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EXHIBIT 10.101
FLOOD INSURANCE SERVICES AGREEMENT
THIS FLOOD INSURANCE SERVICES AGREEMENT ("Agreement") is entered into
by and between INSURANCE MANAGEMENT SOLUTIONS, INC. ("Vendor"), a corporation
organized and existing under the laws of Florida with its principal place of
business located at 360 Central Avenue, St. Petersburg, Florida 33702, and
Middlesex Mutual Assurance Company ("Company"), an insurer existing under the
laws of Connecticut with its principal place of business located at 213 Court
Street, Middletown, CT 06457-0891.
WHEREAS, the Federal Emergency Management Agency ("FEMA") and the
Federal Insurance Administration ("FIA") administer the National Flood
Insurance Program ("NFIP") and Company 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 Flood Carrier ("WYO Carrier")
under the Write Your Own Flood Insurance Program ("WYO Flood Program"), a
program offered under the NFIP; and
WHEREAS, Vendor has been designated by FIA as a "qualified performer"
for the provision of services to WYO Carriers under the NFIP; and
WHEREAS, Company wishes to engage the services of Vendor to administer
certain of Company's obligations as a WYO Carrier in the state(s) 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:
I. AUTHORITY OF VENDOR:
A. Appointment - Company hereby appoints Vendor to supervise and
administer its WYO Flood Program in those states ("Applicable
States") specified in the attached "Territory Schedule", attached
to and hereto made a part of this Agreement. 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.
B. Authority - 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 WYO Flood
Program, including the authority to collect and remit premiums,
process applications and other forms, 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 regulations of the NFIP, FIA, FEMA and the
terms of this Agreement.
II. SPECIFIC RESPONSIBILITIES OF VENDOR:
A. Policy Administration: - Vendor shall administer Company's WYO
Flood Program policies ("WYO Policy", or the plural, "WYO
Policies") and in accordance therewith shall be responsible for the
following policy administration functions: compliance with
community eligibility/rating criteria; policyholder eligibility
determination; WYO Policy issuance; WYO Policy endorsements; WYO
Policy cancellations; WYO Policy correspondence; payment of agents'
commissions on Company's behalf; and, the receipt, recording,
control, timely deposit, and disbursements of premium funds in
connection with the foregoing, all in accordance with the WYO Flood
Program Financial Control Plan ("Financial
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Control Plan") requirements established by the FIA. Further, Vendor
shall reply to written and telephone inquiries from policyholders
and/or producers regarding any WYO Policy administered pursuant to
this Agreement.
B. Full Claim Service - Company shall have responsibility for the
administration and processing of WYO Policy claims ("Claim") under
this Agreement. Vendor shall provide "Full Claim Service", which
shall be defined as processing and administering a Claim from the
Claim's inception until closing. The Claim shall be processed and
administered in accordance with the following procedures:
1. Processing. Vendor shall provide Claims processing in
accordance with the Arrangement and the Financial Control Plan.
Vendor may also rely on 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.
2. Catastrophe Office. A catastrophe team may be engaged at the
discretion of the Vendor to provide Claims support. Vendor
shall coordinate activities and shall provide information to
the FIA or its designee whenever a flood insurance catastrophe
office is established.
C. Statistical Reporting - Vendor shall prepare and submit, to FIA,
monthly financial and statistical reports, reconciliations,
certifications, and statistical tapes on Company's behalf, in
accordance with WYO Flood Program Accounting Procedures and the
Transaction Record Reporting and Processing Plan ("TRRP Plan").
Vendor shall submit copies of all monthly reports to the Company.
D. Company Agents - Vendor shall provide to each Company Agent
appointed under this Agreement, a limited license to use Vendor's
FloodWriter(C)(TM) software program, and a current flood zone
determination for any WYO Policy application submitted pursuant to
this Agreement. Further, excluding records required to be
maintained by Company in accordance with the Flood Writer(C)(TM)
software license, Vendor shall keep appropriate records, in
conformity with Internal Revenue Services regulations, for the
purpose of preparing 1099 reports for Company Agent's commissions
and Adjuster's fees paid by Vendor on behalf of Company. The
expense for the above services has been incorporated into the
Vendor's Monthly Service Fee.
E. Time Standards - Vendor shall use it best efforts to adhere to
certain time standards for performance, as may be outlined and
amended from time to time within the FEMA/FIA Financial
Assistance/Subsidy Arrangement ("Arrangement").
III. PREMIUM COLLECTION AND ARRANGEMENT
A. Banking Arrangement - Vendor and Company shall establish banking
arrangements which comply with the Arrangement and other WYO Flood
Program requirements, and which will provide for the establishment
of a NFIP restricted account ("Restricted Account") with Company as
custodian, and a FEMA letter of credit ("Letter of Credit"), with
additional accounts as needed to facilitate operations, all in
conformity with FEMA/FIA guidelines. Company shall grant specific
Vendor employees check-signing authority on any Restricted Account
and the authority to initiate appropriate drawdowns against
Company's Letter of Credit, in order for Vendor to act on Company's
behalf in making
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disbursements for Company 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 Company upon thirty (30) days advance
written notice to Vendor.
B. Premium Remittance - Vendor shall be liable to the FIA for any
premiums Vendor has received on WYO Flood Program business written
under this Agreement. Vendor shall establish procedures for a
timely deposit and remittance of funds to the U.S. Treasury via
authorized automatic clearinghouse mechanism. Gross premium
collected by Vendor, for WYO Flood Program business written under
this Agreement, shall be remitted to the FIA by Vendor net of the
established NFIP Allowable Expenses. "Allowable Expenses" shall
mean a WYO Carrier's operating and administrative expenses.
C. Financial Data - Vendor shall maintain supporting documentation for
all bank accounts over which it has authority. At least monthly,
Vendor shall prepare financial data, by state, reflecting all
debits and credits with respect to WYO Flood Program business
written pursuant to this Agreement, including agents' commissions
and Vendor's Servicing Fees paid, during the preceding quarter.
IV. COMPANY ACCESS TO RECORDS
Vendor agrees to permit Company or its duly appointed representatives,
during the term of this Agreement, the right to visit, inspect,
examine, copy, verify and audit, at Vendor's offices, any of the
accounts, files, documents, books, reports and other records in
possession or control of Vendor relating directly to the WYO Flood
Program business covered by this Agreement. Such access shall be given
during reasonable business hours and upon ten (10) days prior written
notice to Vendor.
Furthermore, at Company's expense, Vendor shall conduct a biennial
audit of any and all WYO Flood Program business written by Company
pursuant to this Agreement. To minimize the expense incurred by
Company for such biennial audit, Vendor shall select an auditor,
subject to Company's approval, and shall coordinate the biennial
audit.
V. EXPENSES AND FEES
A. Monthly Service Fee - Company shall pay Vendor a monthly servicing
fee ("Servicing Fee") as specified in the "Servicing Fee Schedule",
attached to and hereto made a part of this Agreement.
B. Claims Administration Fee - In addition to the above Servicing Fee,
Company shall pay Vendor a claim administration fee ("Claim
Administration Fee") as specified in the "Claims Administration Fee
Schedule", attached hereto and made a part of this Agreement.
C. Additional Expenses - In accordance with the Arrangement, Company
shall be liable for operating, administrative and production
expenses, including but not limited to any State premium taxes,
agents' commissions, or any other expense of whatever nature
incurred by the Company in the performance of its obligations under
the Arrangement.
D. Vendor Expenses - In consideration of the Servicing Fees and Claims
Administration Fees paid to Vendor, Vendor shall pay the general
expenses of processing the WYO Flood Program Policies, including
those of policy
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administration, cash management, claims processing and financial
and transactional reporting.
E. 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, the
allocated loss adjustments, and for approved special allocated loss
expenses, shall be payable to Vendor upon receipt by Company.
F. Marketing Goals - Company 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.
VI. ADDITIONAL SERVICES AND FEES
A. FULL BOOK FLOOD ZONE DETERMINATIONS - Upon Company's request, Vendor
shall provide a flood zone determination on each of, or a portion
of, Company's homeowners policies for a fee of $10.00 per policy.
B. Agent or Company Training - Upon Company 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. Additional requests for training outside of the
4 provided within this Agreement, will be charged at $125 per
day plus reasonable per diem and travel expenses incurred.
C. Marketing Material - Company may use Vendor's previously developed
marketing or promotional materials, which Vendor may customize and
produce for Company at Company's expense.
D. Additional Fees and Service - Additional services not defined in
this Agreement may be provided as mutually agreed upon between the
Company and Vendor in writing.
VII. CONFIDENTIALITY OF DATA AND INFORMATION
A. Confidential and Proprietary Information - Vendor and Company
acknowledge that any and all information concerning the other's
business is confidential and proprietary information ("Confidential
Information") and neither party shall permit the duplication, use,
or disclosure of any such Confidential 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 Information
is not meant to include any information which: at the time of
disclosure is generally known to the public and/or the insurance
industry prior to the disclosure.
B. Trademarks, Service Marks, Trade Names - Neither party shall use or
duplicate the name(s), trademark(s), service mark(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. Agreement Terms - Neither party shall disclose information as to
specific terms of this Agreement, in particular any details about
the work performed or the
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Service Fees or Claims Administration Fees paid, without prior
written consent of the other party.
D. Company's Records - 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 Information as described in section VII (A)
above.
E. Public Disclosure - The disclosure restrictions provided in this
section 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 either Vendor or Company.
VIII. COMMENCEMENT AND TERMINATION
A. Term of Agreement - This Agreement shall become effective on the
date that this document is executed by Company and by Vendor and
shall have a minimum initial term of thirty six (36) full calendar
months unless terminated earlier pursuant to Section 8.C of this
Agreement. The Agreement shall be renewed and extended after
conclusion of the initial term for an additional renewal term of
thirty six (36) months unless otherwise terminated pursuant to
Section(s) 8.B and 8.C of this Agreement.
B. Termination Without Cause - This Agreement may be terminated,
without cause, at any time after the initial thirty six (36) month
term by either party upon written notice of termination to the
other, not less than ninety (90) days prior to the Termination
Date.
C. Termination for Cause - Any party may immediately terminate this
Agreement for cause upon written notice to the other party in the
event of:
1. Bankruptcy, receivership, of either party, regardless of
whether any of these occur voluntarily or involuntarily; or
2. Failure by any party to fulfill a material obligation under
this Agreement, provided that such party has been notified in
writing of such failure and such failure continues without cure
for a period of ninety (90) days after written notice thereof.
D. Accounting - Upon termination of this Agreement, Vendor shall fully
account to Company for all of its responsibilities and activities
pursuant to this Agreement.
IX. LIABILITY
A. Limit of Liability - In no event shall Vendor's liability for
breach of this Agreement or any of its provisions exceed the
Company's liability to FEMA in connection with the WYO Flood
Program. Vendor shall not be liable for any lost profits, business
goodwill, or other consequential, punitive, special or incidental
damages incurred by Company.
B. Vendor Indemnification - Vendor shall indemnify, defend and hold
harmless Company, its officers, and directors from any liability,
cost, loss, fine, penalty, claim, demand, damage or expense,
including attorney's fees, incurred as a direct result of any act,
error or omission by Vendor, or incurred as a result of any
material breach of Vendor's obligations under this Agreement.
Vendor's
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indemnification under this paragraph shall be in accordance with
the limitations set forth in this Agreement.
C. Company Indemnification - Company shall indemnify, defend and hold
harmless Vendor, its officers, and directors from any liability,
cost, loss, fine, penalty, claim, demand, damage or expense,
including attorney's fees, incurred as a direct result of any act,
error or omission by Company or incurred as a result of any
material breach of Company's obligations under this Agreement.
Company's indemnification under this paragraph shall be in
accordance with the limitations set forth in this Agreement.
D. Notice of Claim - All parties agree to promptly give the other
notice upon being notified or becoming aware of an allegation or
claim which could give rise to a claim under this section.
X. GENERAL AGREEMENTS
A. Applicable Law - This Agreement in all matters arising thereunder
shall be governed by and determined in accordance with the laws of
the State of Florida. Venue for any actions arising hereunder shall
be in a State court of competent jurisdiction in Pinellas County,
Florida.
B. Entire Agreement - This Agreement, and any exhibits, schedules or
addenda 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 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.
C. Attorney's Fees - 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 in which such legal expenses and attorney's fees were
incurred.
D. Company Warranties - Company warrants that it has entered into an
agreement with FEMA pursuant to which it is authorized to issue WYO
Policies, and that it is licensed to engage in the insurance
business in all jurisdictions in which it has duly authorized
Vendor to issue WYO Policies or other insurance coverage in the
Company's name. Further, Company warrants to Vendor that it will
comply with the laws of the state or states covered by this
Agreement and with the rules and regulations of all regulatory
authorities having jurisdiction over Company's activities, and
shall, whenever necessary, maintain at its own expense all required
licenses to transact business in such states.
E. Vendor Warranties - Vendor warrants to Company that it is duly
authorized and incorporated to transact the business of servicing
insurance companies. Further, Vendor warrants to Company that it
will comply with the laws of the state or states covered by this
Agreement and with the rules and regulations of all regulatory
authorities having jurisdiction over Vendor's activities, and
shall,
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whenever necessary, maintain at its own expense all required
licenses to transact business in such states.
F. Invalidation - 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. Construction of Agreement - The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that
the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments or
exhibits hereto.
H. Miscellaneous - 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. Section
headings are intended for purposes of description only and shall
not be used for purposes of interpretation of this Agreement.
I. Notices - 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 Company: Middlesex Mutual Assurance Company
213 Court St.
Middletown, CT 06457-0891
Fax Number: (860) 638-5093
Attention: Bill Sheridan, Senior Vice President
As to Vendor: Insurance Management Solutions, Inc.
360 Central Avenue
St. Petersburg, FL 33701
Fax Number: (813) 823-6518
Attention: Kathy Batson, Senior Vice President
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 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.
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IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement this 23rd day of October, 1998.
The term of this contract will begin upon completion of the data conversion on
or before February 1, 1999.
"Vendor": "Company":
INSURANCE MANAGEMENT SOLUTIONS, INC. MIDDLESEX MUTUAL ASSURANCE COMPANY
By: /s/ Jeffrey S. Bragg By: /s/ William R. Sheridan
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As its: COO As its: Chief Underwriting Officer -
---------------------------- SVP.
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Date: 10/22/98 Date: 10/23/98
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