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EXHIBIT 10.17
VENDOR FLOOD INSURANCE AGREEMENT ("Agreement")
entered into by and between
AUTO CLUB SOUTH INSURANCE COMPANY, a Florida insurance company ("Company")
and
INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida Corporation
("Vendor")
ARTICLE I - AUTHORITY OF VENDOR
A. Company hereby appoints Vendor to supervise and administer its Write Your
Own (WYO) flood insurance program in the State of Florida and such other
states as may be mutually agreed upon in writing between Company and
Vendor.
B. Company hereby grants Vendor the authority to act for and on behalf of
Company in matters required for Vendor to properly supervise and conduct the
handling of the aforesaid flood insurance business, including the authority
to collect and remit premiums, process applications and other form, issue
policies, and process claims, all in a manner consistent with, pursuant to
and as authorized by the provisions of the National Flood Insurance Act of
1968, as amended, the Flood Disaster Protection Act of 1973, as amended, the
regulations of the National Flood Insurance Program (NFIP/Write Your Own
Program administered by the Federal Insurance Administration (FIA) and the
Federal Emergency Management Agency (FEMA), ) (herein, collectively called
the "WYO Program"). and the terms of this Agreement.
C. Vendor hereby accepts such appointment, and the grant of authority, and
agrees to carry out the resulting duties and responsibilities to the best of
its ability, knowledge, skill, and judgment, and in accordance with the
highest reasonably attainable standards of quality generally utilized in the
insurance and data processing industries.
ARTICLE II - SPECIFIC RESPONSIBILITIES OF VENDOR
A. Vendor shall be responsible for the following:
l. Full Policy Administration, in accordance with the WYO Program,
including:
a. Community Eligibility/Rating Criteria,
b. Policyholder Eligibility Determination;
c. Policy Issuance;
d. Policy Endorsements;
e. Policy Cancellations;
f. Policy Correspondence;
g. Policy Renewal
h. Payment of Agents' Commissions (on Company's behalf); and,
i. The receipt, recording, control, timely deposit, and disbursements of
funds in connection with the foregoing (a through g), in accordance
with the WYO Financial Control Plan requirements established by the FIA
("Financial Control Plan").
2. Claims Processing, in accordance with general Company standards and
the WYO Financial Control Plan. Vendor may also rely on information
and will perform to the standards contained in the WYO Claims Manual,
the FEMA Adjuster Manual, the FIA/NFIP Policy Issuance Handbook the WYO
Operational Overview, or other WYO Program instructional material.
3. Preparing and submitting to the FIA monthly financial and statistical
reports, reconciliations, certifications, and statistical tapes on
Company's behalf, in accordance with the WYO Program Accounting
Procedures.
B. Vendor shall provide assistance to Company agents in writing flood business
to which this Agreement relates, by: (l) procuring for each appointed agent a
limited license to use the FloodWriter(C)(TM) rating program, and (2)
providing current flood zone determinations for each such policy application
requested.
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C. Vendor shall establish a program of self-audit acceptable to the FIA or shall
comply with the self-audit program contained in the WYO Financial Control
Plan. Vendor shall report the results of this self-audit to Company and FIA
annually.
D. Vendor shall coordinate activities and shall provide information to the FIA
or its designee whenever a Flood Insurance Catastrophe Office is established.
E. Vendor shall keep appropriate records in accordance with Internal Revenue
Service regulations in order to handle 1099 reporting, for Company, when
applicable.
F. With respect to processing documents, claims, requests or inquiries. Vendor
shall perform its services hereunder in accordance with the National Flood
Insurance Act, as amended, and all implementing regulations as well as
Company's Write-Your-Own Arrangement with FEMA. The same standards by Company
is bound to FEMA shall be which Vendor is bound to Company.
ARTICLE III- PREMIUM COLLECTION AND ARRANGEMENT
A. Vendor and Company shall establish a banking arrangement which complies with
the FEMA/FIA Financial Assistance/Subsidy Arrangement ("Arrangement,") and
other WYO Program requirements, and which will provide for the establishment
of an NF1P restricted account with Company as custodian and a FEMA Letter of
Credit, with additional accounts as needed to facilitate operations, all in
conformity with FEMA guidelines. Company shall grant specific Vendor
employees check-signing authority on accounts and authority to initiate
appropriate drawdowns against Company's Letter of Credit, in order for Vendor
to act on Company's behalf in making disbursements for Company liabilities
established by the Arrangement, the WYO Program, and this Agreement. All such
authorizations shall be in writing and may be revoked, amended or modified at
any time by Company, upon 5 days of advance notice to Vendor. Vendor shall be
liable to the FIA for any and all premiums Vendor has received on business
written under this Agreement. Vendor shall establish procedures for the
timely deposit and remittance of funds to the U.S. Treasury via the
authorized automatic clearinghouse mechanism.
B. Vendor shall maintain supporting documentation for all bank accounts over
which it has authority. At least quarterly, Vendor shall prepare financial
data, by state, reflecting all debits and credits with respect to flood
insurance business written, including agents' commissions and Vendor's
servicing fees paid, during the preceding quarter.
ARTICLE IV- COMPANY ACCESS TO RECORDS
Company, by its duly appointed representatives, shall have the right at any
reasonable time to examine papers in the possession of Vendor covering flood
insurance business written hereunder.
ARTICLE V - EXPENSES AND FEES
A. Vendor shall at no cost to Company accomplish the following:
1. Develop and input Company data into Vendor's policy, claims, and general
ledger systems;
2. Establish agent master files;
3. Assist with obtaining the Letter of Credit, restricted bank account, and
funds transfer arrangement;
4. Design and order forms;
5. Develop any necessary customized procedures;
and,
6. Conduct initial training (excluding travel expenses).
B. Company shall pay Vendor a monthly servicing fee equal to 8 percent of
monthly gross premiums written hereunder. Once calendar year gross written
premium exceeds two million dollars, the monthly processing fee will be 7% of
monthly gross premium for the balance of the calendar year. Vendor shall pay
the general expenses of processing flood insurance business pursuant to this
Agreement, including those of policy administration, claims processing, and
financial and transactional reporting.
C. Company shall pay all taxes, including state premium taxes and fees,
municipal taxes and fees, dividends, agents' commissions, or any board,
exchange or bureau assessment.
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D. Allocate Loss Adjustment expenses reimbursed to the Company pursuant to the
"Fee Schedule" in the WYO) Arrangement shall be paid to Vendor for handling
Company claims.
E. The WYO Program Unallocated Loss Adjustment expenses reimbursement paid by
FEMA of 3.3% of net claim amount after deductible shall be shared with Vendor
receiving 3% and the Company receiving 3/10 of a percent.
F. Company shall receive 5% of any salvage recovery, after expenses.
G. Company shall receive 15% of any subrogation recovery, after expenses.
H. Company shall pay for any audit expenses as required by the rules and
regulations of the Federal Insurance Administration/National Flood Insurance
Program.
ARTICLE VI - ADDITIONAL SERVICES AND FEES
A. Full Book Flood Zone Determinations - A zone determination on each of (or a
portion of) Company's homeowners policies is available at a cost of $10.00
per policy.
B. A zip code analysis sorting designated blocks of homeowners policies into
two categories. Preferred Risk or Special Flood Hazard is available at no
charge.
C. Agent or Company Training - Upon request, Vendor will provide one training
session per quarter, or four training sessions per year, to Company or
Company's agents. Company shall provide the training facility and shall
reimburse Vendor for travel expenses incurred.
D. Marketing Material - Company may use Vendor's previously developed marketing
or promotional materials, which Vendor shall customize and produce for
Company, at Company's expense.
ARTICLE VII - CONFIDENTIALITY OF DATA AND INFORMATION
A. Vendor and Company acknowledge that any and all information concerning the
other's business is "Confidential and Proprietary Information", and neither
party shall permit the duplication, use, or disclosure of any such
"Confidential and Proprietary Information" to any person (other than its own
employees, agents or representatives who must have such information for the
performance of obligations hereunder), unless such duplication, use, or
disclosure is specifically authorized in writing by the other party.
"Confidential and Proprietary Information" is not meant to include any
information which, at the time of disclosure, is generally known to the
general public and/or the insurance industry.
B. Neither party shall use or duplicate the name(s), trademark(s),
servicemark(s), or trade name(s) (whether registered or not) of the other
party in public releases or advertising or in any other manner unless such
use or duplication is specifically authorized in writing by the other party,
except that Vendor may include Company's name in a list of clients/customers
without such authorization.
C. Neither party shall disclose information as to specific work performed or
services fees under this Agreement without prior written consent of the other
party.
D. Vendor shall maintain system integrity and data security necessary to protect
Company's records and data from loss and damage and to protect against
unauthorized disclosure of Company's confidential and proprietary data as
described in this Article.
E. The disclosure restrictions provided in this Article shall be extinguished at
the time and to the extent that the confidential information becomes
generally available to the public domain without the fault of Vendor.
ARTICLE VIII - COMMENCEMENT AND TERMINATION
A. This Agreement shall become effective on the date that this document is
executed by Company and by Vendor, and shall remain in force for three (3)
years. It may be terminated at any time after the three (3) years by either
party sending written notice of termination to the other not less than thirty
days prior to the termination date.
B. This Agreement may, at the option of Company, be terminated in the event that
Vendor fails to perform any of the terms and conditions of this Agreement and
such failure continues for a period of ninety days after written notice given
by Company to Vendor specifying the nature of the default(s).
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C. Upon termination of this Agreement, Vendor shall fully account to Company for
all of its responsibilities and activities pursuant to this Agreement.
D. Company shall be held harmless for any and all adverse acts or omissions of
Vendor arising out of, and in conjunction with, this Agreement; Company shall
be indemnified for all costs and expenses incurred as a result of the adverse
actions or omissions of Vendor.
E. Vendor shall be held harmless for any and all adverse acts or omissions of
Company arising out of, and in conjunction with, this Agreement; Vendor shall
be indemnified for all costs and expenses incurred as a result of the adverse
actions or omissions of Company.
ARTICLE: IX - LIABILITY
Vendor's liability to Company shall be limited to the same extent that the
Company's liability is limited to FEMA in connection with the WYO Flood
Insurance Program. Neither, party shall be liable to the other for incidental
consequential or punitive damages.
ARTICLE X - MISCELLANEOUS
A. The law of the State of Florida shall govern this Agreement or any dispute
arising therefrom.
B. This Agreement contains all of the prior oral and/or previously written
agreements, representations, and arrangements between the parties hereto.
There are no representations or warranties other than those set forth herein.
C. If either party should bring a Court action alleging breach of this Agreement
or Seeking to enforce, rescind, renounce, declare void or terminate this
Agreement or any provisions thereof, the prevailing party shall be entitled
to recover all of its legal expenses, including reasonable attorney's fees
and costs (including legal expenses for any appeals taken), and to have the
same awarded as part of the judgment in the proceeding which such legal
expenses and attorney's fees were incurred.
D. Should any part of this Agreement for any reason be declared invalid, such
decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in full force and effect as if it 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.
E. No change or modification of this Agreement shall be valid unless the same
shall be in writing and signed by all of the parties hereto.
F. Any and all notices, designations, consents, offers, acceptances, or any
other communication provided for herein shall be given in writing by and hand
delivery, by overnight carrier, by registered or certified mail, or by
facsimile transmission and shall be addressed as follows:
As to Vendor Insurance Management Information Services, Inc.
P. O. Box 15707
St. Petersburg, Florida 33733
Attn: Anne Sullivan
Fax #(813) 822-0484
As to Company: Auto Club South Insurance Company
1515 N. Westshore Blvd.
Tampa, Florida 33607
Attn: Larry Patrick
Fax #(813) 289-1498
Notices sent by hand delivery shall be deemed effective on the date of 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
third business day after being deposited into the post office. Notices sent by
facsimile transmission shall be
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deemed to be effective on day when sent if sent prior to 4:30 p.m. (the time
being determined by the time zone of the recipient) otherwise they shall be
deemed effective on the next business day.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement to be effective as of 10 day of
November, 1995.
"Vendor" "Company"
INSURANCE MANAGEMENT AUTO CLUB SOUTH
INFORMATION SERVICES, INC. INSURANCE COMPANY
by: /s/Robert G. Menke by: /s/Larry D. Patrick
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Larry D. Patrick
R.G. Menke, Senior Vice President as its: Managing Director
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