EXHIBIT 10.76
INSURANCE ADMINISTRATION SERVICES AGREEMENT
THIS INSURANCE ADMINISTRATION SERVICES AGREEMENT ("Agreement") is effective
as of the 1st day of March, 2001 ("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 RESIDENCE MUTUAL
INSURANCE COMPANY (herein referred to as "Customer") having their principal
place of business at 525 Broadway, Santa Monica, California 90401.
WHEREAS, Customer wishes to engage the services of IMS to administer
certain of the Customer's obligations for the lines of business ("Authorized
Lines of Business") in the state(s) ("Authorized States") set forth in SCHEDULE
A;
WHEREAS, IMS wishes to provide such insurance administration services as
set forth herein.
NOW THEREFORE, IN CONSIDERATION OF the mutual covenants and agreements
hereinafter set forth, the parties hereto do covenant and agree as follows:
ARTICLE I. DEFINITIONS
Unless the context clearly requires otherwise, the following terms when used in
this Agreement shall have the meanings set forth below:
A. "Affiliate" is any company which controls, is controlled by, or under
common control with, a party, and "control" is defined as owning 50% or
more of such entity.
B. "Authorized Lines of Business" means the lines of business expressly set
forth in SCHEDULE A of this Agreement.
C. "Authorized States" means the states expressly set forth in SCHEDULE A of
this Agreement.
D. "Business Day" means any day other than a Saturday, Sunday or other day
which is a bank holiday for Florida State banks or an IMS paid holiday (New
Year's Day, Memorial Day, Independence Day, Thanksgiving Day, day after
Thanksgiving, Christmas Eve (after 12 P.M. Eastern Standard Time) and
Christmas Day).
E. "Change of Control" means (a) a sale, transfer or pledge, or the issuance
to a new shareholder, of fifty (50%) percent or more of the voting stock of
a party hereto to any third party that is not an Affiliate of such party;
or (b) a sale, transfer or pledge of a substantial portion of the material
assets of a party, or any merger or consolidation of a party with another
entity or entities.
F. "Insurance Administration Services" means the services set forth in this
Agreement and EXHIBIT I hereto in the Authorized States in accordance with
the terms of the Agreement, and all applicable laws and regulations.
G. "Insurance Program" means the Customer's insurance products within the
Authorized Line(s) of Business to be offered within the Authorized States.
H. "Technical Information" means and shall include (without limitation)
computer programs, databases, designs, algorithms, processes, structures,
data formats, business methods, know how, and research and development
information.
ARTICLE II. TERM
The term of the Agreement shall commence on the Effective Date and shall have a
minimum operating term ("Minimum Operating Term") of Twenty-four (24) full
calendar months following the Effective Date. However, the term of this
Agreement shall automatically extend for an additional operating term ("Extended
Operating Term") of twelve (12) calendar months at the end of the Minimum
Operating Term, or at the end of any Extended Operating Term, unless terminated
earlier pursuant to the termination provisions within Article VIII.
ARTICLE III. RESPONSIBILITIES OF IMS
A. 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
within Authorized States specified in SCHEDULE A.
B. IMS shall designate an employee ("Account Manager") of sufficient status
and authority to act as liaison with Customer to facilitate IMS'
performance of the Insurance Administration Services under this Agreement.
The Account Manager shall provide written and/or oral communication of the
status of administration of the Insurance Administration Services as agreed
to by and between Account Manager and Customer.
C. IMS shall, based on accepted industry standards and in accordance with
generally accepted insurance and accounting practices as designated by the
applicable regulatory bodies and the National Flood Insurance Program
("NFIP"), 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 four (4)
years or the period specified by the applicable statutes regulating the
preservation of records, unless the Customer requests that its records be
returned to it at its expense at the expiration of the minimum four (4)
year period; however, that IMS shall be entitled to retain copies thereof.
ARTICLE IV. RESPONSIBILITIES OF CUSTOMER
A. During the term of this Agreement, Customer shall provide to IMS, in a
timely manner, any and all data, information and other items reasonably
required to enable IMS to perform the Insurance Administration Services
specified in EXHIBIT I of this Agreement. Customer represents and warrants
to IMS that it owns and possesses all property rights to its corporate and
subsidiary logos and hereby grants and warrants to IMS a limited,
non-transferable, non-assignable, license to use Customer's corporate and
subsidiary logos (and any other copyrighted or trademarked property of
Customer that may be provided to IMS under this Agreement) while performing
the Insurance Administration Services. Customer acknowledges and agrees
that delays in delivery of required documentation, data and/or information
by Customer will result in a similar delay in
fulfilling Insurance Administration Services, and that such a delay in
performing the Insurance Administration Services shall not be deemed a breach of
the Agreement.
B. CUSTOMER ACKNOWLEDGES AND AGREES THAT IMS ASSUMES NO INSURANCE RISK FOR THE
BUSINESS PROCESSED UNDER THIS AGREEMENT.
C. Customer shall designate manager level employee(s) of sufficient status and
binding decision making authority to act as liaisons with IMS and to
facilitate Customer's role as IMS performs the Insurance Administration
Services specified in EXHIBIT I of this Agreement.
ARTICLE V. CUSTOMER ACCESS TO RECORDS / CONFIDENTIAL INFORMATION
A. At Customer's expense, Customer will be permitted reasonable access (as set
forth herein) to all records and information maintained by IMS on behalf of
Customer (excluding, specifically, proprietary Technical Information)
reasonably necessary to: (i) audit the completeness and accuracy of the
Insurance Administration Services provided under this Agreement and reports
produced for Customer pursuant to this Agreement; (ii) verify the accuracy
and validity of all billings and charges to Customer under this Agreement;
and (iii) verify IMS' overall compliance with the material terms of this
Agreement and applicable laws and regulations.
Access to IMS' records, for the foregoing purposes, will be provided during
normal business hours upon ten (10) Business Days prior written notice to
IMS by Customer for so long as IMS is required to maintain such records
under this Agreement; except in the case of regulatory inquiry, in which
case access will be granted on any Business Day with twenty four (24) hours
of prior written notice to IMS.
At Customer's expense, Customer will be permitted to copy those IMS records
subject to audit in accordance with this Article. Upon reasonable written
request by Customer, and at Customer's 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 reasonably adequate workspace for Customer to conduct
audits in accordance with this Article. Further, Customer or its
representatives shall take precautions, when conducting audits under this
Article, not to disrupt IMS' ongoing business activities.
B. The recipient ("Recipient") of confidential data and/or information
pursuant to this Agreement shall maintain the confidentiality of all data
and/or information which is the property of the other party ("Disclosing
Party"), whether originally supplied by the Disclosing Party, or whether
generated by the Disclosing Party in the course of performing or
facilitating the Insurance Administration Services under this Agreement and
which is directly accessible to the Recipient or is in the possession of
Recipient in the implementation, facilitation and/or performance of the
Insurance Administration Services. During any term of this Agreement,
Recipient may acquire, know, or have within its possession, information
(including, but not limited to, Technical Information) and/or data of the
Disclosing Party concerning commercial and trade affairs, rating and
underwriting rules and guidelines, the identity of clients, the identity of
insureds and beneficiaries, claims, benefits, rates and Agents, financial
information, the Proprietary System (as defined at Article VII (A) herein),
the Third Party Proprietary System (as
defined in Article VII (B) 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, the identity of Customer's clients, the
identity of Customer's insureds and beneficiaries, claims, benefits, and Agents,
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 any Recipient shall have no obligation with respect
to any information or data which:
a) is already rightfully known to Recipient through means other than
Disclosing Party; or
b) is or becomes publicly known through no wrongful act of Recipient; or
c) is rightfully obtained by Recipient from a third-party without similar
restriction and without breach of this Agreement; or
d) is independently developed by Recipient without breach of this Agreement.
Disclosing Party shall retain title to all Confidential Information (whether
tangible or intangible) delivered thereby pursuant to this Agreement. Recipient
shall not copy, reproduce or use any Confidential Information without written
authorization of Disclosing Party, except as may be reasonably required to
accomplish the Insurance Administration Services under this Agreement. Upon
written request of Disclosing Party Recipient shall promptly return, or destroy
with specific written permission of the 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 (B) 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.
For purposes of Article V (B), Recipient and Disclosing Party shall include
within their meaning all respective subsidiaries, agents, or Affiliates of the
Recipient and Disclosing Party.
ARTICLE VI. EXPENSES AND FEES
A. In consideration of IMS providing Insurance Administration Services
described herein, Customer shall pay IMS, as applicable, an implementation
fee ("Implementation Fee"), miscellaneous fee ("Miscellaneous Fee"),
servicing fee ("Service Fee") and claim administration fee ("Claim
Administration Fee") for each Authorized Line of Business, as specified in
SCHEDULE B. The performance by IMS of any service or function that is
outside of the scope of the Insurance Administration Services shall require
the payment by Customer of additional consideration (in addition to the
Service Fees) as mutually agreed between IMS and Customer.
B. Except for the Service Fee, which is based upon a percentage of the
adjusted net written premium and the Claim Administration Fee, the
Miscellaneous Fees specified in Section IV of SCHEDULE B hereto may be
increased (up to a maximum of five percent (5%) per year from the prior
year) effective as of each anniversary of the Effective Date by the
percentage increase in the United States Consumer Price Index for all Urban
Users (CPI-U) as reported by the United States Bureau of Labor Statistics
for the most recently completed calendar year that IMS is performing
services on behalf of the Customer. In the event that a vendor supplying a
service or product to IMS, which service or product is used by IMS to
provide the Insurance Administration Services to Customer, increases its
rates charged to IMS, IMS may increase the Service Fees, Claim
Administration Fees, and Miscellaneous Fees set forth in Schedule B to
incorporate such increased costs and will provide Customer with
documentation verifying the increase.
C. Customer shall reimburse IMS for travel, living and out-of-pocket expenses
incurred by IMS personnel in the performance of training relative to the
Insurance Administration Services to be performed under this Agreement.
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
or 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 under this Agreement shall be paid
within thirty (30) calendar days after Customer's receipt of IMS' monthly
statement for all services provided to Customer under this Agreement. IMS
will calculate the 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. Customer's failure to pay all fees and expenses when due
shall be considered a material breach of this Agreement. Further, if
Customer fails to pay any fees and expenses due IMS as herein provided,
Customer shall pay to IMS in addition to all sums otherwise due, interest
which shall accrue at 1.5% per month on such delinquency from the date the
fees or expenses became past due. Failure or forbearance to exercise any of
its rights and privileges hereunder shall not constitute the forfeiture or
waiver of such rights and privileges on the part of IMS.
F. Prior to renewal of this Agreement for any Extended Operating Term, IMS may
modify SCHEDULE B in its discretion to reflect any increase in the cost of
providing the Insurance Administration Services (including, but not limited
to statutory, regulatory, or judicial changes that require IMS to incur
additional cost or expenses in performing the Insurance Administration
Services) or to remain competitive with the rates currently being charged
within the industry for like services. Any modification of SCHEDULE B
shall be proposed to Customer at least six (6) months prior to the
expiration of any term of this Agreement.
ARTICLE VII. LICENSE, TRADE SECRET AND PROPRIETARY RIGHTS
A. IMS from time to time may use its own proprietary computer software
products and account servicing methods and procedures ("Proprietary
System"), which are identified, described or referenced in EXHIBIT I
hereto, in the performance of the Insurance Administration Services.
During any term of this Agreement, IMS grants a personal,
non-transferable, non-assignable, non-exclusive license to Customer to
use portions of the Proprietary System as necessary for IMS to perform
the Insurance Administration Services under this Agreement. Further,
no provision within this Agreement shall be interpreted as prohibiting
IMS from selling or licensing its Proprietary System to any other
customer or prospective customer of IMS.
B. IMS, from time to time, may also use proprietary third party computer
software products and third party account servicing methods and
procedures ("Third Party Proprietary System"), which are identified,
described or referenced in EXHIBIT I hereto in the performance of the
Insurance Administration Services. No provision within this Agreement
shall be interpreted as prohibiting IMS or the Third Party Proprietary
System vendor from selling or licensing the Third Party Proprietary
System, or modifications and enhancements to the Third Party
Proprietary System, to any other customer or prospective customer of
IMS, so long as Customer's Confidential Information is not disclosed.
C. Other than the limited rights to use the Proprietary System and the
Third Party Proprietary System, as provided in Article VII (A) and
(B) above, this Agreement grants to Customer no right to possess or
reproduce, download, reverse engineer, or obtain any other interest
in, the Proprietary System or the Third Party Proprietary System, or
their specifications in any tangible or intangible medium. Customer
may not mortgage, hypothecate, sell, assign, pledge, lease, transfer,
license, or sublicense the Proprietary System or the Third Party
Proprietary System, nor allow any person, firm, entity or corporation
to transmit, copy, reproduce, download, reverse engineer, or obtain
any other interest in the Proprietary System or the Third Party
Proprietary System, or their specifications in whole or in part. In
the event Customer shall come into possession of any source or object
code associated with the Proprietary System or the Third Party
Proprietary System, Customer shall immediately notify IMS and return
the source or object code associated with Proprietary System or the
Third Party Proprietary System in its possession and all copies of any
kind thereof to IMS.
D. Customer covenants and agrees not to close or otherwise make the
Proprietary System or the Third Party Proprietary System available to
any person other than employees, insurance sales agent ("Agents") or
representatives of the Customer required to have access or use of the
Proprietary System or the Third Party Proprietary System to facilitate
IMS' or Customer's performance under this Agreement. Customer agrees
to obligate each such employee, Agents, or representative to a level
of care sufficient to protect the Proprietary System and the Third
Party Proprietary System from unauthorized disclosure.
E. The obligations of Customer under this Article shall survive
termination of this Agreement, regardless of the reason for
termination.
ARTICLE VIII. TERMINATION
A. Either party may terminate this Agreement at the end of the Minimum
Operating Term or at the end of any Extended Operating Term, provided
the terminating party gives the other party at least three (3) months
prior written notice of such termination.
B. This Agreement shall also terminate:
a) at the election of the Customer, upon written notice to IMS,
if IMS becomes insolvent, if it makes an assignment for the
benefit of its creditors, if a petition for relief under the
United States Bankruptcy Code is filed by or against it and it is
not dismissed within thirty (30) days of being filed, or if a
trustee, receiver or other custodian of its assets is appointed;
b) at the election of IMS, upon written notice to Customer, if
Customer becomes insolvent, if it makes an assignment for the
benefit of its creditors, if a petition for relief under the
United States Bankruptcy Code is filed by or against it and it is
not dismissed within thirty (30) days of being filed, or if a
trustee, receiver or other custodian of its assets is appointed
(including, but not limited to, any proceeding pursuant to any
state or federal action governing insurer insolvency);
c) at the election of the Customer, if IMS materially breaches
any provision of this Agreement and fails to cure such breach
within sixty (60) days after written notice thereof is given to
IMS by the Customer;
d) at the election of IMS, if Customer materially breaches any
provision of tis Agreement and fails to cure such breach within
sixty (60) days after written notice thereof is given to Customer
by IMS (except for Customer's failure to pay any and all fees and
expenses due under Article VI of this Agreement, in which case
Customer must cure such breach within thirty (30) days after
written notice thereof is given to Customer by IMS);
e) at the election of IMS, upon written notice to Customer, in
the event of a Change of Control of Customer unless (i) Customer
has provided IMS not less than sixty (60) days advance written
notice of the proposed Change of Control and (ii) IMS has agreed
in writing to such Change of Control.
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.
C. On expiration or termination of this Agreement, IMS shall return to
Customer all of Customer's Confidential Information, either in
electronic or hard copy form, in IMS' possession and delete any
electronic copies thereof related to the Insurance Administration
Services provided by IMS during the term of this Agreement; Customer
shall do the same and cause Customer's agents and representatives
(including, but not limited to, any third party given access to the
Confidential Information) to do the same relative to IMS' Confidential
Information. Customer shall pay IMS (in accordance with SCHEDULE B
then in effect) any and all Service Fees, Claim Administration Fees,
Miscellaneous Fees and third party fees due IMS for Insurance
Administration Services performed pursuant to 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 claim
administration arrangement, then IMS shall provide such services at
the then current rates charged by IMS for the services specified in
Section IV of SCHEDULE B. This obligations under this Paragraph (C)
shall survive any termination of this Agreement.
ARTICLE IX. WARRANTIES AND COVENANTS
IMS covenants that 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 or merchantability, fitness or fitness for a
particular purpose, will apply to the provision of Insurance Administration
Services under this Agreement.
ARTICLE X. LIABILITY, LIMIT OF LIABILITY, INDEMNITIES AND REMEDIES
A. The parties shall assume the following obligations and liabilities as
specified below and subject to the limitations on liability set forth in
Article X, (C) below:
a) IMS shall indemnify, defend and hold harmless Customer, its
officers, directors, employees and controlling persons from any
liability, cost, loss, fine, penalty, claim, demand, damage or
expense, including reasonable attorneys' fees, incurred solely and
directly as a result of any material breach of IMS' obligations under
this Agreement or the material breach of any representation or
warranty made by IMS to Customer pursuant hereto:
b) Customer shall indemnify, defend and hold harmless IMS, its
officers, directors, employees and controlling persons from any
liability, cost, loss, fine, penalty, claim, demand, damage or
expense, including reasonable attorney's fees, incurred solely and
directly as a result of (i) any material breach of Customer's
obligations under this Agreement, or (ii) the material breach of any
representation or warranty made by Customer to IMS pursuant hereto;
c) Customer agrees that in the event IMS is in violation of any
code, statute or law(s) due to the acts or omissions of Customer, or
the servants, employees, representatives, adjusters, or Agents of
Customer, then Customer shall assume the responsibility and liability
for such acts or omissions and shall indemnify and hold IMS harmless
for any such liability;
B. Except for: (i) fees and expenses payable to IMS under Article VI of this
Agreement; (ii) acts of fraud, or willful misconduct; (iii) violations of
Article VII of this Agreement, and (iv) Customer's indemnification under
Section D of this Article, each party's maximum liability ("Maximum
Liability") to the other party for any cause whatsoever, during any one
calendar year shall be limited to direct damages incurred by that party and
shall not exceed the amount of compensation paid by the Customer under
SCHEDULE B of this
Agreement for the six (6) months immediately preceding the breach or cause
of liability. Further, IMS shall not be liable for any lost profits,
business goodwill, or other consequential, punitive, special or incidental
damages incurred by Customer.
C. If data is processed in error due directly 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.
D. 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 actions
taken, or any representations or decisions made with regard to claim
handling which occurred on the Customer's behalf prior to the Effective
Date of this Agreement.
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.
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 Florida without
giving effect to any choice of law provisions.
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.
C. 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: Residence Mutual Insurance Company
525 Broadway
Santa Monica, California 90401
Fax Number: (310) 395-8693
Attention: Principal Coordinator - NFIP
As to IMS: Insurance Management Solutions, Inc.
360 Central Avenue, 16th Floor
St. Petersburg, FL 33701
Fax Number: (727) 803-4093
Attention: President
Notices sent by hand delivery shall be deemed effective on the date of
actual hand delivery. Notices sent by overnight carrier shall be deemed
effective on the next Business Day after being placed into the hands of the
overnight carrier. Notices sent by registered or certified mail shall be
deemed effective on the fifth Business Day after being deposited into the
post office. Notices sent by facsimile transmission shall be deemed to be
effective on the day when sent if sent prior to 4:30 p.m. (the time being
determined by the time zone of the recipient), otherwise they shall be
deemed effective on the next Business Day.
D. This Agreement, and the exhibits, schedules and appendices attached hereto,
contain all of the prior oral and/or previously written agreements,
representations, and arrangements between the parties hereto. There are no
representations or warranties other than those set forth herein. No change
or modification of this Agreement, including the exhibits, schedules and
appendices hereto, shall be valid unless the same shall be in writing and
signed by all of the parties hereto. All exhibits, schedules, appendices,
addendum of any kind, or attachments to this Agreement shall be made a part
of this Agreement and shall be subject to all terms and conditions of this
Agreement. Articles V (B), VII, and VIII(c) shall survive any termination
of this Agreement.
E. 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.
F. 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.
G. 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.
H. Neither IMS nor Customer shall assign this Agreement or any of its rights
hereunder without the prior written consent of the non-assigning party.
I. The parties agree not to disclose the terms and conditions of this
Agreement to any third party, except (i) as required in the normal conduct
of Customer's business, or (ii) as required by law or regulation including,
without limitation, any Federal securities law, or regulation.
ARTICLE XII. DISPUTE RESOLUTION PROCEDURES
A. The parties will attempt in good faith to promptly resolve any material
dispute regarding this Agreement by negotiations between senior management
("Senior Management") of the parties. Senior Management of each party will
meet within ten (10) calendar days of
notice ("Notice of Dispute") by a party of the existence of a material
dispute, at a mutually agreed time and place, to resolve the material
dispute. Senior Management, who shall have the authority to settle the
dispute, shall prepare and exchange memoranda stating the issues in the
material dispute and their positions. If the material dispute is not
resolved to the mutual satisfaction of the parties within seven (7)
calendar days of the meeting of Senior Management, then the parties may
attempt to resolve the controversy using mediation.
B. If the matter has not been resolved pursuant to the aforesaid mediation
procedure within thirty (30) calendar days of the issuance of a party of a
Notice of Dispute, or if either party will not participate in mediation,
then either party may initiate arbitration upon fifteen (15) calendar days
written notice to the other party. Notwithstanding the foregoing, all
deadlines specified above may be extended upon mutual written agreement of
the parties.
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
arbitration hearing, which date shall be no sooner than forty-five (45)
calendar days and no later than ninety (90) calendar days from the date
that the Arbitration Notice is mailed. Within twenty (20) calendar days of
receipt of the complaining party's Arbitration Notice, the respondent
shall notify the complaining party of the location for conducting
arbitration and the name of its appointed arbitrator. When the two
arbitrators have been appointed, they shall agree on a third independent
arbitrator and shall appoint such person by written notice to the parties
signed by both arbitrators within thirty (30) calendar days from the date
of the appointment of the second arbitrator. If the two arbitrators fail
to agree upon the appointment of an independent arbitrator at the end of
thirty (30) calendar days following the appointment of the second
arbitrator, then the independent arbitrator shall be appointed by the
American Arbitration Association ("AAA"), or its successor, in accordance
with its then prevailing commercial arbitration rules then in effect. The
three (3) arbitrators shall constitute the arbitration board ("Board").
E. The members of the Board shall be active or retired (i) lawyers or
professionals familiar with insurance and/or (ii) active or former
officers or management employees of insurance and/or data processing firms
and/or software development companies. The person selected by the two
respective arbitrators appointed by the parties shall be the umpire or
chief arbitrator and must be a licensed attorney.
F. Arbitration shall be conducted in accordance with the Commercial Rules of
the American Arbitration Association ("AAA") then in effect except as
modified herein.
G. The parties agree that all then current employees of each with material
relevant information will be voluntarily produced, at the employer's
expense, for all proper discovery and arbitration hearings.
H. The cost of the arbitration relative to the arbitrators and the AAA
("Costs") shall be borne equally pending the arbitrators' award. Each party
shall bear its own expenses for attorneys' fees. The prevailing party in
any arbitration proceeding hereunder shall be entitled, in addition to such
other relief as may be granted, to recover the portion of the Costs
incurred by that party in connection with arbitration under the Agreement
prior to the award.
I. The parties agree that the Board shall be required to render its 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.
(The remainder of this page is intentionally left blank.)
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement to be effective as of the 1st day
of March, 2001.
"IMS"
INSURANCE MANAGEMENT SOLUTIONS,
INC.
By: /s/ D.M. Howard
-------------------------
As its: Pres/CEO
---------------------
Date: 2/12/01
-----------------------
"CUSTOMER"
"RESIDENCE MUTUAL INSURANCE
COMPANY"
By: /s/ [ILLEGIBLE]
-------------------------
As its: Sr. V.P. & Secretary
---------------------
Date: 2/7/01
-----------------------
SCHEDULES:
SCHEDULE "A" - AUTHORIZED STATES AND INSURANCE PROGRAM
SCHEDULE "B" - FEE SCHEDULE
EXHIBITS:
EXHIBIT 1 - WYO FLOOD INSURANCE SERVICES
SCHEDULE A
AUTHORIZED STATES AND INSURANCE PROGRAM
IMS shall provide Insurance Administration Services as described in EXHIBIT I
for the following authorized line(s) of business ("Authorized Line of
Business") in the following authorized state(s) ("Authorized States"):
1. AUTHORIZED LINE OF BUSINESS:
WYO Flood Insurance
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2. AUTHORIZED STATES:
RESIDENCE MUTUAL: CA, CO, NV
SCHEDULE B
FEE SCHEDULE
[*]
* 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.
EXHIBIT I
---------
INSURANCE ADMINISTRATION SERVICES (WYO FLOOD)
---------------------------------------------
WHEREAS, The Federal Emergency Management Agency ("FEMA") and the Federal
Insurance Administration ("FIA") administer the National Flood Insurance
Program ("NFIP") and Customer is an insurance company duly licensed to write
flood insurance in the state or states to which this Agreement pertains and is
approved by FIA to act as a Write Your Own Company ("WYO Company") under the
Write Your Own Flood Insurance Program ("WYO Flood Program"), a program offered
under the NFIP; and
WHEREAS, Customer wishes to engage the services of IMS to administer
certain of the Customer's obligations as a WYO Company in the state(s)
("Authorized States") set forth in SCHEDULE A.
1) DEFINITIONS. Capitalized terms not otherwise defined in the Agreement or in
this Exhibit shall be construed as otherwise generally understood in the
insurance and data processing industry.
2) POLICY ADMINISTRATION. IMS shall administer Customer's WYO Flood Program
policies ("WYO Policies") performing the services listed hereunder in
accordance with the NFIP, as amended, and all implementing regulations as
well as Customer's Write Your-Own Arrangement ("Arrangement") with FEMA. The
same standards by which Customer is bound shall be those by which IMS is
bound to Customer.
a) Underwriting.
- Review WYO Policy application for completeness/contact
Agent as applicable;
- Create WYO Policy file;
- Underwriting based on NFIP guidelines.
b) Data Entry. (subject to the Internet Use Milestones specified
in Schedule B)
- New WYO Policy business;
- WYO Policy changes;
- Mortgagee changes;
- WYO Flood insurance Agent changes;
- Endorsements;
- Cancellations.
c) WYO Policy Issuance.
- WYO Policy for new business, renewals and endorsements where
declaration page issuance is required;
- WYO Policy Renewal processing;
- WYO Policy automated rating;
- WYO Policy print declarations and related WYO Policy forms.
d) Billing & Collection.
- Print invoices, reminders, cancellation notification, return WYO
Policy premium disbursements;
- Mortgage activity processing;
- EFT processing;
- Process cancellations for non-payment.
e) Customer Service.
- Provide a dedicated customer service support call center;
- Respond to Customer's WYO Policyholder and WYO flood insurance sales
Agent telephone inquires;
- Process requests for WYO Policy changes;
- Respond to correspondence related to WYO Policy and WYO Policy
claim administration services;
- Track and respond to complaints related to WYO Policy and/or WYO
Policy claim administration services; IMS customer service hours of
operation 8:00 a.m. to 8:00 p.m. Eastern Standard Time ("EST").
f) Bureau Reporting.
- Process and balance WYO Policy premium and WYO Policy loss data;
- Edit and correct invalid data;
- Prepare and mail Bureau transmittals;
- To the best of IMS knowledge, provide on-going regulatory changes;
- Maintain WYO Policy history files.
g) Accounting Administration/Premium.
- Posting, balancing, and control of WYO Policy premium receivable;
- Accounting and payment of Customer's WYO flood insurance Agents WYO
Policy commissions;
- Issuance, control and accounting for disbursements for WYO Policy
premium refunds, WYO Policy commissions.
g) Financial Accounting.
- Issuance, control and accounting for disbursements for general
expenses;
- Day-to-day management of short term cash;
- Provide reasonable and customary financial management reports.
h) Treasury.
- Receive and post WYO Policy payments;
- Issuance, control and accounting for disbursements of WYO Policy
premium related expenses;
- Bank reconciliation of WYO Policy premium disbursements;
- OCR WYO Policy payment processing;
- Mortgagee billing.
i) Agency Administration.
- Agent of record assignment and control;
- 1099 reporting;
- Maintain WYO flood insurance Agent files.
j) Print & Distribution Services.
- Automated document library;
- Electronic document assembly;
- Electronic document archival/retrieval;
- Automated finishing/insertion facility;
- Mail pre-sort facility;
- Mailing WYO Policy, WYO Policy billings and WYO Policy renewals
(including postage and supplies);
- Document Imaging.
k) System Administration.
- Availability of Proprietary System to Customer and Customer's WYO
Policy claim vendor;
- Process daily, weekly, monthly, and annual cycles;
- Internet processing capabilities subject to Internet use limitations
specified in Schedule B.
-
3) CASH MANAGEMENT.
a) Banking Arrangement. IMS and Customer shall establish a banking
arrangement that complies with the Arrangement and other WYO Flood
program requirements, and which will provide for the establishment of
an NFIP restricted account ("Restricted Account") with Customer as
custodian, and a FEMA letter of credit ("Letter of Credit"), with
additional accounts as needed to facilitate WYO Flood Program
operations, all in conformity with FEMA/FIA guidelines. Customer shall
grant specific IMS' employees check-signing authority on any
Restricted Account and the authority to initiate appropriate drawdowns
against Customer's Letter of Credit, in order for IMS to act on
Customer's behalf in making disbursements for Customer liabilities
established by the Arrangement, the WYO Flood Program, and this
Agreement. All such authorizations shall be in writing and may be
revoked, amended or modified at any time by Customer upon thirty (30)
days advanced written notice to IMS. Notwithstanding the foregoing,
IMS shall not draw down on Letter of Credit for an amount that exceeds
$50,000.00 without prior approval from the Chief Financial Officer of
Customer, which approval shall not be unreasonably withheld and shall
be given within 24 hours of the request being made by IMS.
b) Premium Remittance - IMS shall establish procedures, as determined by
FIA, for a timely deposit and remittance of funds to the U.S. Treasury
via authorized automatic clearinghouse mechanism. Gross premium
collected by IMS, for WYO Flood program business written under this
Agreement, shall be remitted to the FIA by IMS net of the established
NFIP Expense Allowance. ("Allowance"), which Allowance expenses to be
paid under the Allowance include Carrier's operating and
administrative expenses.
c) Financial Data - IMS shall maintain supporting documentation for all
bank accounts over which it has authority. On a monthly basis, IMS
shall prepare financial data, reflecting all debits and credits with
respect to WYO Flood Program business administered under this
Agreement, including agents' commissions and IMS' Service Fees paid.
d) WYO Flood Program Reimbursements - Any WYO Flood Program
reimbursements made pursuant to the Arrangement, including, but not
limited to, those for the unallocated loss adjustments expenses, the
allocated loss adjustments, and for approved special allocated loss
adjustments expenses, shall be payable to IMS upon receipt by
Customer.
e) Marketing Goals - Customer shall maintain responsibility for any risk,
or shall be entitled to any reward, that may be associated with
achieving or failing to achieve any marketing goal set by the FIA or
FEMA.
4) CLAIM ADMINISTRATION. IMS shall provide Claims administration in accordance
with the Arrangement, the Financial Control Plan and the Agreement, which
claim administration processing services are outlined below. Any litigation
costs not reimbursed by FEMA would be the responsibility of the Customer.
IMS may also rely on the information and direction contained in the WYO
Flood Program Claims Manual, the FEMA Adjuster Manual, the Flood Insurance
Agent's Manual, the Standard Flood Insurance Policy, the WYO Operational
Overview, and/or other WYO Flood Program instructional material.
a) Claim Management Facilitation.
- - Twenty-four (24) hour reporting capability, first notice of loss, coverage
for verification and WYO Policy claim;
- - Investigation of WYO Policy claim;
- - Fast track unit;
- - Reinspection and audit;
- - Claims handling standards/best practices;
- - Claim check issuance;
- - Management reports;
- - WYO Policyholder satisfaction surveys;
- - Special Investigation Unit ("SIU") services;
- - Salvage & subrogation claim processing;
- - Litigation support.
b) Catastrophe Preparation and Response.
- - Preparedness by developing media reference guides and notices, adjuster
workshops, and training manuals; provide storm tracking; reserve equipment
and supplies; establish procedures;
- - Response in case of a catastrophic event by establishing and staffing
satellite service centers; automating the distribution of claims to
adjusters; internal examinations/external reinspections;
- - Recovery by providing management reports, audit/reinspection program, SIU and
oversight operations.
5) ADJUSTING FIRM. IMS' Colonial Catastrophe Claims Service will be the
authorized adjusting firm ("Adjusting Firm") for all claims adjusting work on
behalf of Customer. However, Customer may designate a different Adjusting
Firm with thirty (30) days written notice to IMS.
6) DISASTER RECOVERY PLAN. IMS shall perform its' full range Disaster Recovery
Plan on an annual basis. Customer has the right to observe the Disaster
Recovery Plan at its own expense, provided that it has requested in writing
to participate within thirty (30) days of planned execution.
6) STATISTICAL REPORTING. IMS shall maintain Customer's data within IMS' policy,
claims and general ledger systems. IMS shall prepare and submit to FIA,
monthly financial and statistical reports, reconciliation reports,
certifications, and statistical tapes on Customer's behalf, in accordance
with WYO Flood Program Accounting Procedures and the Transaction Record
Reporting and Processing Plan ("TRRP Plan").
7) SPECIAL SERVICES.
a) Audit -- At Customer's expense and at IMS' premises, IMS shall conduct a
biennial audit of any and all WYO Flood Program business written by
Customer pursuant to this Agreement. IMS shall select and independent
auditor and Customer shall accept the appointment of the proposed
independent auditor if the estimate of the audit does not exceed $2,500.
If the estimated audit expense of the IMS selected independent auditor is
above $2,500 then IMS shall present the estimate to Customer and Customer
shall have the option of selecting their own independent auditor to
conduct the audit or proceed with the
independent auditor selected by IMS.
b) Zone Determination Services -- IMS shall provide flood zone determinations
to the Customer (or Customer's agents) to assist in writing a WYO Policy
to be placed with the Customer and administered by IMS.
c) Rating Software -- IMS will also make available to Customer and/or
Customer's Agents, Proprietary Systems (specifically rating software)
rating software for the ability to provide quotations, prepare new
business applications, endorsements and cancellation of the WYO Policy.
d) Training -- Upon Customer's request and excluding travel expenses, IMS
will provide one training to Customer and/or Customer's Agents. Customer
will provide the training facility. Additional requests for training will
be charged at One Hundred and Twenty Five Dollars ($125) per day plus
reasonable per diem and travel expenses incurred.
e) Marketing Material. IMS will make available to Customer its marketing or
promotional materials, which IMS may customize and produce for Customer at
Customer's expense.
f) Agency Rollover Services. Within a reasonable time of Customer's request,
IMS will provide rollover services to those Customer agents that wish to
roll over 500 or more WYO Policies in their book of business to Customer.
In the event that there are several Agents within a concentrated
geographical area wishing to roll over 500 or more WYO Policies to
Customer, IMS will provide rollover service to all Agents within that area
at the same time. Due to the potential size of the project, IMS will need
Customer to provide a full listing of Agents, location and size of
business. IMS will create a schedule to perform this service.
g) Additional Fees & Services. Additional services not specified in this
Agreement may be provided by as mutually agreed upon in writing between
the Customer and IMS in writing.
8) INTERNET SERVICES
IMS will facilitate a process whereby Agents may gain Internet access to IMS'
website. The access will allow the Agents to acquire a zone determination,
quote, issue, endorse and cancel a Policy. In order for an Agent to utilize
the this Internet process, the Agent and Customer must be willing to provide
an electronic transfer of funds (EFT) to IMS. Processing business through the
Internet shall be subject to the Internet Use Milestones specified in
SCHEDULE B.