ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement") is hereby entered
into by State and County Mutual Fire Insurance Company ("Company"),
Xxxxxx General Agency, Inc. ("General Agent") and American Hallmark
General Agency, Inc. ("Program Administrator").
WHEREAS, Dorinco Reinsurance Company ("Reinsurer"), General Agent,
Company and Program Administrator have entered into a 100% Quota Share
Reinsurance Agreement ("Reinsurance Agreement") and Reinsurer, Company
and General Agent have entered into a General Agency Agreement ("GA
Agreement"), of which both agreements are incorporated herein by
reference, by which General Agent shall produce private passenger
automobile insurance business on behalf of Company and Reinsurer shall
reinsure Company for 100% of the liability of said business.
WHEREAS, the Reinsurance Agreement requires Program Administrator to
perform all administrative functions for the aforementioned automobile
insurance business and provides for payment to Program Administrator
for, among other things, loss adjustment administration, professional
consulting and other administrative services.
NOW THEREFORE the parties to this Agreement hereby agree as follows:
DUTIES AND FUNCTIONS OF PROGRAM ADMINISTRATOR
1. The establishment of and maintenance of the bank account referred
to in Article II, paragraph 2.01 of the GA Agreement ("Premium
Account").
2. The collection of premiums remitted by General Agent, sub-agents or
insureds on insurance business written under the terms of the
Reinsurance Agreement. Such premiums shall be deposited to the
Premium Account.
3. Cash disbursements from the Premium Account. Such disbursements
shall be limited to payment of claims, claims expenses, reinsurance
premiums, return premiums, cash management fees, professional
consulting fees, commissions due General Agent, premium taxes and
fees due to Company. All cash disbursements from the Premium
Account are to be in compliance with those disbursements authorized
by this Agreement, the Reinsurance Agreement and GA Agreement.
4. The selection, appointment, supervision and compensation of claims
adjusting firm(s) and/or independent claims adjusters, as provided
for in Article I, paragraph 1.04 of the GA Agreement, to settle
claims on business written under the terms of the Reinsurance
Agreement.
5. The supervision of loss settlements and total responsibility for
assuring that all claims, on business written under the terms of
the Reinsurance Agreement, are settled and that all provisions of
Articles XV, XVI, XVII of the Reinsurance Agreement are adhered to
and properly accounted for.
6. Accumulate accounts and reports referred to in Article XIV of the
Reinsurance Agreement, Article II paragraph 2.02 of the GA
Agreement and Article V paragraph 5.04 of the GA Agreement and
furnish Company and Reinsurer, on behalf of General Agent, with
said reports, on a timely basis, as required in the respective
agreements.
COMPENSATION OF PROGRAM ADMINISTRATOR
1. G e n eral Agent shall pay to the Program Administrator, as
compensation for cash management services, a Cash Management Fee
equal to one percent (1%) of the Net Collected Premiums (as defined
in Article XI of the Reinsurance Agreement) on insurance written
under the terms of the Reinsurance Agreement plus fifty percent
(50%) of the remaining policy fees, net of the corresponding
ceding fees and premium taxes, related to this same business. This
Cash Management fee is payable to Program Administrator ten (10)
days after the end of the month in
which the Net Collected Premiums are collected and shall be paid
from the Premium Account and netted against payments due to General
Agent.
2. In addition to the above Cash Management Fee, General Agent agrees
to pay to Program Administrator a Provisional Administration Fee
equal to fifty percent (50%) of any commission earned by General
Agent in excess of the adjusted ceding commission referred to in
Article XII, paragraph 12.02 of the Reinsurance Agreement. This
Provisional Administration Fee is payable to Program Administrator
ten (10) days after the end of the month in which said commission
is determined to have been earned by General Agent and shall be
paid from the Premium Account and netted against commission
payments due to General Agent.
3. In consideration for administrative and consulting services within
the terms of the Reinsurance Agreement, Reinsurer has agreed to
pay to Program Administrator, pursuant to Article XV, paragraph
15.01, on behalf of the Company, an Administrative and Consulting
Fee equal to seven percent (7%) of the ceded earned premium of
insurance business written under the terms of the Reinsurance
Agreement. This Administrative and Consulting Fee is payable to
Program Administrator ten (10) days after the end of the month in
which the ceded premium is earned. In addition, the amounts
payable by Reinsurer under Article XV, paragraph 15.01 of the
Reinsurance Agreement shall be payable to the Program Administrator
upon presentation of proper documentation and shall be paid from
the Premium Account.
4. Program Administrator and General Agent will share equally,
interest and other investment income, less bank service charges, if
any, earned or generated by monies on deposit in the Premium
Account. This investment income will be paid to the respective
recipients from the Premium Account ten (10) days after the end of
the month in which earned.
TERM
The effective date of this Agreement is at 12:01 a.m., Central Standard
Time, January 1, 1997 and shall remain continuously in force for a
period of three (3) years, unless, (1) terminated by mutual consent of
the Program Administrator, General Agent and Company, (2) Reinsurer
requests termination (in which case this Agreement shall terminate
thirty (30) days after Reinsurer's written request to terminate) or (3)
the incurred losses, including IBNR, to premium earned (exclusive of
policy fees) ratio exceeds seventy-five percent (75%) from inception, at
any time during the term of of this agreement (in which case this
Agreement shall terminate thirty days after Program Administrator's
written notice of termination).
U p o n termination, all duties and functions of the Program
Administrator, under this Agreement, shall cease, with the exception of
the Program Administrator's responsibilities regarding the settlement of
claims. Program Administrator's responsibilities under items 4 and 5
above under Duties and Responsibilities of Program Administrator shall
continue for a period of twelve (12) months after termination of this
Agreement. This responsibility shall be limited to the settlement of
claims on insurance business for which Program Administrator has been
compensated.
HOLD HARMLESS AND INDEMNIFICATION
Program Administrator and General Agent agree to and do hereby indemnify
and hold Company harmless from any and all actions, proceedings, claims,
demands, costs, damages, judgements, expenses, causes of action, suits,
arbitrations, or proceedings of any kind, liabilities, losses ,claims
(including bad faith, punitive damages, exemplary damages, fraud by
agent or class action), damages, cost or expenses of attorneys or cost
incurred by Company by reason of, arising out of, or relating in any way
to its settling of claims pursuant to this Agreement, relating to any
other matter under this agreement, or any action taken or not taken by
Program Administrator or General Agent in breach of the terms of this
Agreement, the Reinsurance Agreement or the GA Agreement.
WHEREAS, the Company. General Agent and Program Administrator have
entered into this Agreement, now therefore a representative of each of
these with authority to enter into this Agreement shall have affixed his
signature hereto.
EXECUTED this day of January, 1997.
STATE AND COUNTY MUTUAL FIRE INSURANCE COMPANY
Signature:
Name and Title:
XXXXXX GENERAL AGENCY, INC
Signature:
Name and Title:
AMERICAN HALLMARK GENERAL AGENCY, INC.
Signature:
Name and Title:
