, the Proprietary System or its specifications in
any tangible or intangible medium. Customer may not mortgage,
hypothecate, sell, assign, pledge, lease, transfer, license, or
sublicense the Proprietary System, nor allow any person, firm, entity
or corporation to transmit, copy, reproduce, download, reverse
engineer, or obtain any other interest in the Proprietary System or its
specifications in whole or in part. In the event Customer shall come
into possession of any source or object code associated with the
Proprietary System, Customer shall immediately notify IMS and return
the source or object code associated with Proprietary System in its
possession and all copies of any kind thereof to IMS.
C. Customer covenants and agrees not to disclose or otherwise make the
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 to facilitate IMS' or
Customer's performance under this Agreement. Customer agrees to
obligate each such employee, insurance sales agent, or representative
to a level of care sufficient to protect the Proprietary System from
unauthorized disclosure.
D. The obligations of Customer under this Article shall continue and
remain in effect after this Agreement is terminated for any reason.
ARTICLE VIII. TERMINATION
A. Either party may terminate this Agreement at the end of the Minimum
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 written 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
United States 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;
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b) at the election of IMS, upon written 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
United States 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; including, but not limited to, any proceeding
pursuant to any state or federal action governing insurer
insolvency.
c) 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 written notice thereof is given
to IMS by the Customer;
d) 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 written 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 written notice thereof is given to
Customer by IMS);
e) at the election of the Customer, upon written notice to IMS,
in the event of a Change of Control of IMS, unless (i) IMS has
provided Customer not less than sixty (60) days advance
written notice of the proposed Change of Control and (ii)
Customer has agreed in writing to such Change of Control; or
f) at the election of IMS, upon written notice to Customer, in
the event of a Change of Control of Customer unless (i)
Customer has provided IMS not less than sixty (60) days
advance written notice of the proposed Change of Control and
(ii) IMS has agreed in writing to such Change of Control.
C. The initiation under this Agreement of any dispute resolution procedure
shall not prevent a party from terminating this Agreement in accordance
with this Article VIII.
D. On expiration or termination of this Agreement, IMS shall return to
Customer all of Customer's information including its policy forms,
manuals, instructional memos, procedural memos, reports, and any and
all other customer information requested 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
the term of this Agreement; Customer shall do the same and cause
Customer's agents to do the same relative to IMS' 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 of 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 charged by IMS for the services specified in Section
V. K 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 (and such breach is not timely cured) and Customer
terminates this Agreement for such material breach, then IMS will
provide such data conversion services at IMS' sole expense). This
provision shall survive any termination of this Agreement.
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ARTICLE IX. WARRANTIES AND COVENANTS
IMS covenants that: (a) all Insurance Administration Services shall materially
conform to the descriptions set forth in EXHIBIT I of this Agreement; (b) all
Insurance Administration Services shall be performed in a good and workmanlike
manner; and (c) IMS will comply in all respects with the law of the relevant
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 owns or
otherwise has the right to use the Proprietary System used to perform the
Insurance Administration Services, and the rights to such Proprietary System
granted hereunder will not knowingly infringe upon a third party's copyright or
patent rights; (b) IMS is duly authorized 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 Article X, paragraph B below:
a) IMS shall indemnify, defend and hold harmless Customer, its
officers, directors, employees and controlling persons from
any liability, cost, loss, fine, penalty, claim, demand,
damage or expense, including reasonable attorneys' fees,
incurred solely and directly as a result of any material
breach of IMS' obligations under this Agreement or the
material breach of any representation or warranty made by IMS
to Customer pursuant hereto;
b) Customer shall indemnify, defend and hold harmless IMS, its
officers, directors, employees and controlling persons from
any liability, cost, loss, fine, penalty, claim, demand,
damage or expense, including reasonable attorney's fees,
incurred solely and directly as a result of (i) any material
breach of Customer's obligations under this Agreement, (ii)
the material breach of any representation or warranty made by
Customer to IMS pursuant hereto, or (iii) any actions taken,
or any representations or decisions made with regard to claim
handling which occurred on the Customer's behalf prior to
April 1, 2000.
c) Customer agrees that in the event IMS is in violation of any
code, statute or law(s) due to the acts or omissions of
Customer, or the servants, employees, representatives,
adjusters, or agents of Customer, then Customer shall assume
the responsibility and liability for such acts or omissions
and shall indemnify and hold IMS harmless for any such
liability. If IMS, because of a violation of any law or the
acts or omissions of Customer, is reprimanded, fined, or
otherwise involved in any action caused by Customer, or the
servants, employees, representatives, adjusters, or agents of
Customer, then Customer agrees to reimburse and indemnify IMS
for all expenses, fines or other fees incurred by IMS, except
to the extent that IMS caused, contributed to or compounded
such liability.
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d) IMS agrees that in the event Customer is in violation of any
code, statute or law(s) due to the acts or omissions of IMS,
or the servants, employees, representatives, adjusters, or
agents of IMS, then IMS shall assume the responsibility and
liability for such acts or omissions and shall indemnify and
hold Customer harmless for any such liability. If Customer,
because of a violation of any law or the acts or omissions of
IMS, is reprimanded, fined, or otherwise involved in any
action caused by IMS, or the servants, employees,
representatives, adjusters, or agents of IMS, then IMS agrees
to reimburse and indemnify Customer for all expenses, fines or
other fees incurred by Customer, except to the extent that
Customer caused, contributed to or compounded such liability.
B. Except for: (i) Service Fees and other amounts owed to IMS by Customer
in consideration of IMS providing the Insurance Administration
Services, or any other services hereunder; (ii) acts of fraud, or
willful misconduct; (iii) fees payable by Customer under Article XIII
of this Agreement, and (iv) 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 by either party to the
other party for regulatory fines, settlements and penalties) shall be
limited to direct damages incurred by that party. In no event shall
IMS' or Customer's liability for breach of this Agreement or any of its
provisions exceed the amount of compensation paid by the Customer under
Schedule B of this Agreement for the three months immediately preceding
the breach. Neither Customer nor IMS will be liable for any lost
profits, business goodwill, or other consequential, punitive, special
or incidental damages incurred by Customer or IMS.
C. 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 and will assume resulting liability
therefrom, subject to the provisions of Article X, paragraph B.
D. All parties agree to promptly give the others notice upon being
notified or becoming aware of any and all allegations or claims, which
could give rise to a claim under this Article.
E. Notwithstanding any other provision of this Agreement, Customer shall
be liable to IMS for all damages resulting from a breach of Customer's
obligations under Article VII.C.
ARTICLE XI. GENERAL AGREEMENTS
A. This Agreement and all matters arising hereunder shall be governed by
and determined in accordance with the laws of the State of Texas
without giving effect to any choice of law provisions, except for
matters arising out of or pertaining to IMS' proprietary software
systems, which shall be governed by and determined in accordance with
the laws of the State of Florida.
B. The parties shall not be liable or deemed to be in default hereunder
for any delay or failure in performance under this Agreement or
interruption of the Insurance Administration Services resulting,
directly or indirectly, from acts of God (including but not limited to
weather catastrophes such as floods, hurricanes, tornadoes, windstorms,
ice storms, blizzards and hail storms), 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. 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
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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 services for
Production Customers within 72 hours of a disaster) until the main data
center capabilities are re-established. IMS will maintain and update
its recovery plan and will conduct annual testing of its recovery plan.
IMS will provide the results of such annual testing to Customer within
ten (10) days of receipt for such results.
C. Customer and IMS agree that, during the 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 party, 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 C. shall survive
termination of this Agreement. The provisions of this paragraph apply
to each party's respective subsidiaries, agents, affiliates and other
related entities.
D. Any and all notices, designations, consents, offers, acceptances, or
any other communication provided for herein shall be given in writing
by hand delivery, by overnight carrier, by registered or certified mail
or by facsimile transmission and shall be addressed as follows:
As to Customer: Instant Insurance Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
As to IMS: Insurance Management Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
Notices sent by hand delivery shall be deemed effective on the date of
actual hand delivery. Notices sent by overnight carrier shall be deemed
effective on the next Business Day after being placed into the hands of
the overnight 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 the day when sent if sent prior to
4:30 p.m. (the time being determined by the time zone of the
recipient), otherwise they shall be deemed effective on the next
Business Day.
E. This Agreement, and the exhibits, schedules and appendices 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, including
the exhibits, schedules and appendices hereto, shall be valid unless
the same shall be in writing and signed by all of the parties hereto.
All exhibits, schedules, appendices, addendum of any kind, or
attachments to this Agreement shall be made a part of this Agreement
and shall be subject to all terms and conditions of this Agreement.
Articles V (B), VII, VIII (D), and XI (C) shall survive any termination
of this Agreement.
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11
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 attorneys' fees and costs (including legal expenses for any
appeals taken), and to have the same awarded as part of the judgment in
the proceeding in which such legal expenses and attorneys' 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.
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.
K. Neither Customer nor IMS will make or cause to be made any announcement
or communication ("Press Release') regarding the termination of
Customer's business relationship with INSpire Insurance Solutions, Inc.
("INSpire") or the terms of the business relationship formed between
Customer and IMS as set forth in this Agreement. The terms of this
Article XI, paragraph K, shall not prohibit either party from issuing a
mutually agreed upon Press Release regarding any initiatives undertaken
between Customer and IMS or any development in the relationship between
Customer and IMS which occur or are planned to occur after the
Effective Date of this Agreement.
ARTICLE XII. DISPUTE RESOLUTION PROCEDURES
A. 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
written 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 licensed attorney.
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 written agreement of the parties.
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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, 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
When 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, fees and costs required to complete such System Enhancement Project
("Miscellaneous Fees") along with a detailed description and project plan of the
change(s) requested. IMS and Customer will mutually approve and agree in writing
to the detailed description of the project, the project plan and the estimated
completion date ("Project Completion Date") of the System Enhancement Project
prior to any work being performed by IMS.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement to be effective as of the 22nd day
of June, 2000.
"IMS": "Customer":
INSURANCE MANAGEMENT SOLUTIONS, INC. INSTANT INSURANCE HOLDINGS, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇ By: /s/ ▇. ▇. ▇▇▇▇▇▇
--------------------------------- -----------------------------
▇. ▇. ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
As its: President/CEO As its: President/CEO
----------------------------- -------------------------
Date: 22 June 2000 Date: 22 June 2000
------------------------------- ---------------------------
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SCHEDULE A
AUTHORIZED STATES AND INSURANCE PROGRAM
IMS shall provide Insurance Administration Services as described in EXHIBIT I,
Claim Administration Services, for the following authorized line(s) of business
("Authorized Line of Business") in the following authorized state(s)
("Authorized States"):
I. AUTHORIZED LINE OF BUSINESS:
Personal Automobile.
II. AUTHORIZED STATES:
*
III. AUTHORIZED COMPANIES:
Instant Auto Insurance Company
* 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.
15
SCHEDULE B
FEE SCHEDULE
I. Definitions
The following definitions will apply throughout all Schedules, Exhibits
and Addenda to this Agreement:
A. "Level I Feature(s)" means a feature as set out in the tables
found in Sections II and III below, which was first opened on
a claim prior to April 1, 2000.
B. "Level II Feature(s)" means a feature opened by IMS as a new
or a re-opened feature as set out in the tables found in
Sections II and III below on or after April 1, 2000, and for
which IMS did not administer or control the corresponding
policy on behalf of Customer.
C. "Record Only" means a claim for which notice of loss is
received and recorded by IMS but no further action is taken.
D. A "feature" is any exposure opened on a claim.
II. Claim Administration Services Fees for Level I Features
IMS will provide the Claim Administration Services described in Exhibit
I for Level I Features and charge Customer the rates below for each
coverage feature:
-----------------------------------------------------------
Feature Charge
-----------------------------------------------------------
Bodily Injury *
Personal Injury Protection *
Uninsured/Underinsured Motorist Bodily Injury *
Property Damage** *
Collision and Uninsured/Underinsured
Motorist Property Damage *
Comprehensive *
Towing and Labor Only *
Rental *
Record Only *
Medical Payments *
Safety Equipment *
Deductible Coverage *
** IMS will review this charge at Customer's request after May 1, 2000.
In the event Customer requests that IMS provide Claim Administration
Services for a feature(s) not specified above, Customer and IMS will
negotiate IMS' charge for handling the feature.
* 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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III. Claim Administration Services Fees for Level II Features
IMS will provide the Claim Administration Services described in Exhibit
I for Level II Features and charge Customer the rates below for each
coverage feature:
-----------------------------------------------------------
Feature Charge
-----------------------------------------------------------
Bodily Injury *
Personal Injury Protection *
Uninsured/Underinsured Motorist Bodily Injury *
Property Damage *
Collision and Uninsured/Underinsured
Motorist Property Damage *
Comprehensive *
Towing and Labor Only *
Rental *
Record Only *
Medical Payments *
Safety Equipment *
Deductible Coverage *
In the event Customer requests that IMS provide Claim Administration
Services for a feature(s) not specified above, Customer and IMS will
negotiate IMS' charge for handling the feature.
IV. In addition to the fees per coverage feature described in Section II
and Section III above, Customer will pay IMS, for every claim file set
up and created by IMS on or after April 1, 2000, $___*___, where the
claim contains Level I Features, or a combination of Level I and Level
II Features, and $___*___ where the claim contains only Level II
Features.
V. Additional Claims Services Fees and Terms
The following additional fees and terms will apply to the Claim
Administration Services provided by IMS to Customer for both Level I
and Level II Features, and are in addition to the Services Fees
described in Sections II, III and IV of this Schedule B:
A. Customer will pay IMS $___*___ per claim file for Claim
Administration Services performed on claims where IMS performs
an investigation, but is unable to establish a feature in the
claim system. The file set up fee for these claims will be
$___*___ for those claims where no activity was conducted on
the claim file prior to April 1, 2000, and $___*___ for those
claims where activity was conducted on the claim file prior to
April 1, 2000.
B. Customer will pay IMS the greater of $___*___ or __*__ of the
net salvage (including owner retained) recovery obtained by
IMS on Customer's behalf.
C. Customer will pay IMS __*__ of the net subrogation recovery
obtained by IMS on Customer's behalf.
D. Customer will pay IMS $___*___ per claim file referred to the
IMS Special Investigation Unit.
E. Customer will pay all claim expenses and costs, including
outside vendors whose fees or costs are attributable to claim
handling, as pass-through expenses, except the costs of police
reports and auto appraisals (excluding total loss
evaluations).
F. Customer will pay all claim expenses where the expense was
incurred but not paid prior to April 1, 2000.
* 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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G. IMS will pay Customer $___*___ for every appraisal performed
by Customer's appraisers at IMS' request where geographically
appropriate.
H. Data communication line charges (used by IMS solely for
Customer) will be a pass through expense to Customer.
I. IMS will pay Customer $___*___ for every reinspection
performed by Customer's reinspectors at IMS' request.
J. IMS will complete Customer's claim detail form ("Claim Detail
Form"). Customer will pay IMS $___*___ for every Claim Detail
Form completed by IMS on Customer's behalf.
VI. Claim Feature Review
In the event the average number of features per claim exceeds __*__,
Customer reserves the right to review / re-negotiate the features
charges portion of this Agreement. Additionally, if the number of
features closed without payment as a percentage of opened features
exceeds __*__, Customer reserves the right to review / re-negotiate the
features charges portion 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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SCHEDULE C
CLAIMS STANDARDS
IMS will meet the Claims Standards described in this Schedule C in the
performance of the Claim Administration Services for Level II features only,
provided all policy and underwriting information required for proper claim
handling is timely received by IMS. Customer will provide confirmation of
coverage in the form of the policy declarations or coverage screens. The
provisions of this Schedule C will apply to services performed from the
Effective Date of this Agreement.
1. IMS will establish a claim file case reserve within 15 Calendar Days of
the first notice of the loss or the date of coverage confirmation, on
90% of the new Collision, Comprehensive, Property Damage, UM/UIM
Property Damage, Towing & Labor, Rental, and Safety Equipment features,
received each month. IMS will establish a claim file case reserve
within 30 Calendar Days of the first notice of the loss or the date of
coverage confirmation, on 98% of the new Collision, Comprehensive,
Property Damage, UM/UIM Property Damage, Towing & Labor, Rental, and
Safety Equipment features, received each month.
2. IMS will establish a claim file case reserve within 90 Calendar Days of
the first notice of the loss, the claimed injury, or the date of
coverage confirmation, on 98% of the new Bodily Injury, Personal Injury
Protection, UM/UIM Bodily Injury, Medical Payments features, received
each month.
3. IMS will reinspect an average of 15% of all vehicle repair estimates
per month. The reinspections will be chosen based on market dynamics
and inspection quality.
4. IMS will contact 85% of insureds/claimants within one (1) Business Day
from the date the claim is reported or from the date the
insured/claimant is identified, whichever occurs first. IMS will
contact 100% of the insureds/claimants within three (3) Business Days
from the date the claim is reported or from the date the
insured/claimant is identified, whichever occurs first. "Contact" is
defined as a telephone conversation with the insured/claimant, or
leaving a message for the insured/claimant on a recorded message device
or with another person, or mailing a contact card to the
insured/claimant's last known address via regular mail, which advises
them that the claim representative has been unsuccessful in reaching
them, and requests that they contact the claim representative.
5. IMS will inspect 90% of covered vehicles with claimed damage in excess
of $1500.00 within three (3) Business Days from the date the vehicle
location is identified by IMS, when the vehicle is located within a
major metropolitan area.
6. IMS will inspect 80% of all supplemental claims of covered vehicle
damage where the original vehicle damage appraisal exceeds $3,000 and
the supplemental damage claim exceeds 15% of the original appraisal.
7. IMS will inspect 20% of supplemental claims of covered vehicle damage
where the original vehicle damage appraisal is less than $3,000.
8. IMS will manage rental losses by appraising vehicles after tear down
where feasible; refusing rental direct billing, minimizing rental
duration through communication with the vehicle owner, and using rental
companies that offer favorable rates. Cash out or pre-pay procedures
will be attempted on all applicable losses. If not feasible, rental
reimbursement will be paid where owed based on reasonable repair time
or replacement.
9. IMS will achieve an average score per year of 3.00 out of 4.00 with
1.00 being the worst and 4.00 being the best on the Customer Feedback
Survey Program. This average will be calculated by totaling the
individual survey question responses on all surveys annually. IMS Claim
Management will contact 100% of all those individuals who returned a
survey response with an average survey rating below 2.00 per survey.
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10. IMS will conduct recorded interviews, if permission is granted, within
15 Calendar Days (where not prohibited by local, state or other
applicable law) of the first notice of the loss on 85% of new claims
received each month where the claim representative determines that
there is a material coverage question, questionable liability, claims
involving bodily injury, or subrogation potential. A recorded statement
will be taken, at the IMS adjuster's discretion, on those questionable
liability claims involving property damage only. A loss within the
first 30 days of policy inception, theft claims and fire claims will be
referred to SIU for obtaining a recorded statement and investigation.
11. IMS will obtain a Police Report on all claims where the accident was
reported to the police and a Police Report is a necessary part of the
claim investigation.
12. 95% of all claim files (except glass claims, record purposes only
claims and catastrophe claims) will contain an Adjuster Claim File
Report and an Updated Action Plan as the claim file develops.
13. Reinspection Program Exception Rates for reinspections performed by
external appraisers will not exceed 5% error ratio. Reinspection
Program Exception Rates for reinspections performed by internal staff
appraisers will not exceed 7% error ratio.
14. Net Salvage Recovery (which is defined as the percentage of vehicle
value after expenses) will be targeted at 13% unless relevant local,
state or federal law makes this goal unreasonable or unobtainable.
15. IMS Claim Supervisors or Managers will complete fifteen (15) of IMS'
internal Quality File Reviews on open or closed claim files per
Adjuster per Quarter, including a proportionate number, but no less
than twenty (20), of Customer's claim files.
16. IMS will achieve a minimum score of 90% on all Internal Audits
conducted, which will include a proportionate number of Customer's
claim files. A score of "90%" means that 90% of the quality items
reviewed obtained a score of "satisfactory."
17. IMS will make payment on 60% of Collision Features within 15 Calendar
Days of feature open date and 80% within 30 Calendar Days of feature
open date.*
18. IMS will make payment on 50% of Property Damage Features owed within 25
Calendar Days of feature open date and 70% Within 45 Calendar Days of
feature open date.*
19. IMS Claims Personnel will return telephone calls to insureds and
claimants within 24 hours of the call's receipt.
20. IMS will comply with all prompt payment of claims acts in all states
(Example: Art. 21.55, TX. Ins. Code).
*Subject to review and modification after 90 days.
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EXHIBIT I
CLAIM ADMINISTRATION SERVICES
IMS will perform the following Claim Administration Services on Customer's
behalf in compliance with applicable law, and subject to periodic review and
audit thereof by Customer throughout the term of this Agreement:
I. Claim Adjusting and Program Management
IMS will:
A. Administer claims in accordance with the terms and conditions
of Customer's insurance policies, this Agreement, and
applicable state insurance laws, rules, and regulations that
pertain to claim handling.
B. Provide appropriate staff to service Customer's business based
upon claim volume.
C. Conduct internal claim file audits and quarterly file reviews.
D. Utilize IMS' claim handling best practices, and for all Level
I features, complete the IMS Claim Summary Sheet.
E. Provide vendor management.
II. Claim Adjusting Support
IMS will:
A. Utilize and manage external adjusters and appraisers, in field
locations not staffed by IMS or customer. Decisions as to when
to use external adjusters and appraisers will be made by IMS
and will be based on each individual claim file and the need
for external investigation in order to document the facts.
B. Perform all services necessary to collect subrogation or
salvage that may benefit Customer.
C. Manage claim litigation through the use of external defense
counsel and litigation management planning.
D. Investigate insurance fraud indicators through the IMS Special
Investigation Unit and conform with all filed and state
specific fraud plans and any other statutory or regulatory
requirements.
E. Conduct and manage review of claim file medical records
utilizing IMS' internal Medical Resource Unit on all
applicable cases.
F. Employ mechanized medical ▇▇▇▇ utilization review methods on a
case-by-case basis.
Customer requests the use of medical ▇▇▇▇ repricing based on
International Classification of Diseases (ICD)-9 codes and Current
Procedural Terminology (CPT) codes. ICD-9 Codes stands for
International Classification of Diseases, 9th Revision. These codes
appear on medical treatment bills and describe the diagnosis, symptoms,
complaint, and condition or problem for which medical services are
rendered. Current Procedural Terminology (CPT) Codes are used to report
medical services and procedures performed by physicians.
Customer requests the use of CAPA-certified after-market parts, on a
limited basis where form, fit and structural integrity have been
validated. After-market parts will not be used for structural or
safety-related components. Non-structural after-market parts, such as
head lamps, batteries, or appearance items, will be used whenever and
wherever applicable.
Customer requests the application of betterment or depreciation to
automobile estimates in all states.
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III. Claim Service Center
IMS will:
A. Handle and process initial loss reports received by Customer
or Customer's prior vendor, only if the information submitted
by Customer or Customer's prior vendor is sufficient to enter
a claim into the IMS claim system. Sufficient information
required to set up a claim on the AS 400 Claim System is
insured name, policy number, address, telephone number,
damaged property, and description of the accident.
B. Provide claim adjusting core clerical support, which includes
all mail processing, file control and industry reporting (e.g.
index bureau, NICB, Fraud Bureau and provider of service).
C. Maintain operating hours of 7:30 A.M. to 8:00 P.M. Eastern
Standard Time (EST), Monday through Friday, excluding bank
holidays for Florida State Banks or an IMS paid holiday (New
Year's Day, Memorial Day, Independence Day, Thanksgiving Day,
day after Thanksgiving, Christmas Eve (after 12:00 P.M.
Eastern Standard Time) and Christmas Day). IMS will provide
First Notice of Loss reporting services twenty four (24) hours
per day seven (7) days per week.
IV. Claim System
IMS will:
A. Utilize an AS400 based claim system for claim documentation
and processing.
B. Provide Customer with remote claim system access to the AS400
(view only) as reasonably requested by Customer subject to the
fees described in Schedule B.
C. Provide Customer up to ten (10) hours of initial AS400
training to Customer's representative(s) at IMS' office
location at no cost to Customer, except Customer must pay its
own travel expenses, including, but not limited to, hotel
costs, transportation costs, and the cost of meals.
D. Provide Customer with sixty (60) days written notice of a
proposed material change in or enhancement to the claim system
in use on the Effective Date of this Agreement. Written notice
to Customer will include details of the proposed material
change or enhancement. IMS will provide customer with
appropriate training with respect to such proposed material
change or enhancement.
V. Authority Levels
IMS will establish claim reserves and make claim payments on behalf of
Customer, for each coverage, up to the amounts specified in the table
below ("Authority Table"). Where a claim reserve amount or claim
payment amount will, in IMS' judgment, exceed the amounts listed in the
Authority Table, IMS will request from Customer, in writing, an
increase in the authority level amounts, and Customer will promptly
respond, in writing, so that the claim reserve can be established or
the claim payment made.
AUTHORITY TABLE*
Reserve Limit Payment Limit
-------------------------- ------------------------
Level Indemnity Expense Indemnity Expense
----- ---------- ---------- ---------- ---------
1 (applies to Claim Adjuster Trainees) $5,000.00 $250.00 $2,500.00 $150.00
2 (applies to Claim Adjusters) $10,000.00 $1,500.00 $7,500.00 $500.00
3 (applies to Claim Adjusters) $25,000.00 $10,000.00 $15,000.00 $5,000.00
4 (applies to Supervisors & Technical Advisors) $50,000.00 $15,000.00 $35,000.00 $7,500.00
*Customer may modify the authority levels listed in the Authority Table upon 30
days written notice to IMS. Any such modification may result in a change to the
fees described in Schedule B, Section VII.
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VI. Catastrophe Claims
IMS will:
A. Adjust Customer's claims which result from a weather
catastrophe.
B. Deploy catastrophe claim adjusters to a catastrophe affected
area where a single event results in 50 or more physical
damage claims within a 20-mile radius.
VII. Management Reporting
IMS will:
A. Provide Customer with weekly and monthly claim summary
reports, the contents of which will be mutually agreed to in
writing by Customer and IMS.
B. Provide Customer with monthly productivity and severity detail
and summary reports, the contents of which will be mutually
agreed to by Customer and IMS in writing.
C. Provide Customer with subrogation, Copart and Certified
Collateral Corporation ("CCC") total loss reports, the
contents of which will be mutually agreed to by Customer and
IMS in writing.
D. Provide Customer with daily incurred loss reports and daily
feature count reports as mutually agreed to by Customer and
IMS.
E. Monthly reports will be provided to Customer on or before the
third business day after the close of the month. Weekly
reports will be provided to Customer on or before Tuesday of
the following week. Daily reports will be provided to Customer
on the next business day.
VIII. Claim Account
A. IMS will maintain a daily register of checks drawn on the
Claims Account for each loss payment and expense. IMS will
also maintain a daily register, which register shall include,
for each claim or claimant, the claim number, feature code,
policy number, loss date, name of the payee, date and check
number of the disbursement, and the amount and purpose of the
payment.
B. Any monies collected by IMS for salvage, subrogation,
contribution or deductible reimbursement will be deposited by
IMS in the Claims Account within one business day upon receipt
by IMS thereof.
IX. Accounting
A. IMS will issue checks related to claim handling, and provide
one monthly bank account reconciliation, which includes
balancing the check records back to the bank statement.
B. IMS will provide no other accounting services, such as:
o Annual statement support
o Statistical reporting
o Month-end processing
o Month-end reporting