EXHIBIT 10.75
RUNOFF CLAIM ADMINISTRATION SERVICES AGREEMENT
______________________________________________
THIS RUNOFF CLAIM ADMINISTRATION SERVICES AGREEMENT ("Agreement") is made
and effective as of the 1st day of January, 2001 ("Effective Date"), by and
between INSURANCE MANAGEMENT SOLUTIONS, INC. ("IMS"), a corporation organized
and existing under the laws of the State of Florida with its principal place of
business located at 000 Xxxxxxx Xxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, and
INSTANT INSURANCE HOLDINGS, INC. ("Instant"), a corporation organized and
existing under the laws of the State of Delaware with its principal place of
business located at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, 00000, and
its designated or wholly owned subsidiaries, collectively, INSTANT AUTO
INSURANCE COMPANY ("Instant Auto"), a corporation organized and existing under
the laws of the State of Missouri with its principal place of business located
at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. Where used in this
Agreement, the term "Customer" shall include within its meaning both Instant and
Instant Auto.
WHEREAS, Customer wishes to engage the services of IMS to administer
certain of the Customer's runoff claim administration obligations for the lines
of business ("Authorized Lines of Business") in the state(s) ("Authorized
States") set forth in SCHEDULE A; and
WHEREAS, IMS wishes to provide such runoff claim administration services
as set forth herein.
NOW THEREFORE, IN CONSIDERATION OF the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto do covenant and agree as follows:
ARTICLE I. DEFINITIONS
Unless the context clearly requires otherwise, the following terms when used
in this Agreement shall have the meanings set forth below:
A. "Affiliate" is any company which controls, is controlled by, or under
common control with a party, and "control" is defined as owning 50% or more
of such entity.
B. "Authorized Lines of Business" means the lines of business expressly set
forth in SCHEDULE A of this Agreement.
C. "Authorized States" means the states expressly set forth in SCHEDULE A of
this Agreement.
D. For purposes of legal notice only, "Business Day" means any day other than
a Saturday, Sunday or other day which is a bank holiday or an IMS paid
holiday (specifically, the following days shall be considered a "bank
holiday" or an "IMS paid holiday": New Year's Day, Memorial Day,
Independence Day, Thanksgiving Day, day after Thanksgiving, Christmas Eve
(after 12 P.M. Eastern Standard Time) and Christmas Day).
E. "Distribution Partner(s)" means the Customer's business partners which are
authorized by Customer to transact business on Customer's behalf.
1
F. "Insurance Administration Services" means the runoff claim administration
services set forth in this Agreement and EXHIBIT I hereto in the Authorized
States in accordance with the terms of the Agreement, and all applicable
laws and regulations.
G. "Insurance Program" means the Customer's insurance products within the
Authorized Lines of Business offered within the Authorized States.
H. "Technical Information" means and shall include (without limitation)
computer programs, databases, designs, algorithms, processes, structures,
data formats, business methods, know how, and research and development
information.
I. "Change of Control" means (a) a sale, transfer or pledge, or the issuance
to a new shareholder, of fifty (50%) percent or more of the voting stock of
a party hereto to any third party that is not an affiliate of such party;
or (b) a sale, transfer or pledge of a substantial portion of the material
assets of a party, or any merger or consolidation of a party with another
entity or entities. Both parties agree as respects this paragraph, that a
change of control includes the above definitions when the sale or purchase
is transacted with a company included within the portfolio of Customer's
investment group or a distribution partner(s) of Customer.
ARTICLE II. TERM
The term of the Agreement shall commence on the Effective Date and shall
terminate in accordance with Article VIII.
ARTICLE III. RESPONSIBILITIES OF IMS
A. IMS shall perform the Insurance Administration Services described in
EXHIBIT I.
B. IMS shall, based on accepted industry standards and in accordance with
generally accepted insurance and accounting practices as designated by the
appropriate state regulatory bodies, maintain complete and orderly records
and policy and/or claims files as may be required as a result of IMS
performing the Insurance Administration Services on behalf of Customer.
These files shall be retained by IMS, in a format or media defined by IMS
which shall be in compliance with applicable laws and regulations, for a
minimum of five (5) years or the period specified by the applicable state
and/or federal statutes regulating the preservation of records, whichever
is longer, unless the Customer requests that its records be returned to it
at its expense; provided, however, that IMS shall be entitled to retain
copies thereof. It is specifically agreed and understood between the
parties that all records referred to in this paragraph constitute sole and
exclusive property of Customer, and shall be treated as such by IMS
pursuant to the "Client Confidentiality" Section of IMS' Associate Manual.
C. IMS and Customer acknowledge and agree that Customer bears all risk and has
ultimate responsibility for the policies, and that Customer shall at all
times have ultimate decision-making discretion with regard to all matters
pertaining to the Insurance Program policies. Customer acknowledges and
agrees that any handling instructions or direction from Customer to IMS
shall be within the bounds of any and all applicable laws and regulations
pertaining to the handling of such policies.
ARTICLE IV. RESPONSIBILITIES OF CUSTOMER
2
A. During the term of this Agreement, Customer shall by mutual agreement with
IMS provide to IMS, in a timely manner, any and all data, information and
other items required to enable IMS to perform the Insurance Administration
Services specified in EXHIBIT I of this Agreement. Customer shall also
provide IMS with Customer's banking institution account information
relating to the services being provided by IMS under this Agreement and
corporate and subsidiary logos (if applicable). Customer represents and
warrants to IMS that it owns and possesses all property rights to its
corporate and subsidiary logos and hereby grants and warrants to IMS a
limited, non-transferable, non-assignable, license to use Customer's
corporate and subsidiary logos (and any other copyrighted or trademarked
property of Customer that may be provided to IMS under this Agreement)
while performing the Insurance Administration Services on behalf of
Customer. Customer acknowledges and agrees that delays in delivery of
required documentation, data and/or information by Customer will result in
a similar delay in fulfilling Insurance Administration Services, and that
such a delay in performing the Insurance Administration Services shall not
be deemed a breach of the Agreement.
B. CUSTOMER ACKNOWLEDGES AND AGREES THAT IMS ASSUMES NO INSURANCE RISK FOR THE
BUSINESS PROCESSED UNDER THIS AGREEMENT.
C. Customer shall designate manager level employees of sufficient status and
binding decision making authority to act as liaisons with IMS and to
facilitate Customer's role as IMS performs the Insurance Administration
Services enumerated in EXHIBIT I of this Agreement.
ARTICLE V. CUSTOMER ACCESS TO RECORDS/CONFIDENTIAL INFORMATION
A. At Customer's expense, Customer will be permitted access (as set forth
herein) to all IMS and Customer records and information (excluding,
specifically, IMS' proprietary technical design information) reasonably
necessary to: (i) audit the completeness and accuracy of the Insurance
Administration Services provided under this Agreement and reports produced
for Customer pursuant to this Agreement; (ii) verify the accuracy and
validity of all xxxxxxxx and charges to Customer under this Agreement,
including any travel and living expenses; and (iii) verify IMS' overall
compliance with the terms of this Agreement and applicable laws and
regulations. IMS will maintain a log of all system issues which affect IMS'
ability to perform the terms of this Agreement. Customer will bear the cost
of access to the above records, including the costs of travel, personnel,
computer hardware and software, and data line charges. Notwithstanding the
foregoing, IMS shall reimburse Customer for all reasonable audit expenses
incurred by Customer in performing an audit under this Article if
Customer's audit verifies that the total xxxxxxxx and charges to Customer
under the Agreement were overstated by more than 10%.
Access to the above records, for the foregoing purposes, will be provided
during normal business hours upon five (5) Business Days prior written
notice to IMS by Customer for so long as IMS is required to maintain such
records under this Agreement; except in case of regulatory inquiry, in
which case access will be granted within twenty four (24) hours of written
notice to IMS.
At Customer's expense, Customer will be permitted to copy (using a copy
service of Customer's choice) those IMS records subject to audit in
accordance with this Article.
Upon five (5) days written request by Customer, and at Customer's expense
(based on IMS' actual expense), IMS will promptly mail or fax to Customer
supporting documentation concerning any specific transaction processed by
IMS under the terms of this Agreement.
3
IMS will provide adequate workspace as mutually agreed upon between
Customer and IMS for Customer to conduct audits in accordance with this
Article. Further, Customer or its representatives shall take reasonable
precautions, when conducting audits under this Article, not to materially
disrupt IMS' ongoing business activities. IMS shall provide Customer with
workspace, resources (both physical and human) and amenities necessary to
enable Customer to conduct the audit. Any additional costs incurred by IMS
in providing the human resources and amenities pursuant to this paragraph
shall be borne by Customer.
B. The recipient ("Recipient") of confidential data and/or information
pursuant to this Agreement shall maintain the confidentiality of all data
and/or information which is the property of the other party ("Disclosing
Party"), whether originally supplied by the Disclosing Party, or whether
generated by the Disclosing Party in the course of performing or
facilitating the Insurance Administration Services under this Agreement and
which is directly accessible to the Recipient or is in the possession of
Recipient in the implementation, facilitation and/or performance of the
Insurance Administration Services. During the term of this Agreement,
Recipient may acquire, know, or have within its possession, information
(including, but not limited to, Technical Information) and/or data of the
Disclosing Party concerning commercial and trade affairs, rating and
underwriting rules and guidelines, the identity of clients, the identity of
insureds and beneficiaries, claims, benefits, rates and agents, financial
information, Proprietary System (as defined at Article VII (A) herein), and
business practices of the Disclosing Party ("Confidential Information").
Confidential Information which is provided in tangible form must be clearly
marked "Confidential", "Proprietary" or the substantial equivalent thereof,
or if orally disclosed must be clearly identified as "Confidential" or
"Proprietary" at the time of the disclosure (except for IMS' Technical
Information, Customer's underwriting rules and guidelines, the identity of
Customer's clients, the identity of Customer's insureds and beneficiaries,
claims, benefits, rates and agents, and, the following documents provided
by Customer to IMS prior to the Effective Date of this Agreement: all Flex
Xxxx documentation (including Customer's policy packs, presentation,
matrices, billing guides, 'The eCoverage Report', discount flow charts,
network diagrams, call reason code documentation, initial data mapping with
Amis, sample hierarchy reports, initial web flow, point of sale
specifications, and initial tiered rating spreadsheet) which will be deemed
"Confidential Information" under this Agreement, regardless of whether
marked as such). Except as required by law, Recipient shall keep Disclosing
Party's Confidential Information confidential and shall only use the
Confidential Information in performing or facilitating the Insurance
Administration Services under this Agreement. Recipient shall not disclose
the Confidential Information without Disclosing Party's prior written
permission except to Recipient's employees who require the information to
perform or facilitate the Insurance Administration Services under this
Agreement. Each party hereto, as a Recipient, warrants to the other that
appropriate measures shall be taken by Recipient to safeguard the
confidentiality of the Confidential Information, with a level of care at
least equal to the level of care with which Recipient safeguards its own
confidential or proprietary information. All employees, agents or
representatives of Recipient and any third parties who are given access to
the Confidential Information shall be under written obligation to Recipient
to maintain such information in confidence.
IMS and Customer agree that Recipient shall have no obligation with respect to
any information or data which:
a) is already rightfully known to Recipient through means other than
Disclosing Party; or
b) is or becomes publicly known through no wrongful act of Recipient; or
4
c) is rightfully obtained by Recipient from a third-party without similar
restriction and without breach of this Agreement; or
d) is independently developed by Recipient without breach of this
Agreement.
Disclosing Party shall retain title to all Confidential Information
(whether tangible or intangible) delivered thereby pursuant to this
Agreement. Recipient shall not copy, reproduce or use any Confidential
Information without written authorization of Disclosing Party, except as
may be required to accomplish the Insurance Administration Services under
this Agreement. Recipient shall promptly return or destroy, on written
request of Disclosing Party, all tangible copies containing Confidential
Information, except those copies kept in the regular course of business, or
that are required to be kept pursuant to any state or federal
administrative, regulatory or statutory mandates.
C. For purposes of this Article V, Recipient and Disclosing Party shall
include within their meaning all respective subsidiaries, distribution
partners, agents, representatives, affiliates or fronting companies of the
Recipient and Disclosing Party.
D. The obligations of Customer and IMS under this Article V shall continue and
remain in effect after termination of this Agreement. This Article shall
not prevent the disclosure of Confidential Information to the extent
legally required by any court or regulatory entity having jurisdiction over
the parties.
ARTICLE VI. EXPENSES AND FEES
A. In consideration of IMS providing Insurance Administration Services as
described herein, Customer shall pay IMS fees and expenses as specified in
SCHEDULE B. However, in the event that a vendor supplying a service or
product to IMS, which service or product is used by IMS to provide the
Insurance Administration Services to Customer, increases its rates charged
to IMS, or there is an increase in a statutory, regulatory or judicial
cost, IMS may increase the Service Fee and Miscellaneous Fees set forth
herein by no more than the amount of such increased costs and will provide
Customer with documentation verifying the increase.
B. Customer shall pay for services including but not limited to third party
information service fees and data communication line charges, for which
Customer shall pay directly.
C. Customer shall reimburse IMS for actual travel, living and out-of-pocket
expenses incurred by IMS personnel, provided such expenses are approved in
writing by Customer. Customer shall not pay IMS for IMS' travel time.
D. Customer agrees to pay any and all tariffs and taxes that are now or may
become applicable to the Insurance Administration Services rendered
hereunder, including, but not limited to, sales, use, and personal property
taxes, or any other form of tax based on Insurance Administration Services
performed, equipment used by IMS solely for Customer, and the communicating
of storage of data used by IMS solely for Customer, but excluding taxes on
the net income of IMS.
E. Subject to the terms of this Agreement, all fees and expenses to be payable
by Customer to IMS or any third party (such as sub-contractors IMS may hire
on behalf of or at the direction of Customer) under this Agreement shall be
paid within thirty (30) calendar days after Customer's receipt of IMS'
monthly statement for the Insurance Administration Services, miscellaneous
services or third-party services provided to Customer under this Agreement.
IMS will calculate
5
fees owed to IMS by Customer and will send a statement to Customer within
two (2) weeks of the last day of the month for which fees are owed. If
Customer disputes any amount listed on a monthly statement, then Customer
shall timely pay any undisputed amount and the parties will exercise best
efforts to resolve any issue as to a disputed amount within five (5)
Business Days of Customer's receipt of the monthly statement. Customer's
failure to pay all fees and expenses when due shall be considered a
material breach of this Agreement. IMS shall notify Customer of any such
breach within thirty (30) days of the breach.
F. If costs arise during the term of this Agreement that were not anticipated
by the parties at the time this Agreement was executed, then payment of
such costs will be resolved as follows: (a) if the work or reason giving
rise to the unanticipated cost is only for Customer's benefit, then
Customer will pay such costs, or (b) IMS will pay such costs. Such
resolution for unanticipated costs or costs or fees in dispute will be by
mutual agreement between IMS and Customer. Any such unresolved dispute will
be subject to the terms of Article XI.
ARTICLE VII. LICENSE, TRADE SECRET AND PROPRIETARY RIGHTS
A. IMS from time to time may use its own proprietary computer software
products and account servicing methods and procedures ("Proprietary
System"), which may be identified, described or referenced in EXHIBIT I
hereto. During any term of this Agreement, IMS grants a personal,
non-transferable, non-assignable, non-exclusive license with the
restrictions set forth below to Customer and its appointed insurance sales
agents, representatives, or distribution partners to use portions of the
Proprietary System as necessary for IMS to perform the Insurance
Administration Services to be performed by IMS under this Agreement.
B. Other than the limited rights to use the Proprietary System, this Agreement
grants to Customer no right to possess or reproduce, the Proprietary System
or its specifications in any tangible or intangible medium. Customer may
not mortgage, hypothecate, sell, assign, pledge, lease, transfer, license,
sublicense, reverse engineer, modify, make derivative works of, or obtain
any other interest in the Proprietary System, nor allow any person, firm,
entity or corporation to transmit, copy, reproduce, download, reverse
engineer, modify, make derivative works of, or obtain any other interest in
the Proprietary System or its specifications in whole or in part. Customer
shall not permit third parties to benefit from the use or functionality of
the Proprietary system via time-sharing, service bureau, facilities
management, or other similar arrangement. In the event Customer shall come
into possession of any source or object code associated with the
Proprietary System, Customer shall immediately notify IMS and return the
source or object code associated with Proprietary System in its possession
and all copies of any kind thereof to IMS.
C. Customer covenants and agrees not to disclose or otherwise make the
Proprietary System available to any person other than employees,
distribution partners, insurance sales agents or representatives of the
Customer required to have access or use of the Proprietary System to
facilitate IMS' or Customer's performance under this Agreement. Customer
agrees to obligate each such employee, appointed insurance sales agent,
distribution partner or representative to a level of care sufficient to
protect the Proprietary System from unauthorized disclosure or reverse
engineering.
D. IMS will notify Customer in writing at least five (5) days prior to the
implementation of any and all modifications IMS proposes to make to the IMS
Proprietary System that may affect Customer's business and IMS' performance
the Insurance Administration Services under this Agreement
6
E. The obligations of the parties under this Article shall continue and remain
in effect after this Agreement is terminated for any reason.
ARTICLE VIII. TERMINATION
A. This Agreement shall terminate:
a) at the election of either party, with or without cause, by giving the
other party at least thirty (30) days prior written notice of such
termination;
b) at the election of IMS upon fifteen (15) days written notice if Customer
fails to pay any and all fees and expenses due under Article VI of this
Agreement;
c) at the election of the Customer, upon written notice to IMS, if IMS
becomes insolvent, if it makes an assignment for the benefit of its
creditors, if a petition for relief under the Bankruptcy Act is filed by
or against it and it is not dismissed within thirty (30) days of being
filed, or if a trustee, receiver or other custodian of its assets is
appointed;
d) at the election of IMS, upon written notice to Customer, if Customer
becomes insolvent, if it makes an assignment for the benefit of its
creditors, if a petition for relief under the Bankruptcy Act is filed by
or against it and it is not dismissed within thirty (30) days of being
filed, or if a trustee, receiver or other custodian of its assets is
appointed; including, but not limited to, any proceeding pursuant to any
state or federal action governing insurer insolvency;
e) at the election of the Customer, if IMS materially breaches any
provision of this Agreement and fails to cure such breach within thirty
(30) days after written notice thereof is given to IMS by the Customer;
f) at the election of IMS, if Customer materially breaches any provision of
this Agreement and fails to cure such breach within thirty (30) days
after written notice thereof is given to Customer by IMS;
g) at the election of the Customer, upon written notice to IMS, in the
event of a Change of Control of IMS, unless IMS has provided Customer
not less than thirty (30) days advance written notice of the proposed
Change of Control; and
h) at the election of IMS, upon written notice to Customer, in the event of
a Change of Control of Customer unless Customer has provided IMS not
less than thirty (30) days advance written notice of the proposed Change
of Control.
C. The initiation under this Agreement of any dispute resolution procedure
shall not prevent a party from terminating this Agreement in accordance
with this Article.
D. On expiration or termination of this Agreement, for any reason, IMS shall
return to Customer all of Customer's information including its policy
forms, manuals, instructional memos, procedural memos, reports, and any and
all other customer information requested either in electronic or hard copy
form, in IMS' possession and delete any electronic copies thereof related
to the Insurance Administration Services provided by IMS during the term of
this Agreement; and Customer shall
7
immediately accept possession of all of its claim files and shall
immediately assume all responsibility and obligation for the performance of
the Insurance Administration Services. Customer shall do the same and cause
Customer's agents to do the same relative to the return of IMS'
information. Customer shall pay IMS (in accordance with Schedule B then in
effect) any and all Service Fees, Miscellaneous Fees and third party fees
due IMS for Insurance Administration Services performed prior to the
termination date of this Agreement. IMS and Customer shall cooperate in any
transition period during the wind-up of Insurance Administration Services
provided Customer under this Agreement. If Customer requires assistance in
converting Customer's data to a new format, or requires assistance from IMS
relative to Customer's transition to an alternative arrangement, then IMS
shall provide such services at the then current rates charged by IMS for
the services specified in Schedule B (except in the case where IMS is
finally adjudicated by a court or Arbitration Board as being in material
breach of this Agreement (and such breach is not timely cured) and Customer
terminates this Agreement for such material breach, then IMS will provide
such data conversion services at IMS' sole expense). This provision shall
survive any termination of this Agreement.
ARTICLE IX.
A. The parties shall assume the following obligations and liabilities as
specified below and subject to the limitations on liability set forth in
paragraph B below:
(a) IMS shall indemnify, defend and hold harmless Customer, its officers,
directors, employees and controlling persons from any liability, cost,
loss, fine, penalty, claim, demand, damage or expense, including
reasonable attorneys' fees, incurred solely and directly as a result
of any material breach of IMS' obligations under this Agreement or the
material breach of any representation or warranty made by IMS to
Customer pursuant hereto;
(b) Customer shall indemnify, defend and hold harmless IMS, its officers,
directors, employees and controlling persons from any liability, cost,
loss, fine, penalty, claim, demand, damage or expense, including
reasonable attorneys' fees, incurred solely and directly as a result
of any material breach of Customer's obligations under this Agreement
or the material breach of any representation or warranty made by
Customer to IMS pursuant hereto;
(c) Customer agrees to, and shall cause its affiliates, subsidiaries,
agents and fronting companies, jointly and severally, to indemnify,
defend and hold harmless IMS, its officers, directors, employees,
agents, representatives, and controlled and controlling persons
(collectively "IMS Indemnitees") from and against any and all
liabilities, losses, damages, demands, claims, suits, actions, causes
of action, proceedings, assessments, judgments, awards, penalties,
settlements, fees, costs and/or expenses of any kind or nature
whatsoever asserted against, resulting to, imposed upon or incurred by
IMS or any of IMS' Affiliates, directly or indirectly, by reason of,
arising out of, relating to or resulting from any agreement,
obligation or relationship, contractual or otherwise, that Customer
has or ever had with INSpire Insurance Solutions, Inc., or any of its
affiliates or subsidiaries.
B. Except for: (i) Service Fee and other amounts owed to IMS by Customer in
consideration of IMS providing the Insurance Administration Services,
miscellaneous services or third party services hereunder; (ii) acts of fraud,
or willful misconduct; and (iii) violations of Article IV, VII and V
8
(B) of this Agreement, each party's maximum liability ("Maximum Liability")
to the other party for any cause whatsoever, during any one calendar year
(including, but not limited to, amounts payable to either party by the
other for regulatory fines, settlements and penalties) shall be limited to
direct damages incurred by that party. In no event shall IMS' or Customer's
liability for breach of this Agreement or any of its provisions exceed the
amount of compensation paid by Customer under Schedule B of this Agreement
for the three months immediately preceding the breach. Neither party shall
be liable for any lost profits, business goodwill, or other consequential,
punitive, special or incidental damages incurred by the other.
C. Notwithstanding the foregoing, if claim was paid by IMS that should not
have been paid by IMS, as a result of a data processing error that was due
to an error or defect in the Insurance Administration Services provided by
IMS, then IMS shall assume liability for any such error and the liability
shall not be subject to the provision of Article X (B).
D. In the event of any IMS Proprietary System error or omission which
materially affects IMS' ability to perform the Insurance Administration
Services under this Agreement, IMS will correct same at no cost to
Customer.
E. All parties agree to promptly give the others notice upon being notified or
becoming aware of any and all allegations or claims, which could give rise
to a claim under this Article.
ARTICLE X. GENERAL AGREEMENT
A. This Agreement and all matters arising hereunder shall be governed by and
determined in accordance with the laws of the State of Texas without giving
effect to any choice of law provisions.
B. The parties shall not be liable or deemed to be in default hereunder for
any delay or failure in performance under this Agreement or interruption of
the Insurance Administration Services resulting, directly or indirectly,
from acts of God (including but not limited to weather catastrophes such as
floods, hurricanes, tornadoes, windstorms, ice storms, blizzards and hail
storms), civil or military authority, labor disputes, shortages of suitable
parts, materials, labor or transportation or any similar cause beyond the
reasonable control of the parties. IMS acknowledges that it has a detailed
emergency recovery plan for interruption of the Insurance Administration
Services and has contracted with an emergency "Hot Site". IMS shall follow
its recovery plan that is designed to re-establish the Insurance
Administration Services following a disaster causing an interruption
thereof. IMS acknowledges that Customer is a Production Customer. Customer
acknowledges that the Hot Site is only a temporary bridge and that there
may be a diminution in the performance levels of the Insurance
Administration Services until the main data center capabilities are
re-established. IMS will maintain and update its recovery plan and will
conduct annual testing of its recovery plan.
C. Customer and IMS agree that, during the term of this Agreement and for a
period of six (6) months following the termination of this Agreement,
neither party will directly or indirectly induce any employee of the other
to terminate his or her employment with the other party, nor will either
party, without prior written consent of the other, offer employment to any
employee of the other party or to former employees of the other party
during the six (6) month period immediately following such employee's
termination. This paragraph shall survive termination
9
of this Agreement. The provisions of this paragraph apply to each party's
respective subsidiaries, agents, affiliates and other related entities.
D. Any and all notices, designations, consents, offers, acceptances, or any
other communication provided for herein shall be given in writing by hand
delivery, by overnight carrier, by registered or certified mail or by
facsimile transmission and shall be addressed as follows:
As to Customer: Instant Insurance Holdings, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax Number: 000-000-0000
Attention: President
As to IMS: Insurance Management Solutions, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Fax Number: (000) 000-0000
Attention: President
Notices sent by hand delivery shall be deemed effective on the date of
actual hand delivery. Notices sent by overnight carrier shall be deemed
effective on the next Business Day after being placed into the hands of the
overnight carrier. Notices sent by registered or certified mail shall be
deemed effective on the fifth Business Day after being deposited into the
post office. Notices sent by facsimile transmission shall be deemed to be
effective on the day when sent if sent prior to 4:30 p.m. (the time being
determined by the time zone of the recipient), otherwise they shall be
deemed effective on the next Business Day.
E. This Agreement, and the exhibits, schedules and addenda attached hereto,
supercedes all of the prior oral and/or previously written agreements,
representations, and arrangements between the parties hereto. There are no
representations or warranties other than those set forth herein. No change
or modification of this Agreement, including the exhibits, schedules and
addenda hereto, shall be valid unless the same shall be in writing and
signed by all of the parties hereto. All schedules, addendum of any kind,
or attachments to this Agreement shall be made a part of this Agreement and
shall be subject to all terms and conditions of this Agreement. Articles V
(B), VII, XI (C) shall survive any termination of this Agreement.
F. Words of a gender used in this Agreement shall be held to include any other
gender, the words in a singular number held to include the plural, when the
sentence so requires. Article headings are intended for purposes of
description only and shall not be used for purposes of interpretation of
this Agreement.
G. Should any part of this Agreement for any reason be declared invalid, such
decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in full force and effect as if the Agreement
had been executed with the invalid portion thereof eliminated. It is,
therefore, declared the intention of the parties hereto that each of them
will have executed the remaining portion of this Agreement without
including therein any such part, parts or portion which may, for any
reason, be hereafter declared void.
H. If either party should bring a Court action alleging breach of this
Agreement or seeking to enforce, rescind, renounce, declare, void or
terminate this Agreement or any provisions thereof,
10
the prevailing party shall be entitled to recover all of its legal
expenses, including reasonable attorneys' fees and costs (including legal
expenses for any appeals taken), and to have the same awarded as part of
the judgment in the proceeding in which such legal expenses and attorneys'
fees were incurred.
I. Neither IMS nor Customer shall assign this Agreement or any of its rights
hereunder without the prior written consent of the non-assigning party.
J. The parties agree not to disclose the terms and conditions of this
Agreement to any third party, except (i) as required in the normal conduct
of Customer's business, or (ii) as required by law or regulation including,
without limitation, any Federal securities law, or regulation.
ARTICLE XI. DISPUTE RESOLUTION PROCEDURES
A. The parties will attempt in good faith to promptly resolve any dispute
arising under this Agreement by negotiations between senior management
("Senior Management") of the parties. Senior Management of each party will
meet within ten (10) calendar days of notice ("Notice of Dispute") by a
party of the existence of a dispute, at a mutually agreed time and place,
to resolve the dispute. Senior Management, who shall have the authority to
settle the dispute, shall prepare and exchange memoranda stating the issues
in the material dispute and their positions. If the material dispute is not
resolved to the mutual satisfaction of the parties within seven (7)
calendar days of the meeting of Senior Management, then the parties may
attempt to resolve the controversy using mediation.
B. If the matter has not been resolved pursuant to the aforesaid mediation
procedure within thirty (30) calendar days of the issuance of a party of a
Notice of Dispute, or if either party will not participate in mediation,
then either party may initiate arbitration upon fifteen (15) calendar days
written notice to the other party. Notwithstanding the foregoing, all
deadlines specified above may be extended upon mutual written agreement of
the parties.
C. Except for the right of either party to apply to a court of competent
jurisdiction for review of the award of arbitration, for a temporary
restraining order, preliminary injunction or other equitable relief to
preserve the status quo, or disputes relating to breach of the
confidentiality, non-disclosure or trade secret provisions of this
Agreement, all claims, disputes, controversies and other matters relating
to breach of this Agreement, and which cannot be resolved by the parties
shall be settled by arbitration in accordance with this Agreement.
D. Notice requesting arbitration ("Arbitration Notice"), or any other notice
made in connection therewith, shall be made in writing by one party and
sent by certified mail, return receipt requested, to the other party. The
Arbitration Notice shall state in particular all issues to be resolved in
the view of the complaining party, shall appoint the arbitrator selected by
the complaining party and shall set a tentative date for the hearing, which
date shall be no sooner than forty-five (45) calendar days and no later
than ninety (90) calendar days from the date that the Arbitration Notice is
mailed. Within twenty (20) calendar days of receipt of the complaining
party's Arbitration Notice, the respondent shall notify the complaining
party of the location for conducting arbitration and the name of its
appointed arbitrator. When the two arbitrators have been appointed, they
shall agree on a third independent arbitrator and shall appoint such person
by written notice to the parties signed by both arbitrators within thirty
(30) calendar days from the date of the appointment of the second
arbitrator. If the two arbitrators fail to agree upon the appointment of an
independent arbitrator at the end of thirty (30) calendar days following
the
11
appointment of the second arbitrator, then the independent arbitrator shall
be appointed by the American Arbitration Association ("AAA"), or its
successor, in accordance with its then prevailing commercial arbitration
rules then in effect. The three (3) arbitrators shall constitute the
Arbitration Board ("Board").
E. The members of the Board shall be active or retired (i) lawyers or
professionals familiar with insurance and/or (ii) active or former officers
or management employees of insurance and/or data processing firms and/or
software development companies. The person selected by the two respective
arbitrators appointed by the parties shall be the umpire or chief
arbitrator and must be a licensed attorney.
F. Arbitration shall be conducted in accordance with the Commercial Rules of
the American Arbitration Association ("AAA") then in effect except as
modified herein.
G. The parties agree that all then current employees of each with material
relevant information will be voluntarily produced, at the employer's
expense, for all proper discovery and arbitration hearings.
H. The cost of the arbitration relative to the arbitrators and the AAA
("Costs") shall be borne equally pending the arbitrators' award. Each party
shall bear its own expenses for attorneys' fees. The prevailing party in
any arbitration proceeding hereunder shall be entitled, in addition to such
other relief as may be granted, to recover the portion of the Costs
incurred by that party in connection with arbitration under the Agreement
prior to the award.
I. The parties agree that the arbitrators shall be required to render their
decision in writing within thirty (30) calendar days of the conclusion of
the arbitration proceedings, unless such time shall be extended by mutual
written agreement of the parties.
J. With respect to any matter brought before the Board, the Board shall make a
decision having regard to the intentions of the parties, the terms of this
Agreement, and custom and usage of the insurance and data processing
industry. Such decisions shall be in writing and shall state the findings
of fact and conclusions of law upon which the decision is based, provided
that such decision may not (i) award consequential, punitive, special,
incidental or exemplary damages, or (ii) include a suspension of this
Agreement or any provisions hereof. The decision shall be based exclusively
upon the evidence presented by the parties at a hearing in which evidence
shall be allowed. Said decisions may be reviewable and vacated, modified or
corrected, in whole or in part, by appropriate courts of competent
jurisdiction for clear abuses of discretion or errors at law by the Board.
If the decision is not vacated, modified, or corrected in whole or in part
upon an appeal, such decision shall be final and binding upon all parties
to the proceeding and may be entered by either party in any court having
competent jurisdiction.
12
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement to be effective as of the 1 day of
January, 2001.
"IMS": "Customer":
INSURANCE MANAGEMENT SOLUTIONS, INC. INSTANT INSURANCE HOLDINGS, INC.
By: /s/ X.X. Xxxxxx By: /s/ [Illegible signature]
---------------------------------- -------------------------------
As its: PRES/CEO As its: President/CEO
------------------------------ ---------------------------
Date: 20 Feb 2001 Date: 2/22/01
-------------------------------- -----------------------------
13
SCHEDULE A
AUTHORIZED STATES and INSURANCE PROGRAM
IMS shall provide Insurance Administration Services as described in EXHIBIT I
for the following authorized line(s) of business ("Authorized Line of
Business") in the following authorized state(s) ("Authorized States") for the
following authorized companies ("Authorized Companies"):
1. AUTHORIZED LINE OF BUSINESS: PERSONAL AUTOMOBILE
2. AUTHORIZED STATES: COLORADO, ARIZONA, NEW MEXICO, INDIANA AND TEXAS
3. AUTHORIZED COMPANIES: INSTANT AUTO INSURANCE COMPANY
14
SCHEDULE B
FEE SCHEDULE
[*]
Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
15
Exhibit I
CLAIM ADMINISTRATION SERVICES
IMS will perform the following Claim Administration Services on Customer's
behalf in compliance with applicable law, and subject to periodic review and
audit thereof by Customer throughout the term of this Agreement:
I. Claim Adjusting and Program Management
IMS will:
A. Administer claims in accordance with the terms and conditions of
Customer's insurance policies, this Agreement, and applicable state
insurance laws, rules, and regulations that pertain to claim handling.
B. Provide appropriate staff to service Customer's business based upon
expected claim volume.
C. Conduct internal claim file audits and quarterly file reviews.
D. Utilize IMS' claim handling best practices, and complete the IMS
Claim Summary Sheet.
E. Provide vendor management.
II. Claim Adjusting Support
IMS will:
A. Utilize and manage external adjusters and appraisers, in field
locations not staffed by IMS or customer. Decisions as to when to use
external adjusters and appraisers will be made by IMS and will be
based on each individual claim file and the need for external
investigation in order to document the facts.
B. Perform all services necessary to collect subrogation or salvage that
may benefit Customer.
C. Manage claim litigation through the use of external defense counsel
and litigation management planning.
D. Investigate insurance fraud indicators through the IMS Special
Investigation Unit and conform with all filed and state specific fraud
plans and any other statutory or regulatory requirements, as required
by applicable law.
E. Conduct and manage review of claim file medical records utilizing IMS'
internal Medical Resource Unit on all applicable cases.
F. Employ mechanized medical xxxx utilization review methods on a
case-by-case basis.
Customer requests the use of medical xxxx repricing based on International
Classification of Diseases (ICD)-9 codes and Current Procedural Terminology
(CPT) codes. ICD-9 Codes stands for International Classification of
Diseases, 9th Revision. These codes appear on medical treatment bills and
describe the diagnosis, symptoms, complaint, and condition or problem for
which medical services are rendered. Current Procedural Terminology (CPT)
Codes are used to report medical services and procedures performed by
physicians.
16
Customer requests the use of CAPA-certified after-market parts, on a
limited basis where form, fit and structural integrity has been validated.
After-market parts will not be used for structural or safety-related
components. Non-structural after-market parts, such as headlamps,
batteries, or appearance items, will be used whenever and wherever
applicable.
Customer requests the application of betterment or depreciation to
automobile estimates in all states.
III. Claim Service Center
IMS will:
A. Handle and process initial loss reports received by Customer or
Customer's prior vendor, only if the information submitted by Customer
or Customer's prior vendor is sufficient to enter a claim into the IMS
claim system. Sufficient information required to set up a claim on the
AS 400 Claim System is insured name, policy number, address, telephone
number, damaged property, and description of the accident. Sufficient
information required to set up a claim on the AS 400 Claim System is
insured name, policy number, address, telephone number, damaged
property, and description of the accident.
B. Provide claim adjusting core clerical support, which includes all mail
processing, file control and industry reporting (e.g. index bureau,
NICB, Fraud Bureau and provider of service), which includes routing,
filing, sorting, photocopying claims files, delivering, printing, bar
coding, faxing of claim material, mail indexing, mail matching, mail
preparation, and sending mail.
C. Maintain operating hours of 7:30 A.M. to 8:00 P.M. Eastern Standard
Time (EST), Monday through Friday, excluding bank holidays for Florida
State Banks or an IMS paid holiday (New Year's Day, Memorial Day,
Independence Day, Thanksgiving Day, day after Thanksgiving, Christmas
Eve (after 12:00 P.M. Eastern Standard Time) and Christmas Date). IMS
will provide First Notice of Loss reporting services twenty-four (24)
hours per day seven (7) days per week.
IV. Claim System
IMS will:
A. Utilize an AS400 based claim system for claim documentation and
processing.
B. Provide Customer with remote claim system access to the AS400 (view
only) as reasonably requested by Customer subject to the fees
described in Schedule B.
C. Provide Customer with sixty (60) days written notice of a proposed
material change in or enhancement to the claim system in use on the
Effective Date of this Agreement. Written notice to Customer will
include details of the proposed material change or enhancement.
V. Authority Levels
IMS will establish claim reserves and make claim payments on behalf of
Customer, for each coverage, up to the amounts specified in the table below
("Authority Table"). Where a claim reserve amount or claim payment amount
will, in IMS' judgment, exceed the amounts listed in the Authority Table,
IMS will request from Customer, in writing, an increase in the authority
level amounts, and Customer will promptly respond, in writing, so that the
claim reserve can be established or the claim payment made.
17
AUTHORITY TABLE*
Reserve Limit Payment Limit
---------------------------- -------------------------
Level Indemnity Expense Indemnity Expense
------------------------ ---------- ----------- ----------- ----------
1 (applies to Claim Adjuster Trainees) $5,000.00 $250.00 $2,500.00 $150.00
----------------------------------------------------------------------------------------------------
2 (applies to Claim Adjusters) $10,000.00 $1,500.00 $7,500.00 $500.00
----------------------------------------------------------------------------------------------------
3 (applies to Claim Adjusters) $25,000.00 $10,000.00 $15,000.00 $5,000.00
----------------------------------------------------------------------------------------------------
4 (applies to Supervisors & Technical $50,000.00 $15,000.00 $35,000.00 $7,500.00
Advisors)
----------------------------------------------------------------------------------------------------
*Customer may modify the authority levels listed in the Authority Table upon 30
days written notice to IMS. Any such modification may result in a change to the
fees described in Schedule B.
VI. Catastrophe Claims
IMS will:
A. Adjust Customer's claims which result from a weather catastrophe.
B. Deploy catastrophe claim adjusters to a catastrophe-affected area
where a single event results in 50 or more physical damage claims
within a 20-mile radius.
VII. Management Reporting
IMS will:
A. Provide Customer with monthly claim summary reports, the contents of
which will be mutually agreed to in writing by Customer and IMS.
B. Provide Customer with monthly productivity and severity detail and
summary reports, the contents of which will be mutually agreed to by
Customer and IMS in writing.
C. Provide Customer with monthly subrogation and collection reports.
D. Monthly reports will be provided to Customer on or before the third
business day after the close of the month. Weekly reports will be
provided to Customer on or before Tuesday of the following week.
VIII. Claim Account
A. IMS will maintain a daily register of checks drawn on the Claims
Account for each loss payment and expense. IMS will also maintain a
daily register, which register shall include, for each claim or
claimant, the claim number, feature code, policy number, loss date,
name of the payee, date and check number of the disbursement, and the
amount and purpose of the payment.
B. Any monies collected by IMS for salvage, subrogation, contribution or
deductible reimbursement will be deposited by IMS in the Claims
Account within one business day upon receipt by IMS thereof.
IX. Accounting
18
A. IMS will issue checks related to claim handling, and provide one
monthly bank account reconciliation, which includes balancing the
check records back to the bank statement.
B. IMS will provide no other accounting services, such as:
- Annual statement support
- Statistical reporting
- Month-end processing
- Month-end reporting
19
