EXHIBIT 10.1
MERCURY INSURANCE GROUP
PRODUCERS CONTRACT
The undersigned producer and company(s), hereinafter called Producer and
Company, agree that these provisions apply to the signatory company(s), and the
producer:
1. Producer as designated in this agreement shall mean broker.
2. The territory within which the Producer may act shall be the State of
California.
3. This contract shall become effective on the day it is signed by an officer
the Company.
4. The Producer has authority to solicit applications for insurance for such
classes of risks as the Company may authorize to collect, receive, and
receipt for premiums on insurance tendered by the Producer to and accepted
by the Company; and to receive commission on paid premiums as full
compensation on business placed with the Company as stated in the attached
commission schedules.
5. The Producer shall promptly forward applications and required premiums to
the Company and may bind insurance in accordance with the Producer's
Manual.
6. The Producer shall refund ratably to the Company, on business, heretofore
or hereafter written, commissions on canceled insurance and on reduction in
premiums at the same rate at which such commissions were originally paid.
7. If premiums are to be billed by the Producer, the Company will bill the
Producer monthly. The balance therein shown to be due to the Company shall
be paid within 15 days after the billing date, otherwise such policies
shall be subject to cancellation 10 days thereafter. The Producer shall be
responsible for and agrees to pay to the Company all premiums on policies
written with the Company whether collected by the Producer or not.
Premiums billed by the Company, direct to the Insured, shall be the
responsibility of the Company. The producer is authorized to deposit in a
Federally Insured savings account, term deposit account or time certificate
of deposit (of any combination thereof) any part or all of the premium
funds collected by the agent an behalf of the Company, and is entitled to
retain any Interest which accrues on sold premium funds.
8. Commissions Statements for direct bill policies shall be rendered monthly,
and any balance due the Company shall be paid within 15 days after the
statement is mailed. Any balance due the Producer may be offset by any
other amounts due the Company by the Producer.
9. The Producer has no authority to make, alter, vary, or discharge any policy
contract to extend the time for payment of premiums except as authorized in
writing by the Company to waive or extend any policy obligation or
condition; to incur any liability in
behalf of the Company, or to engage in advertisement respecting the Company
without the prior written consent of the Company.
10. The Company shall not be responsible for any producer expenses.
11. Any Company supplies furnished to the Producer by the Company shall remain
the property of the Company and shall be returned to the Company or its
representative promptly upon demand.
12. In the event of termination of this contract, provided the Producer shall
pay amounts due the Company within thirty days of the billing date, the
Producer's records, use and control of expirations shall remain his
property and be left in his absolute possession. If the Producer does not
pay the statements as provided above, title to the records and expirations
shall transfer to the Company for its exclusive use and control. If
premiums due the Company are disputed, the Producer shall nominate a
national accounting firm to render an Independent accounting. The
nomination must be made in writing within ten days after receipt of the
monthly statement. If demand for an accounting is not made within ten
days, future agreement to Independent accounting will be at the option of
the Company. Premiums found due shall be paid within ten days of the date
the accounting firm renders its opinion. Expenses of the Independent
accounting will be shared equally by both parties.
13. This contract supersedes all previous contracts or agreements whether oral
or written between the Company and the Producer and shall remain in effect
until terminated by either party at any time upon written notice to the
other.
14. The Producer shall not appoint sub agents to represent the Company without
the written consent of the Company. The Producer is not to accept business
for the Company from any other agent or broker.
15. The Producer will not transfer ownership of the policies written the
Company, or allow another producer or broker to renew or service the
policies without the prior written approval of the Company unless this
contract has been terminated and all amounts due the Company have been
paid.
16. If the Producer is a corporation, it is agreed that ownership of any stock
may not be sold, transferred or additional stock issued without consent of
the Company. This provision shall not apply if the Producer is a publicly
held corporation under the Security Exchange Act of 1934.
17. It is agreed that the Producer shall not submit broker of record letters on
existing Mercury polices or rewrite Mercury policies written through other
producers of the company without the prior consent of the Company until the
producer has written at least $500,000 in premiums with the Company.
18. The Company will allow the Producer an additional contingent commission on
the Net Result of business produced by the Producer for the Company on the
basis hereinafter set forth for each calendar year. The rate of said
contingent commission to be as follows:
RATE NET EARNED PREMIUM
OF AT LEAST:
15% $ 50,000
20% 100,000
25% 150,000
30% 200,000
The net result shall be computed as follows:
INCOME
Net premium earned shall be gross premiums earned net of reinsurance cost
to the Company, assessments for guarantee funds and loading for assigned
risk plans, reinsurance facilities and joint underwriting authorities.
OUTGO
A flat deduction of 30% of net earned premiums.
A deduction equal to the average commission rate paid the producer on
premiums earned during the calendar year.
Net Losses incurred shall be gross losses incurred less reinsurance
recovered or recoverable.
Deficit, if any, from previous year's contingent account. (Deficit of any
individual year to be carried forward one year only.)
The difference between the Income and Outgo shall constitute the Net
Result, and contingent commission thereon at the rate as set out above will
be paid to the Producer, but not before August 31st following the end of
the contingent year.
The net results referred to above shall include premiums and losses
resulting from all forms of Insurance written by the Producer for the
Company.
It is a condition of this agreement remittances for all items and balances
shall reach the Company within a period of time in accordance with the
conditions and provisions in the Producer Contract. Otherwise, no
contingent commission shall be payable.
If the Producer Contract is terminated by either the Company or the
Producer, no contingent Commission shall be payable on business produced
in the year in which termination occurs. This applies even if the business
is transferred to another Producer of the Company.
19. The Producer agrees to reimburse the Company for any expense, attorney's
fees, loss or damage sustained by the Company by reason of the Producer's
violation of, or failure to conform to any of the provisions of this
agreement.
IN WITNESS WHEREOF, the Company has caused this contract to be signed at the
Home Office and the Producer has subscribed his name hereto this __________ day
of _______________________.
By____________________________________ Title_____________________________
MERCURY CASUALTY COMPANY
MERCURY INSURANCE COMPANY
CALIFORNIA AUTOMOBILE INSURANCE
COMPANY
Producer______________________________ Title_____________________________
COMMISSION SCHEDULE
The Producer is authorized to represent the Companies below for the classes of
risks indicated and receive commissions at the rate shown, except for commission
rates on certain classes of risks designated in the producers manual.
PERSONAL LINES
Automobile: Mercury Casualty Company .......................................
Mercury Insurance Company & California Automobile Insurance
Company.........................................................
Personal Protection Package (Automobile, Homeowners and Umbrella)............
Personal Umbrella Policy.....................................................
Homeowners...................................................................
Dwelling Fire................................................................
COMMERCIAL LINES
Automobile...................................................................
Commission rates for Mercury Insurance Company, Mercury Casualty Company,
California Automobile Insurance Company, Personal Lines Automobile and Personal
Protection Package policies are subject to the following adjustments:
1. The rate of commission shown in the commission schedule shall be the base
commission rate. The maximum rate of commission payable shall be 20%.
2. The commission rate from the effective date of this agreement to the second
June 30th following the first accounting period will be the base commission
rate. The commission rate will be subject to modification for policies
effective each twelve month period thereafter. The commission rate in
effect during the previous twelve months may be increased or decreased by
1% of the premium.
3. The first accounting period for Mercury Insurance Company, California
Automobile Insurance Company and Mercury Casualty Company private passenger
auto policies, shall be the three year period ending December 31, in the
year the producer has had a contract in effect with the company either as
an agent and or broker for three or more years. Otherwise, the first
accounting period begins with the effective date of this agreement and ends
December 31st in the year this agreement has been in effect for three
years.
4. The first Accounting Period for Personal Protection Package policies shall
be the period beginning with the effective date of this agreement and
ending December 3lst of the year in which it has been in effect for one
year. The second Accounting Period shall be the period beginning with the
effective date of this agreement and ending December 31st of the year in
which it has been in effect for two years.
5. Subsequent accounting periods shall be successive three year periods ending
twelve months following the previous accounting period,
6. Loss ratio means net losses incurred during the accounting period
(developed for fifteen months following the accounting period) divided by
net premiums earned during the accounting period. For Mercury Insurance
Company and California Automobile Insurance Company the net earned premium
and net incurred losses shall be combined and the commission rate adjusted
together. The loss ratio for Mercury Casualty Company and the Personal
Protection Package shall be calculated separately and the commission rates
adjusted separately.
7. For private, passenger automobile net earned premiums and net incurred
losses for Bodily Injury, Property Damage, Uninsured Motorist and Medical
Payments Coverages shall be calculated by the Company based upon a net
retention of $25,000 per occurrence. For Personal Protection Package the
net earned premiums and net incurred losses for all coverages shall be
calculated by the Company based upon a net retention of $25,000 per
occurrence for all coverages. All earned premiums and incurred losses
shall be net of reinsurance costs and recoveries, assessments for guarantee
funds and loading for assigned risk plans reinsurance facilities and joint
underwriting authorities.
8. The commission rate for Personal Protection Package and Mercury Casualty
Company private passenger auto policies will be increased when the loss
ratio for the latest accounting period is 55% or less, and decreased when
the loss ratio is 60% or more.
9. The commission rate for Mercury Insurance Company and California Automobile
Insurance Company will be increased when the loss ratio for the latest
accounting period is 60% or less, and decreased when the loss ratio for the
latest accounting period is 65% or more.
10. Any other change in commission rates are by mutual agreement between the
Producer and Company.
Executed this day of At Los Angeles, California
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By____________________________________ Title_________________________
Mercury Casualty Company
Mercury Insurance Company
California Automobile Insurance Company
Producer______________________________ Title_________________________