Exhibit 10.22
FLORIDA MGA AGREEMENT
BETWEEN
DIRECT GENERAL INSURANCE COMPANY, INC.
A TENNESSEE DOMICILED INSURER
(HEREINAFTER REFERRED TO AS THE "COMPANY")
AND THE
MAITLAND UNDERWRITERS, INC.
A FLORIDA DOMICILED CORPORATION
(HEREINAFTER REFERRED TO AS THE "MANAGING GENERAL AGENT")
EFFECTIVE
AUGUST 16, 1999
CONTENTS
PAGE
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Recitals 1
ARTICLE 1. APPOINTMENT/AUTHORITY 1
1.01 Authority 1
1.02 General Duties 1
1.03 Commencement Operational Date; Trial Period 2
1.04 Independent Contractor 2
ARTICLE 2. REINSURANCE 3
2.01 Acceptable Reinsurance Treaty 3
2.02 Retrocessions; No Authority 3
ARTICLE 3. COMPENSATION PAYABLE TO MGA; COMMISSION STATEMENTS 3
3.01 Commission Entitlement 3
3.02 Commission Structure 3
3.03 Commission Statement 4
3.04 Advanced Commissions 4
3.05 Acceleration 4
3.06 Equitable Relief 4
3.07 Ancillary Products Commissions 5
3.08 Full Compensation 5
ARTICLE 4. LIMITATIONS OF AUTHORITY 5
4.01 Maximum Premium Volume 5
4.02 Underwriting Guidelines and Forms 5
4.03 Maximum Limits 5
4.04 Company's Right to Cancel/Nonrenew Insurance Policies 6
4.05 Company's Right to Suspend Binding Authority 6
4.06 Prohibited Expenses 6
4.07 Managing General Agent's Right to Offset 6
4.08 No Claims Settlement Authority 6
ARTICLE 5. PREMIUM COLLECTION AND REMITTANCES 6
5.01 Premium Financing 6
5.02 Payment of Premium; Responsibility For 6
5.03 Premium Trust Account 7
ARTICLE 6. [RESERVED] 7
ARTICLE 7. REPORTS 7
7.01 Financial Information 7
7.02 Reporting Requirements 7
ARTICLE 8. RECORDS 7
8.01 Records Retention 7
8.02 Document Production 8
ARTICLE 9. GENERAL OBLIGATIONS OF MGA 8
9.01 Licensing 8
9.02 Supervision of Agents/Producers 8
9.03 Compliance with Laws 8
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9.04 Complaint Procedure 8
9.05 No Authority to Delegate 9
9.06 Managing General Agency Expense Responsibility 9
9.07 Use of Company Logo, etc 9
9.08 Ownership of Supplies 9
9.09 [Reserved] 9
9.10 MIS System and Computer Access 10
9.11 Confidentiality 10
9.12 Claims Reporting 10
ARTICLE 10. GENERAL OBLIGATIONS OF COMPANY 10
10.01 Insurance Department Complaints 10
10.02 Use of Managing General Agent's Logo, etc 10
10.03 Company's Right to Offset 10
ARTICLE 11. INSURANCE AND INDEMNITY 10
11.01 Insurance 10
11.02 Indemnification by Managing General Agent 11
11.03 Indemnification by Company 11
11.04 Notice of Indemnifiable Claim 12
ARTICLE 12. TERM OF AGREEMENT 12
12.01 Term 12
ARTICLE 13. TERMINATION OF THIS AGREEMENT 13
13.01 Termination by Company; Generally 13
13.02 Termination by Company for Cause 13
13.03 Termination by Managing General Agent 14
13.04 Ownership of Business 15
13.05 Continued Servicing 15
13.06 Immediate Suspension 16
ARTICLE 14. SOLICITATION AND RECRUITMENT 16
14.01 Non-Solicitation 16
14.02 Non-Recruitment 17
14.03 Injunctive Relief 17
ARTICLE 15. GENERAL PROVISIONS 17
15.01 Notice 17
15.02 Integration, Waiver, and Amendment 17
15.03 Remedies Not Exclusive 18
15.04 Severability 18
15.05 Applicable Law 18
15.06 Conformance to Law 18
15.07 Arbitration 18
15.08 Other Companies 19
15.09 Non-Assignability/Non-Delegation 20
15.10 Counterparts 20
ARTICLE 16. CONDITION PRECEDENT 20
Signatures 21
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Schedules
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A List of Cash Register Automobile Insurance Agencies 22
B Private Passenger Automobile Business -- Authority 23
C Commission Schedule 24
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FLORIDA MANAGING GENERAL AGENCY AGREEMENT
This Managing General Agency Agreement (this "Agreement") is effective
this the 16th day of August, 1999 ("Effective Date"), by and between Direct
General Insurance Company, a Tennessee domiciled insurer (the "Company") and
Maitland Underwriters, Inc. (the "Managing General Agent" or "MGA")
WHEREAS, Company is a duly licensed insurance company in various states
of the United States; and
WHEREAS, Managing General Agent has substantial expertise in
soliciting, developing marketing, underwriting, and issuing contracts of
insurance for certain coverages as described herein which uniquely meet the
insurance needs of certain persons and entities; and
WHEREAS, Company desires to appoint Managing General Agent as its
managing general agent for the solicitation, underwriting, binding, and issuing
of such insurance coverages in the State of Florida through its duly licensed
affiliated producing agencies listed on Schedule A hereto (the "Agencies"). (For
the purposes of this Agreement, the "Agencies" shall include any and all
additional insurance agencies that LR3 Enterprises, Inc. ("LR3") may establish
or acquire during the term of this Agreement as though such new agencies had
been listed on Schedule A hereto.)
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1. APPOINTMENT/AUTHORITY
1.01 Authority. Subject to the limitations described in this Agreement,
Company hereby authorizes and appoints Managing General Agent as its
managing general agent for the purpose of producing, issuing and
delivering policies or contracts of insurance and endorsements thereto
as described in Schedule B, attached hereto and incorporated by this
reference, within the Territory defined in Schedule B, and in
accordance with Company's written underwriting guidelines, procedures,
instructions, and authority limits established by Company, and any
memoranda provided to Managing General Agent from time to time,
(individually an "Insurance Policy" or collectively, the "Insurance
Policies"). SCHEDULE B may be modified by Company from time to time
without the need to amend this Agreement and shall be effective upon
thirty (30) days written notice to Managing General Agent or such
earlier time as the parties may agree. Managing General Agent agrees to
comply with and be bound by such modifications without the need for
amendment of this Agreement.
1.02 General Duties. Subject to the limitations described in this Agreement
Managing General Agent shall perform all acts necessary for the proper
solicitation, placement, acceptance, and servicing of the Insurance
Policies. Managing General Agent, in its sole discretion, may delegate
and apportion its general duties under this paragraph, and
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any other of its duties and obligations under this Agreement, among the
Agencies, LR3, and any affiliated entity under the common control of
LR3; provided, however, that any such delegation or appointment shall
not relieve the Managing General Agent of the ultimate responsibility
for the performance of its duties and obligations hereunder. The
general duties of the Managing General Agent under this paragraph shall
include, but not limited to, the following:
1.02.a. To solicit, prepare, accept, and submit applications for
Insurance Policies or contracts of insurance and endorsements
as described herein;
1.02.b. To collect, receive, and forward premiums, policy fees and/or
applicable surplus lines tax(es);
1.02.c. to appoint agents on behalf of the Company; and
1.02.d. To bind insurance contracts on behalf of the Company so that
if applications are sent to the Company or its authorized
designee every other day via U.S. Express Mail, coverage will
become effective as of the applicant's signature date and
time. However, if the completed application is not sent in
accordance with such procedure, then, at the election of the
Company, any and all Insurance Policies will be effective on
the date received; unless Florida statute or regulation would
require an earlier effective date.
1.02.e. To carry out its duties to the best of its ability, knowledge,
skill and judgment.
1.03 Commencement Operational Date; Trial Period. This Agreement will
commence on the Effective Date on a trial period basis, during which
time all Agencies will become operational for the sale of automobile
insurance policies issued by the Company. "Operational" means that the
Agencies in existence at the time this Agreement commences have
installed the required computer software and trained their personnel.
Time is of the essence with respect to such Agencies becoming
Operational, and the parties shall use their best efforts to promptly
comply with Section 9.10 (MIS Systems and Computer Access) hereof and
take all other actions necessary to achieve Operational status. By
mutual consent, the Company and MGA shall confirm in writing to each
other the date that Operational status has been achieved, which date
shall be the first day of a calendar month as agreed between the
parties (the "Operational Date"). The period of time between the
Effective Date and the Operational Date shall be referred to herein as
the "Trial Period."
1.04 Independent Contractor. Nothing contained herein shall create an
employer/employee relationship between Company and Managing General
Agent or between Managing General Agent and any affiliate of Company.
Except as set forth herein, Company shall have no right of control over
Managing General Agent as to the time, means, or manner of Managing
General Agent's performance of its duties hereunder. Managing General
Agent shall conduct itself and its business under the terms of this
Agreement solely as an independent contractor.
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ARTICLE 2. REINSURANCE
2.01 Acceptable Reinsurance Treaty. The Company's willingness to authorize
Managing General Agent to act as a managing general agent pursuant to
the terms of this Agreement is conditioned upon Company's ability to
reinsure with reinsurers acceptable to it at least 80% (or such lower
level as determined by Company) of its insurance liability with respect
to the Insurance Policies produced by MGA under this Agreement. In this
regard, the Company authorizes the Managing General Agent to arrange
and negotiate for such reinsurance on behalf of the company, subject to
the company's prior approval of the reinsurers and the terms of any
reinsurance treaty. Managing General Agent shall have no authority to
bind reinsurance on behalf of the Company.
2.02 Retrocessions; No Authority. Managing General Agent shall have no
authority to bind retrocessions on behalf of Company, and shall have no
authority to commit Company to participate in insurance or reinsurance
syndicates. The Company shall notify Managing General Agent immediately
upon receipt of any notice of cancellation or intent to cancel any such
reinsurance.
ARTICLE 3. COMPENSATION PAYABLE TO MGA; COMMISSION STATEMENTS
3.01 Commission Entitlement. If all of the terms of this Agreement are
adhered to by the Managing General Agent, the Managing General Agent
shall be entitled to commissions, as described below and listed on
Schedule C hereto, on Insurance Policies produced by the Managing
General Agent and the Agencies and written by the Company. The
commission so paid shall be accepted by the Managing General Agent in
full satisfaction of all claims by the Managing General Agent for
services rendered and expenses incurred on behalf of the Company.
Notwithstanding Termination of this Agreement, in the event of
cancellation or termination of any coverage or policy prior to
expiration, regardless of whether such cancellation or termination was
by policyholder, the Company, or a premium finance company, the
Managing General Agent shall refund any unearned commissions to the
Company at the same rate paid to the Managing General Agent.
3.02 Commission Structure.
3.02.a. TRIAL PERIOD COMMISSION. The parties anticipate that during
the Trial Period some Agencies will begin selling automobile
insurance policies issued by the Company. During the Trial
Period, Managing General Agent will receive a commission
(including applicable MGA fees) on the net written premiums of
the automobile insurance business written by the Agencies on
behalf of the Company in Florida. The rate of said commission
is listed on Schedule C, attached hereto and incorporated by
this reference; which Schedule C may be modified from time to
time by the mutual written consent of the Company and the
Managing General Agent.
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3.02.b. OPERATIONAL COMMISSION. Effective on the Operational Date,
Managing General Agent will receive a commission (including
applicable MGA fees) on the net written premiums of the
automobile insurance business written by Agencies on behalf of
the Company in Florida. The rate of said commission is listed
on Schedule C hereto. Beginning on the thirty-first month
after the Operational Date under this Agreement, this
commission rate may be reduced or increased by an amount equal
to any reduction or increase in the Company's reinsurance
commission rate, as compared to the reinsurance rate in effect
as of the Operational Date with respect to the Agencies'
business.
3.02.c. COMMISSION AFTER TERMINATION. As of the effective date of
termination of this Agreement other than pursuant to Section
13.02 hereof, MGA shall be entitled to a commission on
renewals and endorsements of 15% or such other rate as may be
agreed by the parties. In the event this Agreement is
terminated by the Company pursuant to Section 13.02 hereof, no
commissions shall be payable on renewals or endorsements.
3.03 Commission Statement. Following the end of each month, the Company
shall, by the 15th day of the next month, send to the Managing General
Agent a statement of accounts setting forth, among other things, the
premium written, commissions, and the net amount due to the Managing
General Agent by the Company, together with payment of that amount. If
such statement reflects an amount due to the Company from the Managing
General Agent, the Managing General Agent will pay that amount within
30 days of the date of said statement.
3.04 Advanced Commissions. For each of the first three months under this
Agreement beginning on the Operational Date, the Company will advance
to Managing General Agent an amount to facilitate the transition to
"account current" settlements with the Company. The payment for the
first month will be 22.5% of the average monthly net premiums produced
by the Agencies for the prior twelve (12) months. For the second and
third months, advances will be based on actual net premium production
of the Company's business produced by the Agencies for the preceding
month. For the fourth month, no advances will be paid, and commission
payments for business produced during the fourth month will be made on
an "account current" basis, beginning on the 15th day of the fifth
month. At that time, commissions payable on the Company's business
produced during such three-month period will be calculated on an
account current basis and will be netted against advances that have
been made.
3.05 Acceleration. Should Managing General Agent default in any payment of
premiums or return of unearned commissions referred to herein, all
unpaid premiums and unearned commissions on the Insurance Policies
shall be due and payable immediately.
3.06 Equitable Relief. Notwithstanding Section 15.07 (Arbitration) of this
Agreement, should Managing General Agent fail to pay Company any
premiums, unearned commissions, or other monies when due, then Company
shall be entitled to the issuance of an injunction to obtain such
premiums or monies to prohibit Managing General Agent's use of such
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funds in violation of this Agreement, or to require Managing General
Agent's deposit of such funds in accordance with this Agreement; and
the cost and expense of the Company to obtain such injunction,
including reasonable attorneys' fees, shall be borne by Managing
General Agent. If the Company seeks, but is unsuccessful in obtaining
such an injunction, then the cost and expense of the MGA to obtain a
court order denying the injunction, including reasonable attorney's
fees, shall be borne by the Company.
3.07 Ancillary Products Commissions. Agencies will continue offering the
ancillary products currently being sold and any others MGA may deem
worthy; provided, however, that an administrative fee equal to 10% of
net written premiums on all ancillary products administered by any
affiliate of the Company and financed by the Company's premium finance
company affiliate shall be payable by the MGA; this administrative fee
may be offset against any commissions payable to the MGA pursuant to
this Article 3.
The parties agree that in the event that the Company or an affiliate,
directly or indirectly, would suffer a loss resulting solely from
paying compensation to Managing General Agent or the Agencies relating
to ancillary products on other than a pro rata basis, then an
adjustment shall be made to reduce the amounts due under this Article
so that such loss will not occur.
3.08 Full Compensation. The compensation to which Managing General Agent is
entitled under this ARTICLE shall constitute full compensation for
services to be performed by Managing General Agent under this
Agreement.
ARTICLE 4. LIMITATIONS OF AUTHORITY
4.01 Maximum Premium Volume. Absent prior written approval, the maximum
annual premium volume (direct written premium, net of cancellations and
return premium) that the Managing General Agent is authorized to
produce for the Company's account is $75 Million.
4.02 Underwriting Guidelines and Forms. The rules and rates to be utilized
by the Managing General Agent in underwriting the insurance are those
which have been approved for use by the Company and by the insurance
department of the State of Florida. A copy of the rules and rates shall
be maintained on file at the offices of the Managing General Agent.
These rules and rates cannot be changed or deviated from without the
prior written consent of the Company. Further, insurance coverage shall
be evidenced pursuant to the policy form(s) which have been approved
for use by the Company and which shall be maintained on tile at the
offices of the Managing General Agent.
4.03 Maximum Limits. The maximum insurance coverage that may be provided
under any policy issued by the Agents is set forth in SCHEDULE B. No
coverage may be issued for a policy period in excess of twelve months.
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4.04 Company's Right to Cancel/Nonrenew Insurance Policies. The Company
reserves the right to cancel or non-renew any Insurance Policy, subject
to requirements imposed by law and any policy provision without
specifying the reason therefore and without liability to the Managing
General Agent or the producing agents.
4.05 Company's Right to Suspend Binding Authority. Upon sixty (60) days
notice to Managing General Agent, the Company may suspend the binding
authority of the Managing General Agent or of any of the Agencies
during the pendency of any dispute regarding cause for termination
under Section 13.02 hereof. Such sixty (60) days notice period shall
begin when the Company gives the Managing General Agent notice of
termination of this Agreement pursuant to Section 13.02.
4.06 Prohibited Expenses. Managing General Agent shall not charge or commit
Company to any expense, agreement, payment, debt, settlement, or
obligation other than as expressly provided for herein.
4.07 Managing General Agent's Right to Offset. Managing General Agent may
combine or offset any balances or funds owed by Company to MGA against
any balances or funds owed to Company by MGA under this Agreement or
any other agreement between the parties; provided, however, that
Managing General Agent may not offset any balance due from Company to
Managing General Agent against any amounts of fiduciary funds (i.e.,
funds held by MGA on behalf of insureds or other third parties) due
from Managing General Agent to Company under this Agreement, or under
any other contract with Company or any of Company's affiliates.
4.08 No Claims Settlement Authority. Managing General Agent has no authority
to adjust or settle any claims arising out of or in connection with the
Insurance Policies. Managing General Agent shall not collect payment
from any reinsurer or commit Company to a claim settlement with a
reinsurer.
ARTICLE 5. PREMIUM COLLECTION AND REMITTANCES
5.01 Premium Financing. With respect to business produced by Managing
General Agent for the Company and for certain carriers providing
specific ancillary products as identified under the Premium Finance
Agreement as defined below, Managing General Agent agrees that it will
offer premium financing exclusively through Direct General Financial
Services, Inc. ("DGFS") in accordance with this Agreement and that
certain Premium Finance Services Agreement dated of even date herewith
between DGFS and MGA and certain affiliates of MGA (the "Premium
Finance Agreement"). Except as otherwise described herein or in the
Premium Finance Agreement, Managing General Agent agrees that it will
not offer financing through DGFS on business produced for insurers
other than the Company or any ancillary products not identified under
the Premium Finance Agreement.
5.02 Payment of Premium; Responsibility For. All applications and, where
applicable, premium payments for new Insurance Policies submitted by
the Managing General
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Agent will be forwarded to the Company in the manner prescribed in the
Company's Underwriting Guidelines or as otherwise may be instructed by
the Company from time to time. The Managing General Agent may not
collect premiums on any Insurance Policies that have been cancelled,
expired or terminated.
5.03 Premium Trust Account. All premiums and other funds collected by
Managing General Agent for the Company's account are the property of
Company and shall be held in trust on behalf of Company in fiduciary
capacity ("Premium Trust Funds") and shall be deposited and maintained
in an account separate and segregated from Managing General Agent's own
funds or funds held by Managing General Agent on behalf of any other
company or person (the "Premium Trust Account"). The Premium Trust
Accounts shall be maintained in an amount at least equal to the
premiums (unpaid to Company), and return premiums (unpaid to
policyholders or insureds) received by Managing General Agent.
ARTICLE 6. [RESERVED]
ARTICLE 7. REPORTS
7.01 Financial Information. Managing General Agent agrees to furnish Company
with financial statements each year, which accurately reflect the
financial condition of the Managing General Agent and the Agencies and
other affiliates of Managing General Agent through which Managing
General Agent performs its duties and obligations under this Agreement,
and which financial statements will include an auditors statement and
report if Managing General Agent obtains audited statements. If
Managing General Agent does not obtain audited statements, the
financial information furnished may be unaudited, unless the law of any
state having jurisdiction over this Agreement requires submission of an
audited statement. Such financial information shall be furnished to
Company within ninety (90) days (or sixty 60 days if unaudited)
following the close of the fiscal year of the Managing General Agent.
7.02 Reporting Requirements. With regard to the Insurance Policies written,
Managing General Agent shall provide, at its expense and within a
reasonable time after written request from the Company, sufficient
information to satisfy reasonable reporting requirements imposed on
Company by boards, bureaus, and associations, and to enable Company and
reinsurers to file required financial statements and reports with
insurance departments and regulatory bodies. Company shall provide
Managing General Agent with such written reporting requirements.
ARTICLE 8. RECORDS
8.01 Records Retention. Managing General Agent shall keep true and complete
records of all transactions and correspondence with policyholders,
agents, brokers, insurance departments, and Company. The Company shall
have access to, and the right to copy, all accounts and records related
to such insurance, in a form usable by the Company, at any time during
the Managing General Agent's business hours. All records and
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documents required to be maintained by Managing General Agent
including, but not limited to, policyholder information and financial
documents, shall be maintained during the Term, as defined in Section
12.01 and thereafter while providing any continuing services hereunder,
in a manner and form as mutually agreed upon or as required by Company
to be compatible with Company's internal systems and in accordance with
generally acceptable accounting principles and insurance regulatory
practices.
8.02 Document Production. On request, Managing General Agent will forward to
Company, no later than five (5) days from such request (or such longer
period as may be reasonably necessary to produce such information),
exact copies of all Insurance Policies or other appropriate evidences
of insurance written pursuant to this Agreement financial documents or
other reports; policyholder data, or any other information in Managing
General Agent's possession requested by Company and not otherwise
readily available to Company relating to the Insurance Policies.
ARTICLE 9. GENERAL OBLIGATIONS OF MGA
9.01 Licensing. Managing General Agent warrants that it is, and will
continue to be during the Term and thereafter while providing any
continuing services hereunder, authorized and licensed to perform all
acts set out in this Agreement. On or before the signing of this
Agreement, Managing General Agent shall provide Company with a copy of
its current Managing General Agent License, and thereafter shall
provide copies of any renewal of such license to Company within 15 days
of receipt of the renewed license from the Florida Department of
Insurance.
9.02 Supervision of Agents/Producers. Managing General Agent shall maintain
a listing and current copies of the insurance licenses of any agent or
broker from which Managing General Agent accepts a submission. Managing
General Agent shall supervise all agents and brokers who place business
through Managing General Agent. Further, Managing General Agent shall
be responsible to Company for such agents and brokers and for all funds
collected for business solicited by such agents and brokers. At
Company's request, Managing General Agent shall provide to Company
copies of the listing of and of any agreements with such agents and
brokers.
9.03 Compliance with Laws. Managing General Agent shall be responsible for
full compliance with all applicable laws, regulations, rules and
requirements relating to the performance of its obligations hereunder;
and the general standards, rules, and regulations of the insurance
industry; and all written instructions provided to Managing General
Agent from time to time by Company.
9.04 Complaint Procedure. Managing General Agent and Company shall notify
the other within five (5) days of notice or receipt (or such shorter
period as necessary to adequately respond) of any complaint with any
insurance department or other regulatory authority relating to the
Insurance Policies, whether against Company, any affiliate of
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the Company, Managing General Agent, its agents, or brokers. Managing
General Agent shall provide Company with a proposed written response to
a complaint including, but not limited to, a written summary of all
facts relevant to such complaint. Company will then respond, or
authorize Managing General Agent to respond, to such complaint in such
form as Company determines, in Company's sole discretion, is necessary.
The parties will work together to promptly and adequately respond to
any such complaint.
9.05 No Authority to Delegate. Except as specifically provided herein,
Managing General Agent shall not have the authority to delegate any
authority contained herein to any other person or entity without prior
written authorization from Company.
9.06 Managing General Agency Expense Responsibility. Since Managing General
Agent, the Agencies, and their employees are independent contractors
and not employees of Company, all expenses including, but not limited
to, Managing General Agent's office rent, transportation; salaries;
utilities; furniture; fixtures; equipment, telephone; attorney and/or
legal fees; postage; promotional advertising and public relations
expenses; printing costs, records and reports; inspection fees; credit
reports and any other documents required to fulfill Managing General
Agent's obligations hereunder; commissions, fees due to agents or
brokers; and Managing General Agent's license fees and occupational
taxes, whether billed to Managing General Agent or Company, shall be
the sole liability of Managing General Agent, unless assumption of such
expense by Company is agreed to in writing by Company. Managing General
Agent will remit promptly to Company the amount of any such item billed
to Company upon notice by Company to Managing General Agent of the
charge therefor.
9.07 Use of Company Logo, etc. Managing General Agent may not use the name,
logo, or service xxxx of Company or any of its affiliates in any
advertising, promotional material, or in any material disseminated by
Managing General Agent without the prior written consent of Company.
Managing General Agent shall maintain copies and provide an original to
Company of any advertisement or other materials approved by Company
along with full details concerning where, when, and how it was used.
Managing General Agent shall be liable for any liability of or cost
incurred by Company as a result of any such materials.
9.08 Ownership of Supplies. All forms and supplies provided to Managing
General Agent or authorized to be used by Managing General Agent by
Company shall remain the property of Company and shall be returned
immediately upon request. Upon termination of this Agreement or
Managing General Agent's authority hereunder, at the request of Company
Managing General Agent shall return to the Company or to its designated
representative all property owned or leased by Company.
9.09 [Reserved]
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9.10 MIS System and Computer Access. The Company and Managing General Agent
will design and implement information processing systems to bridge
their existing policy, premium finance and receipt systems and enable
them to function properly.
9.11 Confidentiality. If either party provides to the other party access to
information or networks through computer access, such other party shall
be responsible for maintaining the confidentiality, security and
integrity of such information and of the providing party's computer
programs and systems. Additionally, each party that obtains such
information shall be responsible to insure that its employees, agents,
and representatives are aware of the sensitive and proprietary nature
of the information obtained, of the importance of confidentiality, and
of the conditions described in this Section 9.11. This Section 9.11
shall survive termination of this Agreement.
9.12 Claims Reporting. Managing General Agent shall ask policyholders to
promptly report all claims, suits, or losses to Company or an assigned
adjuster or claim representative who has been designated by Company.
Managing General Agent shall cooperate with Company or the assigned
adjuster or claim representative in the investigation, adjustment,
settlement, and payment of claims arising out of the Insurance
Policies. All records, files, correspondence, or other materials
pertaining to claims shall be the sole property of Company. Retention
of a commission under the terms of this Agreement shall constitute a
representation by Managing General Agent that all known claims have
been accurately, promptly, and completely reported to Company.
ARTICLE 10. GENERAL OBLIGATIONS OF COMPANY
10.01 Insurance Department Complaints. Notwithstanding Section 9.04 hereof,
Company shall have the sole right to respond to any state insurance
department complaint or inquiry, after consulting with Managing General
Agent as provided herein.
10.02 Use of Managing General Agent's Logo, etc. Company agrees that it shall
not use Managing General Agent's name, logo, or service xxxx in
connection with any advertising without Managing General Agent's prior
written approval.
10.03 Company's Right to Offset. Company may combine or offset any balances
or funds owed by Managing General Agent to Company against any balances
or funds owed to Managing General Agent by Company under this Agreement
or any other agreement between the parties.
ARTICLE 11. INSURANCE AND INDEMNITY
11.01 Insurance. Through LR3 or otherwise, Managing General Agent and the
Agencies are required to maintain in full force and effect the
following existing insurance policies issued by an insurer rated no
less than "A-" by A.M. Best Company during the Term of this Agreement
and thereafter while Managing General Agent has any obligations
hereunder covering MGA and the Agencies and their employees as follows:
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11.01.a. Errors and omissions coverage in the minimum amount of $1
million, with a deductible not to exceed $2,500 thousand;
11.01.b. Commercial general liability insurance policy in the minimum
amount of $1 million each occurrence and $1 million general
aggregate, including:
i. Personal injury liability of $1 million; and
ii. Non-owned automobile liability of $1 million;
11.01.c. Workers compensation insurance in the amount of Florida's
required minimum.
Such insurance shall be maintained by Managing General Agent and/or the
Agencies at their sole cost and expense, and shall be primary on
contributing coverage over any other valid and collectible insurance
available to Company. Managing General Agent shall request its insurers
to provide thirty (30) days prior notification to Company, and Managing
General Agent agrees to immediately notify Company when it receives
notice of any lapse, increased deductibles, or upon receipt of a notice
terminating coverage. Managing General Agent shall furnish proof of
such insurance within fifteen (15) days of the Company's written
request for the same. Managing General Agent further agrees to notify
Company promptly of any claim brought under any such policy which
arises out of or is connected with the Insurance Policies written
hereunder.
11.02 Indemnification by Managing General Agent. At all times hereafter,
Managing General Agent hereby agrees to defend, indemnify, and hold
Company harmless from and against all claims, actions, causes of
action, liability, or loss which result from any negligent or willful;
acts, errors, or omissions of Managing General Agent, its employees,
representatives, agents, or sub-agents in the performance or breach of
duties under this Agreement. Managing General Agent further agrees that
in the event Company is in violation of any state code, statute,
regulation, or bulletin due to the negligent or willful acts, errors or
omissions of Managing General Agent, its employees, representatives,
agents, or sub-agents, then Managing General Agent shall assume the
responsibility and liability for such act and shall indemnify and hold
Company harmless for such liability and loss. Loss shall include, but
not be limited to, all damages, costs, expenses, reasonable attorneys'
fees, penalties, fines, direct damages, verdicts (including punitive
damages to the extent permissible by law), and any other expense or
expenditure incurred by Company. This Section shall survive termination
of this Agreement.
11.03 Indemnification by Company. At all times hereafter, Company hereby
agrees to defend, indemnify, and hold Managing General Agent harmless
from and against all claims, actions, causes of actions, liability, or
loss which result form any negligent or willful acts, errors, or
omissions of Company, its employees, representatives, agents, or
sub-agents in the performance or breach of duties under this Agreement.
Company further agrees that in the event Managing General Agent is in
violation of any state code, statute, regulation, or bulletin due to
the negligent or willful acts, errors, or omissions of
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Company, its employees, representatives, agents, or sub-agents, then
Company shall assume the responsibility and liability for such act and
shall indemnify and hold Managing General Agent harmless for such
liability and loss. Loss shall include, but not be limited to, all
damages, costs, expenses, reasonable attorney's fees, penalties, fines,
direct damages, verdicts (including punitive damages to the extent
permissible by law), and any other expenses or expenditures incurred by
Managing General Agent. This Section shall survive termination of this
Agreement
11.04 Notice of Indemnifiable Claim. Upon receipt of a claim or demand for
which a party is entitled to indemnification, the indemnified party
shall as promptly as is reasonably possible:
11.04.a. notify the indemnifying party in writing of the nature of the
indemnifiable claim, and the names and addresses of the
persons involved in or having an interest in such claim in the
manner provided in Section 15.01 of this Agreement; and
11.04.b. furnish the indemnifying party with all documents and
information within the possession, custody or control of the
indemnified party and relating to such claim; and
11.04.c. cooperate with the indemnifying party and its counsel,
including but not limited to, appearing as a witness as may be
reasonably required and responding to all reasonable request
for documents and answering interrogatories.
Upon receipt of written notice of an indemnifiable claim and all other
documents and instruments required by this Agreement to be furnished to
the indemnifying party, the indemnifying party shall thereafter be
given a reasonable opportunity to defend or settle such a claim at its
own expense. Neither party shall settle any such claim that might have
an adverse effect on the other party, without the prior written consent
of the other party, which shall not be unreasonably withheld. Each
party shall at all times have the full right to participate in any such
defense at its own expense. If either party, within a reasonable time
after receiving notice of a claim from the other party, fails to
defend, such other party shall have the right, but not the obligation
to undertake the defense, compromise, or settlement of such claim on
behalf of, for the account of and at the risk of the party failing to
defend.
ARTICLE 12. TERM OF AGREEMENT
12.01 Term. The initial term of this Agreement shall commence on the
Effective Date, and, including the Trial Period, terminate on the third
anniversary of the Operational Date, unless terminated earlier as set
forth in Article 13 below. The initial term and any successive term
agreed between the parties shall be referred to herein as the "Term".
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ARTICLE 13. TERMINATION OF THIS AGREEMENT
13.01 Termination by Company; Generally. The Company may terminate this
Agreement at any time with 60 days written notice to Managing General
Agent. In the event of such termination (unless the termination is for
cause, as described below) Managing General Agent and the Agencies
shall retain all rights to the renewal of all of the Company's business
written by Agencies under this Agreement. Thereafter, the Company will
not solicit any of the customers of Agencies for renewal of Insurance
Policies or ancillary products.
13.02 Termination by Company for Cause. The Company may immediately, unless
otherwise indicated in this Section 13.02, upon written notice
terminate this Agreement in whole or in part, for cause, which shall
include, but is not limited to, the following:
13.02.a. Insolvency. Managing General Agent, LR3, or any of the
Agencies becomes insolvent, institutes or acquiesces in the
institution of any bankruptcy, financial reorganization, or
liquidation proceeding or any such proceeding is instituted
against Managing General Agent, LR3 or any of the Agencies
that remains undismissed for thirty (30) days; provided,
however, that in the case of such proceeding regarding any of
the Agencies, the proceeding must have a material adverse
effect on Managing General Agent's ability to perform its
duties and obligations under this Agreement. (Managing General
Agent shall immediately notify Company of same); or
13.02.b. Sale of Stock or Assets to a Third Party. Managing General
Agent, or the owner of a controlling interest in Managing
General Agent or the Agencies, sells, exchanges, transfers,
assigns, consolidates, pledges or causes to be sold,
exchanged, transferred, assigned, consolidated, or pledged,
all or substantially all of the stock of Managing General
Agent, or all or substantially all of the stock or assets of
the Agencies, to a third party without the prior written
consent of Company (Managing General Agent shall immediately
notify Company of same); or
13.02.c. Inadequate Staff. Managing General Agent or Agencies fails to
maintain a staff qualified to service the Insurance Policies
or to maintain the quality of services and obligations
necessary to operate within this Agreement, if such failure
would have a material adverse effect on the level of the
quality of services provided by Managing General Agent under
this Agreement; or
13.02.d. Remit Reports or Premiums. Managing General Agent fails to
provide, or cause to be provided, timely and proper reports or
premium accounting as required, or to remit premiums when due
after thirty (30) days written notice from Company; or
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13.02.e. Maintain Trust Funds. Managing General Agent fails to maintain
Premium Trust Funds in the amount and manner required in this
Agreement after ten (10) days notice from the Company that
such funds are not being maintained; or
13.02.f. Claims. Managing General Agent or any Agency continues to make
claims payments in violation of this Agreement more than ten
(10) days after discovering or being notified by the Company
that such claims payments are being made; or
13.02.g. Misconduct, etc. Managing General Agent or any Agency engages
in acts or omissions constituting abandonment, fraud,
misappropriation of funds, material misrepresentations, gross
and willful misconduct, or any other acts that are prohibited
by law or regulation of any applicable regulatory authority;
or
13.02.h. MGA License. Managing General Agent's license or certificate
of authority is canceled, suspended, or is declined renewal by
any regulatory body within the State of Florida if after
ninety (90) days, Managing General Agent fails to remedy such
loss of license (Managing General Agent shall immediately
notify Company of same); or
13.02.i. Breach. If Managing General Agent materially breaches any
provision of this Agreement other than this Section 13.02
after written notice of such breach has been given to Managing
General Agent and Managing General Agent has failed to cure
within a ten (10) day notice period; or
13.02.j. Underwriting Guidelines; Policy Forms. Managing General Agent
or any Agency binds or underwrites risks (i) that are
unacceptable in accordance with the underwriting guidelines,
procedures, instructions, or memoranda provided for herein, or
(ii) with limits in excess of those specified in the
underwriting authority limits provided for herein, or (iii)
with rates or policy forms or filings in a jurisdiction where
Managing General Agent has knowledge that required regulatory
approvals have not been met; provided, however, that clauses
(i) and (ii) of this subparagraph shall not apply if any
unacceptable risk is bound or underwritten by an Agency as an
occasional and isolated event, and Managing General Agent or
LR3 takes immediate action to correct and avoid recurrence of
such event; or
13.02.k. Access to Records. Managing General Agent or the Agencies fail
to permit Company to inspect or audit any records or files
relating to the Insurance Policies.
13.03 Termination by Managing General Agent. Managing General Agent may
terminate this Agreements as follows: upon demonstration by Managing
General Agent that the quoted insurance premiums for the Company's
Insurance Policies are not competitive as
14
hereafter described, Managing General Agent may give the Company 60
days written notice to modify its rates or make any required rate
filing with the Florida Department of insurance. Such notice shall
include MGA's written demonstration of the Company's non-competitive
rates based on the approach described below. If the Company fails to
make such modification or filing within 60 days, Managing General Agent
may terminate this Agreement. In determining whether the Company's
rates are non-competitive, the following approach shall be followed:
13.03.a. The Company's rates shall be deemed "competitive" if at least
80% of a sample of the Company's quotes are among the "Top 10"
of the non-standard auto issuers selected below, as ranked on
Quick Quote.
13.03.b. The parties shall consider only the largest issuers of
non-standard automobile insurance in Florida, which together
represent 80% of the total non-standard net written premium in
Florida per the most recent A.M. Best A4 Report. For this
purpose, direct and captive agency writers and the companies
in the Progressive Insurance group, and their business shall
be excluded.
13.03.c. The sample of the Company's quotes will be based on a sample
of policies agreed to by the parties that is reasonably
representative of the business written by Agencies.
If Florida becomes a non use and file state, then compliance with this
Agreement will become subject to Department of Insurance approval of
the Company's revised rates. For any time over 30 days from the rate
change request that the Department of Insurance delays the requested
rate change, the duration of this Agreement will be likewise extended.
13.04 Ownership of Business. If this Agreement is terminated by the Managing
General Agent pursuant to Section 13.03, or by the Company pursuant to
Section 13.01, the records and the use and control of expirations for
the insurance serviced under this Agreement shall remain the property
of the Managing General Agent and be left in the Managing General
Agent's exclusive possession, provided Managing General Agent has then
rendered and continues to render timely accounts and payments of all
moneys due the Company.
However, if Managing Agent is in material default of this Agreement
and/or if this Agreement is terminated by the Company for Cause as
described in Section 13.02, or if Managing General Agent fails to
render timely accounts and payments within (10) days after such failure
is brought to the Managing General Agent's attention, then the records
and the use and control of expirations, shall be the property of the
Company and Managing General Agent shall immediately thereafter forward
all such records to the Company.
13.05 Continued Servicing. Managing General Agent agrees that in the event
this Agreement is terminated for any reason, Managing General Agent and
the Agencies shall continue
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to perform all customary and necessary services for all in-force
Insurance Policies in accordance with the provisions of this Agreement
until all such Insurance Policies have been completely cancelled,
non-renewed, or otherwise terminated, provided, however, that Company
may, in its sole discretion, immediately suspend or terminate Managing
General Agent's continuing service obligation hereunder. Managing
General Agent's continuing service obligations after termination of the
Agreement shall include, but not be limited to:
13.05.a. The issuance and countersignature of appropriate endorsements
to such in-force Insurance Policies when so authorized in
writing by Company, provided that such endorsements shall not
increase Company's liability or extend the term of any
Insurance Policy without prior written approval of Company;
and
13.05.b. The collection and remittance of all premiums due, if any, and
premium finance note payments on such in-force insurance
Policies hereunder.
If Managing General Agent fails in any respect to fulfill this
continuing service obligation, then Managing General Agent shall
reimburse Company any reasonable expense incurred by Company to service
or arrange for the servicing of the Insurance Policies issued by or
through Managing General Agent hereunder or such amounts may be offset
by Company.
Upon Company providing written notice of termination to Managing
General Agent hereunder, Company is hereby authorized to deal directly
with all other licensed persons and/or entities with respect to the
Insurance Policies hereunder, including but not limited to, the right
to collect from and return premiums directly to the Agencies and all
producers, brokers, or insureds.
13.06 Immediate Suspension. Notwithstanding Section 4.05 above or anything
else set forth herein to the contrary, if Company terminates this
Agreement under Section 13.02(g) hereof ("Misconduct, etc."), then
Company may immediately suspend some or all of the authority of
Managing General Agent under this Agreement. Upon receipt of notice of
such suspension, Managing General Agent shall thereupon cease to
exercise such power or powers in accordance with such notice.
ARTICLE 14. SOLICITATION AND RECRUITMENT
14.01 Non-Solicitation. During the Term of this Agreement, and for a period
of one (1) year after, Managing General Agent and Agencies shall not
solicit any customer of Company, or divert or attempt to divert from
Company any customer of Company, for automobile insurance sales or
services to be provided by any person or entity that competes with
Company in the business of selling, quoting or servicing automobile
insurance policies. For the purposes hereof a "customer of Company"
shall mean any person or entity for whom or which Company has provided
automobile or life insurance sales within two (2) years prior to the
termination of this Agreement. This Section 14.01 shall not apply to
solicitation of customers of the Company, following termination
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of this Agreement, provided Managing General Agent retains ownership of
the business as described in Section 13.04.
14.02 Non-Recruitment. During the Term of this Agreement, and for a period of
one (1) year after, Managing General Agent shall not, directly or
indirectly, recruit, solicit or encourage, or facilitate the
recruitment, solicitation, or encouragement of any employee of Company
to terminate said employee's employment with Company or otherwise
interfere in anyway with said employee's employment with Company.
14.03 Injunctive Relief. Notwithstanding Section 15.07 (Arbitration) of this
Agreement, should Managing General Agent violate the terms of Section
14.01 or 14.02, then the parties agree that Company would suffer
irreparable harm and the Company shall be entitled to the issuance of
an injunction to prohibit Managing General Agent from such
solicitation, recruitment and/or interference with Company's employees.
The cost and expense of the Company successfully obtaining said relief,
including reasonable attorneys' fees, shall be borne by Managing
General Agent. If the Company seeks, but is unsuccessful in obtaining
such injunction, then the cost and expense of the MGA to obtain a court
order denying the injunction including reasonable attorneys' fees,
shall be borne by the Company.
ARTICLE 15. GENERAL PROVISIONS
15.01 Notice. Except as otherwise set forth herein, any notice required under
this Agreement must be in writing and either sent by first class mail,
facsimile, certified mall, or personally delivered. Notice shall be
effective either upon receipt or five (5) days after mailing to the
other party, whichever comes first. Unless changed by written notice to
the other party, the addresses of the respective parties are:
MANAGING GENERAL AGENT:
Maitland Underwriters, Inc.
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxx Register
Title: Vice President
COMPANY:
Direct General Insurance Company
0000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxxxxx X. Xxxxx, President
15.02 Integration, Waiver, and Amendment. This Agreement, together with its
Schedules and the agreement referred to in Article 16 hereof constitute
the entire agreement between Company and Managing General Agent and
supersedes any and all other agreements,
17
either oral or written, between Company and Managing General Agent with
respect to the managing general agency relationship between the
patties. No waiver by either party to enforce any provision of this
Agreement will be effective unless made in writing and signed by an
authorized officer of Company and Managing General Agent and shall be
effective as to the specifically stated waiver. No amendment to this
Agreement will be effective unless made in writing and signed by the
parties hereto, and specifying the effective date of such amendment.
15.03 Remedies Not Exclusive. No right or remedy set forth in this Agreement
is exclusive of any other right or remedy but shall be in addition to
every other right and remedy given under this Agreement or existing now
or hereafter at law or equity.
15.04 Severability. Wherever possible, each provision of this Agreement will
be interpreted in such a manner and to such an extent as to be
effective and valid under applicable law. If any provision is
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity.
15.05 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to its
rules regarding conflict of laws.
15.06 Conformance to Law. This Agreement and the provisions relating to
commissions shall, without prior notice, be automatically modified to
conform to any law or governmental regulation having application to or
jurisdiction over the subject matter of the parties hereto and the
parties shall promptly amend the Agreement to comply with such
modifications.
15.07 Arbitration. Except as provided in Section 6.04 (Equitable Relief) and
Section 14.03 (Injunctive Relief), all unresolved differences of
opinion or disputes between Company and Managing General Agent arising
out of or in connection with this Agreement or any transaction
hereunder shall be submitted to arbitration, in accordance with the
rules relating to commercial arbitration of the American Arbitration
Association except as modified herein.
The Board of Arbitration ("Board") shall consist of one (1) arbitrator
chosen by Company, one (1) arbitrator chosen by Managing General Agent,
and an umpire chosen as promptly as possible by the two (2)
arbitrators. The arbitrators and umpire shall be financially
disinterested parties or former executives of property or casualty
insurance or reinsurance companies.
The party demanding arbitration shall communicate its demand therefor
in writing, identifying the nature of the dispute and the name of its
arbitrator, to the other. The other party shall then be bound to name,
in writing, its arbitrator within thirty (30) days after receipt of
such demand. Failure or refusal of the other to name its arbitrator
within the thirty (30) day time period shall empower the demanding
party to name the second arbitrator as well.
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If the two (2) arbitrators are unable to agree upon an umpire within
thirty (30) days after the second arbitrator is named, either party may
petition a court of competent jurisdiction to make the appointment of
an umpire from candidates submitted by both parties in conformity with
the qualifications set out in this Agreement.
The applicant for arbitration shall submit its position in writing
within thirty (30) days after selection of the umpire. The respondent
shall submit its written position within thirty (30) days after receipt
of the applicant's position. The Board may extend any of the time
periods set forth above.
The Board shall have the power to make and determine all procedural
rules for the holding of the arbitration including discretionary power
to make orders as to any matter which they may consider proper in the
light of circumstances of the case with regard to pleadings,
depositions, discovery, inspection of documents, examination of
witnesses, and any other matter whatsoever relating to the conduct of
the arbitration and may receive and act upon such evidence, whether
oral or written, strictly admissible or not as the Board shall find
fit. The Board shall make its decision based on the terms of this
Agreement, the intent of the parties and the custom and usage of the
non-standard automobile insurance industry.
All rules, orders, acts, and decisions of the Board shall be effective
if done by a majority of the Board. The final determination of the
Board shall be made in writing within sixty (60) days of the conclusion
of the arbitration. Any decision shall be final and binding on the
parties, and shall not be subject to appeal. If either party fails to
comply with the Board's decision, the other party may apply for its
enforcement to a court of competent jurisdiction.
Each party shall bear the cost of its own arbitrator and shall jointly
and equally bear with the other party the expenses of the umpire. The
Board shall allocate the remaining costs of the arbitration proceeding.
The arbitration proceedings shall convene and be held within Orange
County, Florida or such other location mutually agreed upon by the
parties.
Nothing contained in this Paragraph shall be construed as limiting the
ability of Company to suspend the authority of Managing General Agent
pursuant to this Agreement.
This Section 15.07 shall survive termination of this Agreement.
15.08 Other Companies. Managing General Agent agrees to advise Company of
existing and future agency agreements entered into with other insurance
companies with respect to the classes of business covered by this
Agreement.
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15.09 Non-Assignability/Non-Delegation. Except as specifically provided
herein, neither party may delegate its duties nor assign its rights
under this Agreement unless otherwise agreed upon and authorized in
writing by an officer of the other party.
15.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.
ARTICLE 16. CONDITION PRECEDENT
16.01 The covenants and obligations of the Company and Managing General Agent
hereunder are expressly conditioned on the execution and delivery by
Direct General Financial Services, Inc. and Managing General Agent of
that certain premium Finance Services Agreement of even date herewith.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the Effective Date.
MAITLAND UNDERWRITERS, INC.
BY: /s/ Xxxxx X. Register III
----------------------------
Name: Xxxxx X. Register III
Title: President
DIRECT GENERAL INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice Chairman
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