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Exhibit 10.2
INSURANCE ADMINISTRATION SERVICES AGREEMENT
THIS INSURANCE ADMINISTRATION SERVICES AGREEMENT ("Agreement") is made
and effective as of the 30th 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 360 Central Avenue, St. Petersburg, Florida 33701, 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 8113 Ridgepoint Drive, Suite 214, Irving Texas, 75063, 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 8113 Ridgepoint Drive, Suite 214, Irving, Texas 75063. Where used in this
Agreement, the term "Customer" shall include within its 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. Both parties
agree as respects this paragraph E, that a change of control includes
the above definitions when the sale or purchase is transacted with a
company included within the portfolio of Customer's investment group or
a distribution partner(s) of Customer.
F. "Distribution Partner(s)" means the Customer's business partners which
are authorized by Customer to transact business on Customer's behalf.
G. "Insurance Administration Services" means the services set forth in
this Agreement and EXHIBITS I AND II hereto in the Authorized States in
accordance with the terms of the Agreement, and all applicable laws and
regulations.
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H. "Insurance Program" means the Customer's insurance products within the
Authorized Lines of Business to be offered within the Authorized
States.
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. Refer to APPENDIX B for a
more detailed description of the Systems Development Life Cycle.
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 completion
("Completion Date") of all tasks delineated in the rollout plan
("Rollout Plan") contained within APPENDIX A for the first five states
to be implemented (Colorado, Texas, Arizona, New Mexico and Indiana).
Customer shall provide to IMS during such Implementation Period all
data, information, background, and other materials as defined by IMS
and agreed to by Customer to enable IMS to complete the Rollout Plan
delineated within APPENDIX A.
B. The term of the Agreement shall commence on the Effective Date and
shall have a minimum operating term ("Minimum Operating Term") of
eighty-four (84) full calendar months following the Effective Date.
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. During the Implementation Period, IMS shall design, construct, modify
or customize software systems that will enable IMS to provide the
Insurance Administration Services. In addition, the Implementation
Period will be used by IMS to assemble and train its staff, arrange for
furniture and fixtures, and essentially implement the procedures
required to provide to Customer the Insurance Administration Services.
B. IMS will utilize the Systems Development Life Cycle and the appropriate
phase-specific processes (as further described in APPENDIX B) to
complete the Rollout Plan 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 Systems Development Life Cycle. IMS will provide Customer
with the test results and shall await the Customer's sign-off prior to
deployment into live production. C. IMS shall dedicate the human,
equipment and computer resources commercially reasonably required 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. 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 IMS key 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. During the process by which IMS is
replacing a key staff member, Customer may be involved during the
interview process.
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D. IMS shall perform the Insurance Administration Services as described in
Exhibit I & II, in accordance with the service standards and goals
described in SCHEDULES C & D.
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 shall provide written and oral
communication of the status of implementation and administration of the
Insurance Administration Services as agreed to by and between Account
Manager and Customer.
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 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 "F" constitute sole and exclusive
property of Customer, and shall be treated as such by IMS pursuant to
the "Client Confidentiality" Section of IMS' Associate Manual.
G. At IMS' expense, IMS will provide office space at its principal
servicing office for two designated employees of Customer. The office
space will be equipped with a telephone with customer service
monitoring capability and a personal computer with access to Customer's
policy information data, and capable of permitting occupancy for two
(2) people.
H. IMS and Customer acknowledge and agree that Customer bears all risk and
has ultimate responsibility for the policies to be administered by IMS,
and that Customer shall at all times have ultimate decision-making
discretion with regard to all matters pertaining to the Insurance
Program policies. Customer acknowledges and agrees that any handling
instructions or direction from Customer to IMS shall be within the
bounds of any and all applicable laws and regulations pertaining to the
handling of such policies.
ARTICLE IV. RESPONSIBILITIES OF CUSTOMER
A. During the term of this Agreement (including the Implementation
Period), Customer shall by mutual agreement with IMS provide to IMS, in
a timely manner, any and all data, information and other items required
to enable IMS to perform the Insurance Administration Services
specified in EXHIBITS I AND II of this Agreement. Customer shall also
provide IMS with Customer's banking institution account information
relating to the services being provided by IMS under this Agreement,
corporate and subsidiary logos (if applicable), style and
specifications of printed documents (such as insurance policies), and
policy jackets. 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 on behalf of Customer. 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.
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B. Customer shall work and cooperate with IMS in utilizing the Systems
Development Life Cycle (as further described in APPENDIX B) to complete
the Rollout Plan and to accomplish any other project (related to the
Insurance Administration Services) to be performed under this
Agreement. Customer participation in the Systems Development Life Cycle
shall include, but shall not be limited to, promptly reviewing and
signing-off on all definitions and documentation prior to the
commencement of each phase within the Systems Development Life Cycle.
Customer agrees to provide such sign-off in writing within ten (10)
business days of receipt of satisfactory test results from IMS.
Customer shall perform functional and business case testing within the
IMS Model Office environment to 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 Systems Development
Life Cycle.
C. CUSTOMER ACKNOWLEDGES AND AGREES THAT IMS ASSUMES NO INSURANCE RISK FOR
THE BUSINESS PROCESSED UNDER THIS AGREEMENT.
D. Customer shall designate manager level employees 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 EXHIBITS I AND II 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 IMS and Customer records and information (excluding,
specifically, IMS' 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 billings 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. IMS will maintain a log of all system
issues which affect IMS' ability to perform the terms of this
Agreement. Customer will bear the cost of access to the above records,
including the costs of travel, personnel, computer hardware and
software, and data line charges.
Access to the above 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 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 Customer's 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 as mutually agreed upon between
Customer and IMS 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. IMS shall provide
Customer with workspace, resources (both physical and human) and
amenities necessary to enable Customer to conduct the audit. Any
additional costs incurred by IMS in providing the human resources
pursuant to this paragraph A shall be borne by Customer.
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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 the
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, and, the following
documents provided by Customer to IMS prior to the Effective Date of
this Agreement: all Flex Bill documentation (including presentation,
matrices, billing guides, `The eCoverage Report', discount flow charts,
network diagrams, call reason code documentation, initial data mapping
with Amis, sample hierarchy reports, initial web flow, point of sale
specifications, and initial tiered rating spreadsheet, which will be
deemed "Confidential 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 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 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.
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C. For purposes of this Article V., Recipient and Disclosing Party shall
include within their meaning all respective subsidiaries, distribution
partners, agents, representatives, affiliates or fronting companies 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.
ARTICLE VI. EXPENSES AND FEES
A. In consideration of IMS providing Insurance Administration Services as
described herein, Customer shall pay IMS fees and expenses as specified
in SCHEDULE B. Except for the service fee ("Service Fee") which is
based upon a percentage of Customer's direct written premium, the
Miscellaneous Fees specified in Section V of SCHEDULE B hereto may be
increased 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.
Further, 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, or there is an increase in a statutory, regulatory or judicial
cost, IMS may increase the Service Fee and Miscellaneous Fees set forth
herein by no more than the amount of such increased costs and will
provide Customer with documentation verifying the increase.
B. Customer shall not be required to pay for any third-party products used
by IMS in delivering its Insurance Administration Services as specified
in EXHIBITS I AND II, unless the terms of Article VI.G apply. Customer
shall pay for services including but not limited to third party
information service fees and data communication line charges, for which
Customer shall pay directly.
C. 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.
D. 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 of storage of data used by IMS solely
for Customer, but excluding taxes on the net income of IMS.
E. Subject to the terms of this Agreement, all fees and expenses to be
payable by Customer to IMS or any third party (such as sub-contractors
IMS may hire on behalf of 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 the Insurance
Administration Services, miscellaneous services or third-party services
provided to Customer under this Agreement. IMS will calculate fees 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. If Customer
disputes any amount listed on a monthly statement, then Customer shall
timely pay any undisputed amount and the parties will exercise best
efforts to resolve any issue as to a disputed amount within five (5)
Business Days of Customer's receipt of the monthly statement.
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.
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F. 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) 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 eight (8) months
prior to the expiration of the term of this Agreement.
G. If costs arise during the 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, then Customer will pay such costs, or (b) IMS will pay such
costs. Such resolution for unanticipated costs or costs or fees in
dispute will be by mutual agreement between IMS and Customer. Any such
unresolved dispute will be subject to the terms of Article XII.
H. Customer shall ensure that within any monthly billing period, a minimum
of ninety percent (90%) of all new business that is processed by IMS
materially conforming to the description of services provided in
Exhibit I, C of this Agreement, for the Authorized Line of Business and
Authorized State, is processed using the electronic access and without
the manual data entry by IMS. If in any given monthly billing period,
more than ten percent (10%) of new business for the Authorized Line of
Business and Authorized State is not processed by IMS via the internet
access and requires the manual data entry by 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 ten percent (10%) level.
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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 Exhibits I
and II hereto, but specifically excluding Customer Exclusive Code, as
defined below, 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 with the
restrictions set forth below to Customer and its appointed insurance
sales agents, representatives, or distribution partners to use portions
of the Proprietary System as necessary for IMS to perform the Insurance
Administration Services to be performed by IMS under this Agreement.
B. Any modifications or enhancements to the object code of the Proprietary
System that IMS specifically designs and develops for Customer pursuant
to this Agreement and/or Exhibits I and II of this Agreement and during
any term of the Agreement ("IMS/Customer Exclusive Modification") (as
may be documented within the Systems Development Life Cycle) which are
mutually agreed by IMS and Customer to be special modifications and
enhancements for this Customer alone, will be specifically marked with
the legend "IMS/Customer Exclusive Modification" and shall constitute
the sole and exclusive property of Customer. 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 an "IMS/Customer Exclusive Modification". Notwithstanding the
foregoing, it is hereby agreed by the parties that Flex Billing(R),
Equity Specific Billing Forms, Reporting Hierarchy, Instant Rater,
Point of Sale Interface, and Web Rater Interface, are IMS/Customer
Exclusive Modifications. 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 (object code 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. IMS agrees that it will not sell to, or
use in full or in part on behalf of, any other customer of IMS, an
IMS/Customer Exclusive Modification.
C. Other than the limited rights to use the Proprietary System, in Article
VII, this Agreement grants to Customer no right to possess or
reproduce, the Proprietary System or its specifications in any tangible
or intangible medium. Customer may not mortgage, hypothecate, sell,
assign, pledge, lease, transfer, license, sublicense, reverse engineer,
modify, make derivative works of, or obtain any other interest in the
Proprietary System, nor allow any person, firm, entity or corporation
to transmit, copy, reproduce, download, reverse engineer, modify, make
derivative works of, or obtain any other interest in the Proprietary
System or its specifications in whole or in part. Customer shall not
permit third parties to benefit from the use or functionality of the
Proprietary system via time-sharing, service bureau, facilities
management, or other similar arrangement. 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. Customer
acknowledges that the IMS/Customer Exclusive Modification is designed
to work with the Proprietary System and that the IMS/Customer Exclusive
Modifications are not functional apart from the Proprietary System, and
that the Customer has no rights in the Proprietary System except for
the specific license granted in this Article VII.
D. Customer covenants and agrees not to disclose or otherwise make the
Proprietary System available to any person other than employees,
distribution partners, 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, appointed insurance
sales agent, distribution partner or representative to a level of care
sufficient to protect the Proprietary System from unauthorized
disclosure or reverse engineering.
E. Upon termination of this Agreement, IMS shall be prohibited from
possessing or reproducing, downloading, reverse engineering, or
obtaining any other interest in the IMS/IAIEC. Further, upon
termination of this Agreement, IMS shall have no right to possess or
reproduce, the IMS/IAIEC or its specifications in any tangible or
intangible medium. During and after the termination of this Agreement,
except as to Customer, IMS may not mortgage, hypothecate, sell, assign,
pledge, lease, transfer, license, sublicense, reverse engineer, modify,
make derivative works of, or obtain any other interest in a IMS/IAIEC,
nor allow any person, firm, entity or corporation to transmit, copy,
reproduce, download, reverse engineer, modify, make derivative works
of, or obtain any other interest in a IMS/IAIEC or its specifications
in whole or in part. IMS shall not permit third parties to benefit from
the use or functionality of a IMS/IAIEC via time-sharing, service
bureau, facilities management, or other similar arrangement. After the
termination of this Agreement, in the event IMS shall come into
possession of any source or object code associated with a IMS/IAIEC,
IMS shall immediately notify Customer and return the source or object
code associated with IMS/IAIEC in its possession and all copies of any
kind thereof to Customer.
F. IMS covenants and agrees not to disclose or otherwise make a IMS/IAIEC
available to any person other than employees, distribution partners,
agents or representatives of IMS required to have access or use of a
IMS/IAIEC to facilitate IMS' or Customer's performance under this
Agreement. IMS agrees to obligate each such employee, agent,
distribution partner or representative to a level of care sufficient to
protect a IMS/IAIEC from unauthorized disclosure or reverse
engineering.
G. IMS will notify Customer in writing at least five (5) days prior to the
implementation of any and all modifications IMS proposes to make to the
IMS Proprietary System that may affect Customer's business and IMS's
performance of IMS duties and services under this Agreement.
H. Any global changes or enhancements made by IMS to the Proprietary
System will be used by IMS in connection with providing the Insurance
Administration Services hereunder.
I. The obligations of the parties under this Article shall continue and
remain in effect after this Agreement is terminated for any reason.
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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
Bankruptcy Act 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 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
Bankruptcy Act 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 Customer, if IMS materially breaches any
provision of this Agreement (except the provisions of SCHEDULE
D), with or without curing the breach, more than ten (10)
times in any three (3) month period.
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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 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);
f) 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
g) 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.
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. 1 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.
ARTICLE IX. WARRANTIES AND COVENANTS
IMS covenants that: (a) all Insurance Administration Services shall materially
conform to the descriptions set forth in EXHIBITS I AND II of this Agreement;
(b) all Insurance Administration Services shall be performed in a good and
workmanlike manner; and (c) IMS will comply in all material respects 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 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.
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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) 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 any material
breach of Customer's obligations under this Agreement or the
material breach of any representation or warranty made by
Customer to IMS pursuant hereto.
(c) Customer agrees to, and shall cause its affiliates,
subsidiaries, agents and fronting companies, jointly and
severally, to indemnify, defend and hold harmless IMS, its
officers, directors, employees, agents, representatives, and
controlled and controlling persons (collectively "IMS") from
and against any and all liabilities, losses, damages, demands,
claims, suits, actions, causes of action, proceedings,
assessments, judgments, awards, penalties, settlements, fees,
costs and/or expenses of any kind or nature whatsoever
asserted against, resulting to, imposed upon or incurred by
IMS or any of IMS' Affiliates, directly or indirectly, by
reason of, arising out of, relating to or resulting from any
agreement, obligation or relationship, contractual or
otherwise, that Customer has or ever had with Inspire
Insurance Solutions, or any of its affiliates or subsidiaries.
B. Except for: (i) Service Fee and other amounts owed to IMS by Customer
in consideration of IMS providing the Insurance Administration
Services, miscellaneous services or third party services hereunder;
(ii) acts of fraud, or willful misconduct; (iii) penalties payable by
IMS 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 to either
party by the other 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 Customer
under Schedule B of this Agreement for the three months immediately
preceding the breach. Neither party shall be liable for any lost
profits, business goodwill, or other consequential, punitive, special
or incidental damages incurred by the other.
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 provision of Article X, paragraph B.
D. In the event of any IMS Proprietary System error or omission which
materially affects IMS' ability to perform the Insurance Administration
Services under this Agreement, IMS will correct same at no cost to
Customer.
E. 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.
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F. 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 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.
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 of 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.
8113 Ridgepoint Drive, Suite 214
Irving, Texas 75063
Fax Number: 214-496-3633
Attention: President
As to IMS: Insurance Management Solutions, Inc.
360 Central Avenue, 16th Floor
St. Petersburg, FL 33701
Fax Number: (727) 823-6518
Attention: President
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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 addenda attached
hereto, supercedes 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 addenda hereto, shall be valid unless the
same shall be in writing and signed by all of the parties hereto. All
schedules, 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, 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 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 Customer's transition from
doing business with INSpire Insurance Solutions, Inc. ("INSpire") to
doing business with IMS, or regarding that Customer has ceased doing
business with INSpire. 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 business 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 dispute
arising under 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 dispute, at a mutually agreed time and
place, to resolve the
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dispute. Notwithstanding any provisions in this Agreement pertaining to
IMS' rights to cure any service standard deficiencies or Customer's
rights pursuant to Schedule B.VI, 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.
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.
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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.
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, AUTHORIZED LINES OF BUSINESS,
AND 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 as defined in
Appendix B. Such estimate of time and cost will be subject to review
and approval by Customer. IMS will not initiate the requested project
until there is mutual agreement between Customer and IMS as to the
estimated completion date, cost required and project plan. Upon written
agreement between Customer and IMS regarding the detailed description
of the project, the project plan and the estimated completion date
("Project Completion Date") of the System Enhancement Project, IMS will
begin work on the project.
B. In the event that a non-conformity exists after implementation of a
modification or enhancement, IMS will allocate not less than fifteen
percent of the total hours expended to correct the non-conformity at no
cost to Customer. Customer will pay IMS for all additional work
performed by IMS, in excess of the fifteen percent of the total hours
expended to correct the non-conformity, at the applicable current rates
in Section V.2. of Schedule B.
IN WITNESS WHEREOF, the parties hereto by their respective duly
authorized representatives have executed this Agreement to be effective as of
the 30th day of June, 2000.
"IMS": "Customer":
INSURANCE MANAGEMENT SOLUTIONS, INC. INSTANT INSURANCE HOLDINGS, INC.
By: /s/ Chris Breakiron By: /s/ B. G. Porter
-------------------------------- ------------------------------
Chris Breakiron B. G. Porter
As its: CFO As its: President/CEO
---------------------------- --------------------------
Date: 7/3/00 Date: 6/30/00
------------------------------ ----------------------------
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SCHEDULE A
AUTHORIZED STATES AND INSURANCE PROGRAM
IMS shall provide Insurance Administration Services as described in EXHIBITS I
AND II for the following authorized line(s) of business ("Authorized Line of
Business") in the following authorized state(s) ("Authorized States") for the
following authorized companies ("Authorized Companies"):
1. AUTHORIZED LINE OF BUSINESS: PERSONAL AUTOMOBILE
2. AUTHORIZED STATES: THE UNITED STATES
3. AUTHORIZED COMPANIES: INSTANT AUTO INSURANCE COMPANY
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 Customer's prior written approval,
which shall not be unreasonably withheld, at another comparable IMS
Service Center.
The addition of any line of business, state or company not currently
named in this Schedule A will require written agreement between
Customer and IMS specifying the additional services to be provided by
IMS and the corresponding Service Fees to be paid by Customer.
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SCHEDULE B
FEE SCHEDULE
SECTION I IMPLEMENTATION SERVICE CHARGES
A. Initial Implementation
Customer shall pay IMS an "Implementation Charge" equal to $___*___
in consideration of IMS implementing the Insurance Administration
Services to be performed under this Agreement for the first five
states (Colorado, Texas, Arizona, New Mexico and Indiana). All data
center charges associated with implementing the base system are
included in the Implementation Charge.
Customer will pay this Implementation Charge as follows:
o $___*___ due upon execution of the Agreement
o $___*___ balance due after the first month of live production.
B. Additional State Implementation
After the first five states are implemented, Customer shall provide a
minimum of six months prior written notice of its intended Rollout
Plan for any given year. The implementation fee for each additional
state will be $___*___, assuming the new state has materially
similar and like function to the states previously implemented. Once
business requirements are agreed to by Customer based on the Systems
Development Life Cycle contained in Appendix B, IMS will complete the
new state implementation within sixty days.
New state requirements that do not have materially similar and like
function, will be collaboratively defined. For states that have not
been previously implemented with materially similar or like function,
the cost to implement will be estimated and the time frame required to
implement that state will be mutually agreed upon by Customer and IMS
pursuant to Article XIII. prior to starting the implementation
process.
* 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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C. System Development Estimates
In addition to the Implementation Charge and state implementation fees
delineated above, IMS will bill Customer monthly on a time and
materials basis for the development work associated with the items in
the following table. The total billed for each individual item will not
exceed the Estimated Time and Materials total. Customer may withhold
payment of an amount equal to ___*___ of the fees set out below until
completion of the items listed below. Upon satisfactory completion by
IMS of the items listed below, Customer shall tender to IMS the amount
withheld pursuant to this paragraph within thirty (30) days of written
notice from IMS of completion and written acceptance of such completion
by Customer.
------------------------------------------------------- ------------------------------------
TASK ESTIMATED TIME AND MATERIALS TOTAL
------------------------------------------------------- ------------------------------------
Instant Rater** $___*___
------------------------------------------------------- ------------------------------------
Data Warehouse Mapping Assistance** $___*___
------------------------------------------------------- ------------------------------------
Flex Billing(R) development $___*___
------------------------------------------------------- ------------------------------------
Non-Ace Distribution Partner Fee's $___*___
------------------------------------------------------- ------------------------------------
Interface to Choicepoint Allowing Motor Vehicle ___*___
Record (MVR), Claim Loss Underwriting Experience
(CLUE) and Credit Score Reporting
------------------------------------------------------- ------------------------------------
Reporting Based on Customer's Additional (Customized) $___*___
Levels of Market, Distribution Type, and Distribution
Location
------------------------------------------------------- ------------------------------------
Tiered Rating** $___*___
------------------------------------------------------- ------------------------------------
TOTAL IMPLEMENTATION FEE $___*___
------------------------------------------------------- ------------------------------------
**Subject to revision, until the business requirements for this project
are completed and approved by Customer.
D. Upon execution of this Agreement, the fees billed to Customer pursuant
to the Letter of Under-standing between the parties dated January 11,
2000, shall be subtracted from the Total Implementation Fee described
in Section I,C. of Schedule B above.
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
the 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 NDWP" will mean the sum total of Customer's monthly NDWP for
the Authorized Line of Business, for the current month and prior
eleven (11) months.
3. "Charge Size" will mean the appropriate vertical column in the Policy
Administration Service Fee Schedule, for each Authorized Line of
Business, to be determined by the Customer's Total NDWP for that
particular Authorized Line of Business.
4. "Charge Factor" will mean the appropriate percentage of premium to be
paid to 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.
* 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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5. "Monthly Average Policy Premium" will mean the appropriate horizontal
row in the Policy Administration Service Fee Schedule below, for the
Authorized Line of Business, to be determined by dividing the sum of
the NDWP processed by IMS in a given month for the Authorized Line of
Business by the number of new and renewal policies processed in such
month for the Authorized Line of Business.
SECTION III POLICY ADMINISTRATION - 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 the 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 the
Authorized Line of Business, will be identified.
3. Each Service Fee, for the Authorized Line of Business, will equal the
sum of the products resulting from multiplying the Charge Factor in
the Policy Administration Service Fee Schedule (at the intersection of
the Monthly Average Policy Premium row and the Charge Size column)
times the NDWP processed by IMS for the month for the Authorized Line
of Business.
4. Charge Factor Table
- -------------------------------------------------------------------------------------------------------------
PERSONAL AUTOMOBILE
POLICY ADMINISTRATION SERVICE FEE SCHEDULE
- -----------------------------------------------------------------------------------------------------------
Charge Size (Based on Total NDWP)
- ---------- ------------------ ----------------- ------------------- -------------------- ------------------
Monthly
Average ___*___ ___*___ ___*___ ___*___ ___*___
Policy ___*___ ___*___ ___*___ ___*___ ___*___
Premium ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
Any reduction in the applicable Charge Factor, resulting from the attainment of
a certain level of Total NDWP production level as specified above, shall only
be applicable to business processed by IMS after Customers' Total NDWP
production reaches that certain specified level.
* 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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Upon IMS' compliance with implementation and development duties and
responsibilities hereunder, IMS will require Customer to achieve a minimum NDWP
of $___*___ to be processed on IMS' system within the first twelve calendar
months following implementation. If Customer does not achieve this minimum,
Customer will pay IMS, in addition to the actual service fee, the difference
between the service fee on $___*___ and the actual service fee paid.
SECTION IV HYPOTHETICAL MONTHLY SERVICE FEE
For illustrative purposes only, if in a given month, Customer writes $___*___ in
NDWP and has a Total NDWP of $___*___ with an Average Policy Premium of
$___*___. The charge factor of ___*___ would apply and the service fee for that
month would be $___*___ x ___*___ or $___*___.
SECTION V MISCELLANEOUS FEES
Those fees not otherwise billed under this Agreement will be billed as follows:
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 Article VI.A of this Agreement.
2. Data Conversion from existing Customer system to IMS system, or from
IMS system to an alternative processing arrangement, will be performed
on a time and materials basis at the rate of $___*___ per person, per
hour, subject to an annual adjustment based on Article VI.A of this
Agreement.
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. Credit card processing fees will be a pass through expense to
Customer.
6. IMS will provide data entry services, pursuant to Article VI.H of this
Agreement, at IMS's servicing office at the time and materials rate of
$___*___ per person, per hour, subject to annual adjustment based on
Article VI.A of this Agreement.
7. The cost for Customer's existing or future output envelopes that
differ from the standard output envelopes used by IMS, will be paid
directly by Customer.
8. During the initial implementation phase, IMS will provide three days
of training at Customer's office free of charge using the "train the
trainer" approach. After the initial implementation, training and
education for sales agents will be provided at a rate of $___*___ per
day plus reasonable travel and living expenses.
9. Actual travel, and out of pocket living expenses incurred by IMS
during the Implementation Period shall be paid in accordance with the
terms of Article VI.C.
SECTION VI OPTION FOR CUSTOMER TO TAKE CUSTOMER SERVICE IN-HOUSE
IMS shall perform the Customer Service functions described in Exhibit I,
Section E and Customer shall pay IMS for those services pursuant to the terms
of Schedule B. IMS and Customer shall jointly create audit criterion and
performance standards ("Criterion") for measuring IMS' Customer Service
performance. Customer may conduct monthly audits to determine whether IMS'
performance meets the established Criterion. In the event IMS' Customer Service
performance does not meet the Criterion, Customer may perform the Customer
Service functions described in Exhibit I, Section E at Customer's expense.
* 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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Customer must give IMS thirty (30) business days notice of its intent to
perform the Customer Service functions and at the end of that thirty (30) day
period ("transition period"), the Policy Administration Service Fees in
Schedule B, Section III will be replaced with the Service Fees described in the
table below and IMS will no longer provide the services identified in Exhibit
I, Section E.
- -------------------------------------------------------------------------------------------------------------------
PERSONAL AUTOMOBILE
- -------------------------------------------------------------------------------------------------------------------
POLICY ADMINISTRATION SERVICE FEE SCHEDULE
- -------------------------------------------------------------------------------------------------------------------
(EXCLUDING CUSTOMER SERVICE)
- -------------------------------------------------------------------------------------------------------------------
Charge Size (Based on Total NDWP)
- ---------- ------------------ ----------------- ------------------- -------------------- --------------------
Monthly
Average ___*___ ___*___ ___*___ ___*___ ___*___
Policy ___*___ ___*___ ___*___ ___*___ ___*___
Premium ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
$___*___ ___*___ ___*___ ___*___ ___*___ ___*___
- ---------- ------------------ ----------------- ------------------- ------------------- -------------------
Customer will pay IMS for any work performed during the transition period at
the then current rates set forth in Section V.2. of Schedule B.
* 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 VII CLAIM ADMINISTRATION SERVICES FEES
1. IMS will provide Claim Administrative Services described herein and
charge Customer based on features. The following is the "flat rate"
charge by 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 $___*___
---------------------------------------------- ------------
The fees payable for each feature are payable in three equal payments
as follows: initial payment due upon opening the feature, second
payment due thirty (30) days after opening feature and third, final
payment due within sixty (60) days of opening feature. 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.
2. 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.
3. Customer will pay IMS the greater of $___*___ or ___*___ of the net
salvage (including owner retained) recovery obtained by IMS on
Customer's behalf.
4. Customer will pay IMS ___*___ of the net subrogation recovery obtained
by IMS on Customer's behalf.
5. Customer will pay IMS $___*___ per claim file referred to the IMS
Special Investigation Unit.
6. Customer will pay all claim expenses and costs directly, as
pass-through expenses, except the costs of police reports and auto
appraisals (excluding total loss evaluations).
7. IMS will pay Customer $___*___ for every appraisal performed by
Customer's appraisers at IMS' request where geographically
appropriate.
8. Data communication line charges (used by IMS solely for Customer) will
be a pass through expense to Customer.
9. IMS will pay Customer $___*___ for every reinspection performed by
Customer's reinspectors at IMS' request.
10. 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.
11. Customer will pay IMS $___*___ per person per hour for any additional
services requested by Customer and performed by IMS on Customer's
behalf.
* 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. In the event the average number of features per claim exceeds 2.1,
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
SERVICE STANDARDS AND INCENTIVE/PENALTY SCHEDULE
For purposes of this Schedule C, data received by IMS after 6:00 P.M. Eastern
Standard Time will be considered "received" on the following business day.
I. Policy Administration Service Standards
The following Service Standards will be subject to the
incentives/penalties contained in Section II and III of this
Schedule C.
A. A new business policy is considered issued when the
declaration page and attachments are generated in the system
and mailed out.
New business policies will be automatically issued by the
policy processing system within two (2) business days of
receipt of (1) the electronic record of funds (distribution
partner, Automated Clearing House (ACH), or credit card) and,
(2) motor vehicle report (MVR), claims loss underwriting
experience (CLUE) report, and credit score information from
the data services vendor.
B. A policy is rewritten if payment is received after the policy
lapse. A rewritten policy is a new policy which contains a
new policy number and a new effective date. The old policy is
cancelled and the new policy is "rewritten".
Policy rewrites will be issued automatically by the policy
processing system within one (1) business day of receipt of
cash beyond the time period acceptable for reinstatement as
determined by State statutes.
C. A policy will be reinstated when the payment is received
within the allowable time frame for reinstatement with no
lapse in coverage.
Policy reinstatements will be issued automatically by the
system within one (1) business day of receipt of cash within
the reinstatement guideline 98% of the time.
D. 98% of policies canceling for non-payment will be canceled
automatically in the nightly cycle.
E. IMS will maintain without employing the practice of taking
messages, no more than 3% phone call abandonment rate, based
on the total number of customer calls received and not
answered at or after a 20-second threshold, during agreed
upon business hours.
F. 85% of customer service calls will be answered by a customer
service representative within 20 seconds, during agreed upon
business hours. 98% of customer service calls will be
answered by a customer service representative within 60
seconds during agreed upon business hours and customer
service will use verbiage and material supplied by Customer.
G. Minimum System Availability of 98% During Customer's Business
Hours as Defined in the Agreement.
H. Maintain an Average Systems Workload Less than 80% of System
Capacity Central Processing Unit (CPU), Disc Access Storage
Device (DASD).
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I. The following monthly management financial reports will be
available for distribution by the 4th business day of the
month:
o Written premium by coverage
o Earned premium by coverage
o Policy fees
o All components of incurred losses and Allocated Loss
Adjustment Expenses (ALAE) (paid, case reserves,
recoveries)
o Claim counts, feature counts and loss data (new claims,
outstanding claims, closed claims with and without
payment)
o A list of in-force policies (with a total count) that
includes (I) premium receivable - billed, (ii) premium
receivable - not yet billed and (iii) unearned premium.
J. 98% of telephone endorsements will be rated simultaneously
with the initial oral request of the insured (no callbacks),
to include billing information, provided the customer has the
complete information to rate at time of contact. If the
customer does not have the complete information to rate at
the time of contact, IMS will follow up call to the Customer
to obtain the information.
K. On 98% of policies coming up for system cancel IMS will make
one call to the insured within two (2) business days of the
anticipated cancellation date to remind them to make the
payment (outbound retention calls), and the insured's policy
will be documented accordingly.
L. On 98% of policies requiring additional underwriting
information IMS will make a reminder call to the insured to
send in information according to Customer's workflows, but no
more than four (4) calls in a sixty (60) day period.
II. IMS Incentives
If in any month, IMS' performance exceeds all of the above standards
described in Part I, of this SCHEDULE C, Customer will pay IMS an
incentive equal to ___*___ of the total amount invoiced by IMS to
Customer for policy administration services during that month. IMS will
track its performance of those standards, calculate any incentive
amount owed to IMS by Customer, and add the incentive amount to IMS'
total invoice amount.
III. IMS Penalties
IMS will generate weekly reports detailing the service levels achieved
on a weekly average for the service standards contained in this
SCHEDULE C. In the event that any service level average falls below
the standards described in SCHEDULE C.I., IMS will owe to Customer a
penalty of $___*___ per standard not met.
IMS will have seven (7) days from the date of the report to correct
said standard, and if the next weekly report does not reflect a
correction, IMS will pay Customer an additional penalty of $___*___
IMS will continue to owe additional penalties of $___*___ per week
for any standard not met until the service level is cured. However, if
the service level is not cured within twenty-eight (28) days after the
date of the first report documenting that the standard was not met,
IMS will be in breach 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 D
ADDITIONAL SERVICE GOALS
IMS will meet the service goals described in this Schedule D in the performance
of the services described in Exhibits I and II. These goals are NOT subject to
the penalties-incentives of Schedule C. However, if an audit reveals that any
additional service goal specified in this Schedule is not being met, IMS will
have thirty (30) calendar days from the time it is notified of a goal not being
achieved to correct the deficiency. If the deficiency is not corrected by the
end of the thirty (30) calendar days, then IMS will be in breach of this
Agreement unless programming is required to correct the deficiency and the
programming requires a period of time greater than thirty (30) calendar days. If
so, IMS will provide Customer with an estimated timeframe to correct the breach
and mutually agree on the correction period. The provisions of Schedule D will
apply to services performed by IMS after sixty (60) days from the Effective Date
of this Agreement.
A. Operational / System Processing Goals
1. Motor vehicle report (MVR), claims loss underwriting
experience (CLUE), and credit score will be ordered
automatically (no human intervention required) by the quoting
application from the data services vendor at the point of
sale a minimum of 95% of the time. A minimum of 95% of the
data received back from the data services vendor will be
available to the quoting system.
Note that immediate turnaround service is not offered in
every state, but the information will still be requested by
the system at point of sale.
2. Output is generated within one (1) business day of print/mail
date.
3. All insured requested endorsements received will be processed
within five (5) business days of receipt to IMS, as verified
by the incoming date stamped on the request, provided the
insured has supplied the complete information, and state
statutory requirements are met.
4. IMS will verify accurate output (match system data to filed
forms) by means of random weekly quality checking at point of
output in Policy Assembly.
5. On 98% of incoming and outgoing calls IMS will document in
the policy system on client's individual policy the reason(s)
for the call, issues, and outcomes discussed with the
customer.
6. All customer requested cancellations received will be
processed within two (2) business days of receipt by IMS, as
verified by the incoming date stamped on the request,
provided insured signature(s) are included and state
statutory requirements are met.
7. Payments received at IMS' office will be posted to the
policies the same business day as received until 12:00 noon.
Any payments received after that time will be processed on
the next business day.
B. Management Reporting
IMS will produce management reports according to Customer defined
hierarchy, which includes: company, product, state, market,
distribution type, distribution location, and producer. The following
daily reports will be available to Customer:
1. New business policy counts and total new business premium.
2. Renewal counts and total renewal premium.
3. Cancellation counts and total cancellation premium.
4. Rewrite counts and total rewrite premium.
5. Reinstate counts and total reinstate premium.
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C. Projects
IMS will complete all projects governed by Article XIII.B. provided
all information pursuant to Article IV.A. and appropriate signoffs are
received from Customer.
D. Claims
1. IMS will establish a claim file indemnity reserve within 30
Calendar Days of the first notice of the loss on 95% of the
new claims received each month where IMS is able to open a
feature in the system.
2. 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.
3. 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.
4. 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.
5. 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.
6. IMS will manage renal 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. The time period allowed for rental will be
based on the number of days required to repair the vehicle.
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 achieve an average score per year of 3.00 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.
9. IMS will conduct recorded interviews, if permission is
granted, within 30 Calendar Days (where not prohibited by
local, state or other applicable law) of the first notice of
the loss on 80% 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.
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10. IMS will obtain a Police Report on all claims where the
accident was reported to the police and a Police Report is
judged by IMS to be a necessary part of the claim
investigation.
11. 95% of all pending 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.
12. 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.
13. 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.
14. 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.
15. IMS will strive to 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."
16. IMS will make payment on 60% of Collision Features within 25
Calendar Days of feature open date and 80% within 40 Calendar
Days of feature open date.*
17. IMS will make payment on 40% of Property Damage Features
within 25 Calendar Days of feature open date and 60% Within
45 Calendar Days of feature open date.*
18. IMS adjusters will return telephone calls to insureds and
claimants within 24 hours of the call's receipt.
*Subject to review and modification after 90 days.
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EXHIBIT I
POLICY ADMINISTRATION SERVICES
For the purposes of this Exhibit I, Insured means an insured or potential
insured of Customer.
IMS will provide the following services to Customer:
A. INTERNET FUNCTIONALITY AS IT PERTAINS TO CUSTOMER
IMS will provide functionality to Customer over the Internet or through direct
connection as described below. (Both connectivity strategies will be referred
to in this section):
o Quoting - Available to Customer for obtaining a rate on a potential
new policy.
o Convert Quote/New Business Processing - Ability to issue a policy
remotely with signature verification/underwriting performed by IMS'
customer service.
o Policy Changes (Endorsements) - Available to Customer for making
policy changes.
o Policy Inquiry - All policy data will be available to Customer.
o Policy Processing - Customer will have access to all policy processing
functions available to IMS customer service representatives.
o Online Documentation - Help text and online user documentation will be
available to Customer.
o Security - Providing varying degrees of access as currently presented
by IMS.
o Industry standard financial transaction security (Secure Electronic
Transaction (SET), Secure Sockets Layer (SSL), etc.)
o IMS will coordinate with ZyQuest, Customer's vendor, to implement an
interface between the quoting/rating system and the point of sale
(POS) system.
o IMS will coordinate with ZyQuest, Customer's vendor, to verify that
quoting/rating includes POS integration.
B. POLICY ISSUANCE
IMS will provide:
o Policy issuance for New Business, Renewals, and Endorsements
o Renewal/cancellation/reinstatement/rewrite processing - Automated
according to Customer Flex Billing(R)
o Automated Rating
o Non-renewal processing
o Printing of declarations and related forms.
o Forms which match those filed and approved with the Department of
Insurance.
o Data printed on forms which match data in the system.
o Rewritten policies which retain the same policy number as the original
policy with an increase in the policy suffix number.
o Output mailed to Customer daily.
C. BILLING
IMS will:
o Print and mail invoices, combo notices, reminders, cancellation
notification, return premium disbursements
o Process Credit Card, Electronic Checking, and Automatic Checking
Withdrawal payment processing and the ability to sweep accounts using
Automated Clearing House (ACH).
o Employ Customer Flex billing(R)
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o Automatically Process cancellations for non-payment
o Send out two overdue notices. Once account reverts to collection
status, IMS will send to Customer or the collection agency of
Customer's choice.
o Process Cancellations in the cycle the night before cancellation. For
example, policies due to cancel at 12:01am Thursday, 12/2 will be
processed after hours on Wednesday (12/1) cycle. This way, the
cancellation is effective right after the cycle is complete.
o Look ahead and process Sunday and/or holiday Customer transactions a
day early for any day that is not a postal mailing day (Sundays and
postal holidays). For example, on Saturday, all of the cancellations
occurring on Sunday will be processed on Saturday night's cycle.
o Provide hours of operations: Monday through Friday, 8:00 a.m. to 11:00
p.m. Eastern Standard Time and Saturday, 9:00 a.m. to 9:00 p.m.
Eastern Standard Time, including IMS paid holidays of the day after
Thanksgiving and Christmas Eve day.
D. CUSTOMER SERVICE
IMS will:
o Respond to insured and agent (sales representative) telephone
inquiries - Customer Service/Processing and Underwriting functionality
is available remotely at multiple Customer sites (Dallas & Michigan
facility) beginning day one of implementation with IMS. Customer and
IMS will jointly develop and mutually agree on the defined workflow
based off the functionality in Customers current workflow.
o Convert quote / new business processing - involves reviewing images /
signature verification, underwriting, and issuing new business
policies.
o Process requests for policy changes - Real-time over the telephone and
documented requests including ability to calculate next billing
amounts as an integrated function of rating software.
o Work with Customer to jointly create a Customer Service audit form
("Audit Form"), to be used by IMS and Customer to measure telephone
interaction between IMS' Claim Service Representatives and Customer's
policy holders.
o Answer Base Auto System (BAS) questions prior to policy issuance.
o Conduct jointly with Customer, audits of the Customer Service
Representative's performance based on the performance standards
described in the Audit Form. The audits will be conducted during the
last week of each calendar month and will result in a Customer Service
Representative performance score of "outstanding", "satisfactory" or
unsatisfactory".
o Process Credit Card, Electronic Checking, and Automatic Checking
Withdrawal installments over telephone. IMS will provide credit card
processing and the ability to sweep accounts using Automated Clearing
House (ACH.)
o Utilize Interactive Voice Response Unit (IVR)
o Provide Toll-free Number - Utilizing Customer's existing toll-free
number.
o Respond to correspondence related to policy and claims services -
Includes all correspondence sent to IMS on behalf of Customer by its
Insureds, staff, and management.
o Track and respond to complaints related to policy and/or claims
services
o Review every application image (new business and endorsements) for
Insured written-in modifications, presence of signature, coverage's,
and supporting documentation and apply the appropriate up-rates.
o Utilize telephone and email for Customer support. Toll-free,
Interactive Voice Response (IVR) and voicemail are methods of phone
interaction with insureds. IVR options are Frequently Asked Questions,
Live Support Option and Voice Mail for all insureds.
o Operate Monday through Friday, 8:00 AM - 11:00 PM Eastern Standard
Time, and Saturday, 9:00am to 9:00 PM Eastern Standard Time, including
IMS paid holidays of the day after Thanksgiving and Christmas Eve.
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E. MANAGEMENT REPORTING
IMS will produce reporting according to Customer defined hierarchy
which includes: company, product, state, market, distribution type,
distribution location, and producer. The policy processing system will
be enhanced to capture the information necessary to provide information
in this hierarchy. Customer will rely on its data warehousing solution
to provide management reports in this hierarchy other than those
necessary for financial management, listed in Section F.2 of this
Exhibit I.
1. MANAGEMENT REPORTING
IMS will:
o Produce standard activity reports
o Produce standard monthly reports
o Produce standard accounting reports
o Produce premium and loss reports
o Allow Olympic Amis to place the Datamirror product on IMS'
central policy processing system and activate the journaling
services required by the Olympic Amis solution.
o IMS will reimburse Customer for the cost of the data mapping
services performed by IMS through a credit for future
services performed by IMS on behalf of Customer, if IMS
decides to implement the Olympic Amis solution.
2. FINANCIAL REPORTING
a. DAILY
IMS will provide daily reports detailing:
o New Business Counts and Total New Business Premium
o Renewal Counts and Total Renewal Premium
o Cancellation Counts and Total Cancellation Premium
o Rewrite Counts and Total Rewrite Premium
o ReCustomer Counts and Total ReCustomer Premium
b. MONTHLY
IMS will provide monthly reports detailing:
o Written Premium by Coverage
o Earned Premium by Coverage
o Policy Fees
o Incurred Losses and ALAE amounts by Coverage (paid,
case reserves, recoveries)
o Claim Counts and Feature Counts and amounts (new
claims, outstanding claims, closed claims with and
without payment)
o In Force Policy List (with a total count) that Includes
(1) Premium Receivable - billed, (2) Premium Receivable
- not yet billed and (3) Unearned premium.
3. BUREAU/STATISTICAL REPORTING
IMS will:
o Process and balance premium and loss data
o Edit and correct invalid data
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o Prepare and mail Bureau transmittals
o Provide on-going Regulatory changes
o Maintain history files
o Provide support for Department of Insurance (DOI) Filing
o Provide hard copy or electronic submissions (does not include
annual and quarterly statements filings with the DOI)
F. ACCOUNTING AND PREMIUM ADMINISTRATION
IMS will provide:
o Issuance, control and accounting for disbursements for premium and
losses
o Posting, balancing, and control of premium suspense
o Receipt and posting of all installment payments (including lockbox if
volume necessitates)
o Bank reconciliation of premium and loss accounts
o Mini general ledger of direct premium and loss activity
o Posting and balancing of electronic cash received from distribution
centers.
o System generated reports for all direct premium and loss activity.
o Month-end closing within four (4) business days of month-end.
o Reconciliation within four (4) business days of receipt of bank
statements.
o Daily reconciliation of distribution center cash to IMS cash suspense
within two (2) business days of transaction date.
G. PRINT AND DISTRIBUTION SERVICES
IMS will provide:
o Automated document library - A copy of all central policy processing
system computer-generated policy documents is maintained within the
electronic document design program, and hard copies are maintained
within company/product specific catalogs. All applicable versions of
any document remain within the document library. IMS will provide
Customer with a hard copy of all documents contained in this library.
o Electronic document assembly - IMS uses a document packaging
distribution tool that sorts forms before they are printed, ensuring
that recipients receive all forms, sorted by specific criteria, in a
single package.
o Electronic document archival/retrieval - A copy of all central
processing system computer generated policy documents for each policy,
such as new business and renewal declarations, renewal bills,
endorsements, cancellations, and correspondence, is electronically
transformed into an image and is stored in the Computer Output to
Laser Disc (COLD) Imaging System. These company images are duplicates
of the documents received by the insured, producer, and other
respective parties. Archived documents will be available to IMS'
customer service and Customer for retrieval.
o Automated finishing/insertion facility - The policy document output
produced from the computer system will be sorted and packaged by IMS'
document packaging system and will be prepared for assembly throughout
the entire day. Once prepared, the output will be assembled on IMS'
document assembly device.
o Mail pre-sort facility - IMS uses a presort vendor to reduce postage
costs. Most mail is forwarded to the presort vendor. Mail forwarded
directly to the US Postal Service shall include any checks (for
security reasons), and any packages processed past the vendor's
pick-up deadline.
o Mailing (including postage and supplies) - The US Postal Service will
not guarantee a three day turn around time. If this is a mandatory
requirement, IMS will investigate the capabilities of external service
providers to meet this requirement. The additional cost of this
service will be a pass through expense to Customer.
o Current Document Imaging - At the time of the Agreement Effective
Date, IMS Records Management Services handles the preparation,
scanning, indexing and quality assurance
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of all hard-copy policy documents to be scanned into the Imaging
System. All hard copy (paper) policy files are prepared for imaging.
This entails taping torn documents, removing staples and paper clips,
incorporating document separator pages between each group (folder) of
policy documents, and making sure the correct policy number is
included on each document. These policy documents are quality reviewed
prior to scanning to ensure all of the above has been completed
correctly. Once the prepped documents are quality reviewed, the
documents are scanned. The scanning operator will log all necessary
information to track the batch of work until it is completely
processed. Once scanned, the document folders are indexed into the
Imaging System by policy number and document type. The indexed
documents are quality reviewed one more time to ensure accuracy. After
the documents have been archived in the imaging system, the hard
copy/paper documents are destroyed. All imaging system data base
information is backed up nightly to tape and the actual archived
images are backed up nightly to optical platters. All pictures
received with policy documents are labeled with a policy number and
are stored manually. There is a manual and computer log, which details
the exact location of the photos for retrieval. For Internet viewing,
access will be limited to COLD forms only. Any hardware or software
required by Customer to review imaged documents will be a pass through
expense.
o Future Document Imaging - IMS is currently researching an alternative
Imaging solution. When implemented, Customer will have access to all
functionality of the new Imaging solution. Any hardware or software
required by Customer to review imaged documents will be a pass through
expense.
o Fax server capability to receive faxes from ACE locations for signed
policy documents.
o Operation hours: Monday through Friday, 8:00 a.m. to 11:00 p.m.
Eastern Standard Time and Saturday, 9:00 a.m. to 9:00 p.m. Eastern
Standard Time, including IMS paid holidays of the day after
Thanksgiving and Christmas Eve day.
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H. DISTRIBUTION CENTER ADMINISTRATION
IMS will provide:
o Distribution Center record assignment and control
o Maintenance of Distribution Center File
o Accounting and payment of Customer's non-ACE distribution partnership
fees. IMS will calculate and pay non-ACE distribution partners
I. SYSTEM ADMINISTRATION
IMS will provide:
o Hardware/software maintenance and enhancements.
o System availability to Customer including all 3rd party products
necessary to provide system availability (data communications costs
are pass-through). IMS will purchase, in addition, any 3rd party
products necessary to provide system availability that will reside
locally at IMS. Connectivity decisions will be jointly agreed upon
well in advance of system implementation. A connectivity
recommendation will be made by IMS based on completion of the
Connectivity Project Definition by Customer after analysis and any
necessary clarification of the project definition contents. A
connectivity recommendation will be made by IMS based on the
Connectivity Project Definition.
o Processing of daily (7 day per week cycles), weekly, monthly, and
annual cycles.
o 22 hours a day, 7 days a week (4:00 a.m. to 2:00 a.m. EST) system
availability. IMS is currently pursuing development of a system which
will provide 24-hour per day Internet availability.
o Maintenance to the system including rate table updates, billing plan
table updates, and updates to other miscellaneous tables including
regulatory maintenance requirements.
J. TECHNICAL SUPPORT FOR REMOTE SYSTEMS USERS
IMS will provide technical support for all Internet Solutions IMS administers
and/or develops in support of the services for Customer defined in this
Agreement.
This support will include:
o Security
o How to access the systems
o How to use the systems
o User documentation (on-line)
o General usability questions regarding the applications
o Problem determination and resolution
o All telecom service issues, administration and setup related to IMS
provided solutions.
o Support availability Monday through Friday, 8:00am to 11:00pm Eastern
Standard Time and Saturday, 9:00am to 9:00pm Eastern Standard Time,
including IMS paid holidays of the day after Thanksgiving and
Christmas Eve day.
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EXHIBIT II
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. in field locations not staffed by IMS or customer. Decisions
as to when to use of 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.
C. Perform all services necessary to collect subrogation or
salvage that may benefit Customer.
D. Manage claim litigation through the use of external defense
counsel and litigation management planning.
E. 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, as required by applicable law.
F. Conduct and manage review of claim file medical records
utilizing IMS' internal Medical Resource Unit on all
applicable cases.
G. Employ mechanized medical bill utilization review methods on
a case-by-case basis.
Customer requests the use of medical bill 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.
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Customer requests the use of CAPA-certified after-market parts, on a
limited basis where form, fit and structural integrity has been
validated. After-market parts will not be used for structural or
safety-related components. Non-structural after-market parts, such as
headlamps, 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.
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. 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). which includes routing, filing, sorting,
photocopying claims files, delivering, printing, bar coding,
faxing of claim material, mail indexing, mail matching, mail
preparation, and sending mail.
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 Date). 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 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 ten (10) hours training with
respect to such proposed material change or enhancement.
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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.
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. by feature, coverage, and state. Provide Customer with
daily feature count reports which show the number of features
received, reopened, and closed by coverage and state.
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.
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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
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APPENDIX A
ROLLOUT PLAN*
* 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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APPENDIX B
SYSTEMS DEVELOPMENT LIFE CYCLE*
* 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.