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EXHIBIT 10.14
MANAGING GENERAL AGENT AGREEMENT BY AND
BETWEEN SUMMIT CONSULTING, INC. OF LOUISIANA AND
LOUISIANA EMPLOYERS MUTUAL INSURANCE COMPANY
Agreement made May 29, 1997 between Louisiana Employers Mutual
Insurance Company, hereinafter referred to as "Insurance Company", a
corporation organized under the laws of the State of Louisiana, having
its principle place of business at Baton Rouge, Louisiana, and Summit
Consulting, Inc. of Louisiana, hereinafter referred to as "Summit", a
corporation organized under the laws of the State of Louisiana, having
its principle place of business at Baton Rouge, Louisiana.
Section 1
Appointment of Managing General Agent
Insurance Company appoints Summit as its Managing General Agent, to
solicit applications for insurance policies and to collect such
premiums as directed by Insurance Company. Summit shall act as the
exclusive Managing General Agent of Insurance Company. Summit hereby
accepts such appointment and agrees to render its services to
Insurance Company in the management of claims, in the manner and to
the extent set forth herein.
Section 2
Term of Agreement
This agreement shall become effective upon approval of the Louisiana
Department of Insurance of Summit as a Managing General Agent and
authorization for Insurance Company to begin doing business in the
state of Louisiana, and such agreement shall continue in force for a
term of 5 years, subject to the provisions of this agreement; and
thereafter on a continuing basis as mutually agreed upon in accordance
with the policies adopted by the Board of Directors of Insurance
Company, provided that either party hereto shall have the right to
terminate this agreement by giving not less than 30 days notice in
writing to the other party in accordance with the provisions below.
Section 3
Relationship of Parties
The parties agree that the relationship created by this agreement is
that of an independent contractor. Summit is not an employee of
Insurance Company and the relationship created herein is not to be
construed as a joint venture between Summit and Insurance Company or
any form of partnership between Summit and Insurance Company.
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Section 4
Taxes
Each party shall remain exclusively responsible for payment and
discharge of all taxes, assessments or charges of any nature whatsoever
that may be imposed or claimed against the party.
Section 5
Duties of Summit
5.1 Summit shall set up policies, maintain records and manage
claims of Insurance Company in such a manner as provided
herein. Premium audits shall be performed by Summit, along
with all record keeping and accounting services. All policy
administration, loss control prevention services and all
underwriting functions shall be performed by Summit. Summit
shall collect all sums due Insurance Company and pay all
items of expense in accordance with the policies of the Board
of Directors of Insurance Company. Summit shall also invest
policy surplus as approved by the Board of Directors and
properly account for all funds so handled, as provided
herein. Collection activities shall also be performed by
Summit. Such collection activities shall not include legal
pursuit of Insurance Company's claim and therefore, no legal
fees, court costs or other associated costs shall be incurred
by Summit on behalf of Insurance Company. Summit shall also
market insurance products for and on behalf of Insurance
Company.
5.2 Premium audit, as defined in this section, shall mean
analysis and tests of payroll records and other procedures
necessary to examine the correctness of premiums paid by
policyholders. The audit shall include examining, on a test
basis, evidence supporting the amounts and disclosures with
respect to the payroll and premiums paid by policyholders;
therefore, the audit will involve judgment about the number
of transactions to be examined and the areas to be tested.
However, because the audit will not include a detailed
examination of all transactions, there is a risk that
material errors, irregularities or illegal acts, including
fraud, may exist and not be detected by Summit.
Section 6
Type of Insurance Authorized to Issue
The classes of business of which Summit shall have jurisdiction shall
be any and all types of business for which Insurance Company's charter
presently authorizes and is approved by the Louisiana Department of
Insurance and will continue to authorize from time to time.
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Section 7
Underwriting Guidelines of Summit
Summit shall agree to be bound by the following underwriting
guidelines. Any modification of the underwriting guidelines must be in
writing and signed by both parties.
7.1 The maximum annual premium volume written shall be
$20,000,000.00, with $500,000.00 payable for one
policyholder.
7.2 The basis of the rates to be charged shall be that of NCCI
rates, as approved and authorized by the Louisiana Department
of Insurance.
7.3 The types of risks which may be written include worker's
compensation insurance or any risks authorized by the
Louisiana Department of Insurance that Insurance Company may
write.
7.4 The maximum limits of liability for worker's compensation
insurance, are as statutorily defined by Louisiana law.
Maximum limits of employer's liability are up to a
$1,000,000.00 policy limit.
7.5 All applicable policy exclusions are as provided in the
proposed NCCI policy forms.
7.6 Policies shall only be written in the State of Louisiana.
7.7 Policy cancellation provisions are as provided in NCCI policy
forms and allowed under Louisiana statute.
7.8 The maximum policy period is one year.
Section 8
Settlement of Claims
8.1A Summit shall have installment and lump sum settlement
authority with respect to the settling of claims on behalf of
Insurance Company. Lump sum settlement authority shall be
limited to $100,000.00, without the approval of an Officer of
Insurance Company.
8.1B For purposes of section 8.1, lump sum settlement shall mean
payment of an entire amount due at one time in lieu of
monthly installments.
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8.2 Summit shall hold all settlement documents, records and files
available for purposes of inspection, review, audit and
copying by Insurance Company at all times, upon reasonable
request..
8.3A It shall be the duty of Summit to timely report all claims to
Insurance Company. The duty to respond will be discharged by
a report to any officer of Insurance Company. Insurance
Company shall retain the right to request a copy of the claim
file. Upon such request, or as soon as it becomes known that
the claim:
i) has the potential to exceed an amount determined by
the Commissioner or exceeds the limits set by
Insurance Company, whichever is less, if applicable;
ii) involves a coverage dispute;
iii) may exceed Summit's claims settlement authority;
iv) is open for more than six (6) months; or
v) is closed by payment of an amount set by the
Commissioner or an amount set by the company, which
ever is less, if applicable,
a copy of the claim file shall be sent to the insurer. With
respect to section 8.3A, "timely" shall be defined as any 24
hour period. If the expiration of such 24 hour period shall
fall on a weekend or holiday, the period shall be extended to
the first business day following said weekend or holiday.
8.3B The Louisiana Department of Insurance or any other
appropriate government agency may request such documents and
Summit shall comply with all governmental orders effecting
Insurance Company. If, however, Summit is aware that
Insurance Company is legally contesting such action, or
intends to legally contest such action, Summit shall refuse
to comply with such governmental request or order, until a
final court order is obtained in favor of the governmental
request or order.
8.4 Insurance Company shall have the right to review and/or audit
all settlement documents and settlement files, at anytime,
with proper notice.
8.5 All claim files shall be the property of Insurance Company.
Upon order of liquidation of Insurance Company, files shall
become the sole property of Insurance Company or its estate.
Summit shall have reasonable access to and the right to copy
the files on a timely basis.
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8.6 Any settlement authority granted to Summit may be terminated
for cause upon Insurance Company's written notice to Summit
or upon termination of the contract.
8.7 Insurance Company may suspend settlement authority of Summit
during the pendency of any dispute regarding the cause for
termination.
Section 9
Records
9.1 It shall be the duty and responsibility of Summit to maintain
separate records of all matters pertaining to this agreement.
Insurance Company shall have access to and the right to copy
all accounts, electronic data files and records related to
its business in a form useable by Insurance Company and the
Commissioner of Insurance for the State of Louisiana or any
regulatory authority, upon reasonable request. Access to all
books, bank accounts, and records of Summit in a form usable
to the Commissioner of Insurance or regulatory authority
shall be given. Such records shall be retained pursuant to
rules and regulations, as amended from time to time and
promulgated by the Commissioner of Insurance.
9.2 In the event of the termination of this agreement between
Insurance Company and Summit or the withdrawal of funds from
the terms of this agreement as herein provided, Summit
specifically agrees to turn over to an authorized
representative of Insurance Company on or before the date of
such termination or withdrawal, any such records or
correspondence as may be reasonably necessary for the
assistance of an authorized representative of the corporation
in carrying to completion any transaction that may be
required under the terms of this agreement.
9.3 All documents, except as herein specified, shall be and
remain the property of Insurance Company and shall be
available to Insurance Company and its representatives as
provided herein.
Section 10
Cancellation of Policy
Insurance Company shall have the right to cancel or non-renew any
policy of insurance pursuant to the laws and regulations applicable
thereto.
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Section 11
Severability
In the event any provision of this agreement shall be held to be
invalid and unenforceable by a court of competent jurisdiction or
regulatory authority, the same shall not affect whatsoever the
validity or enforceability of the remainder of this agreement.
Section 12
Notice
All notices, requests, demands or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
in person, or within 10 days after deposit in the United States mail,
postage prepaid, certified, with return receipt requested, or
otherwise actually delivered to the other party.
Section 13
Termination of Contract
13.1 Insurance Company may terminate the contract for cause upon
written notice to Summit. At least 60 days written notice
must be given to Summit notifying Summit of Insurance
Company's intention to terminate for cause. During this sixty
day period, Summit shall be given the opportunity to cure the
default Such notice shall be sent by registered mail, with
return receipt requested. As defined in this section, "cause"
is any breach of the terms of this agreement.
13.2 Notwithstanding any other provision in this agreement,
Insurance Company may cancel this contract for any illegal or
unlawful act committed by Summit, its officers and/or
employees in performance of this contract.
13.3 Insurance Company may suspend the underwriting authority of
Summit during the pendency of any dispute regarding the cause
for termination.
13.4 Notice of termination must be signed by officers or
representatives of the respective organizations of equal or
greater rank to those signing this agreement.
Section 14
Receipt of Insurance Company Funds; Accounts
14.1 Summit shall deposit (either directly or in a depositary bank
for transmittal) all money received on behalf of Insurance
Company in an escrow fund account for the benefit of
Insurance Company or an account
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or approved investment in the name of Insurance Company. The
trust account shall be maintained at all times in a national
or state member bank that is a member of the Federal Reserve
System. Summit shall not commingle any of the above described
money with any funds or other property of Summit. This
account shall be used for all payments on behalf of Insurance
Company. Notwithstanding any other provision in this
agreement, Summit may retain no more than three (3) months
estimated claims payments and allocated loss adjustment
expenses. Any balance remaining shall be remitted to
Insurance Company.
14.2 In the event Insurance Company so elects, it may designate
the bank which shall act as a depositor for such funds.
Insurance Company further reserves the right to direct a
change in the depositary, at any time. Notice of an election
to designate a depositary bank or of an exercise of the right
to direct a change in the depository arrangements or the
depository bank shall be given in writing by an authorized
representative of the corporation.
14.3 Anything in this agreement to the contrary notwithstanding,
Summit shall not be liable for any failure or bankruptcy of
any bank used as a depository of any funds maintained in the
escrow account or Insurance account, provided said bank was
approved or authorized by Insurance Company.
Section 15
Unauthorized Actions
15.1 Summit shall have full power and authority, to act on behalf
of Insurance Company, pursuant to the duties and obligations
of this agreement.
15.2 Summit shall not:
A. Bind reinsurance or retrocessions on behalf of Insurance
Company, except that Summit shall bind facultative
reinsurance contracts pursuant to obligatory facultative
agreements if the contract with Insurance Company contains
reinsurance underwriting guidelines including, for
reinsurance both assumed and ceded, a list of reinsurers with
which such automatic agreements are in effect, the coverages
and amounts or percentages that may be reinsured and
commission schedules.
B. Commit the insurer to participate in insurance or reinsurance
syndicates;
C. Appoint any producer without assuring that the producer is
lawfully licensed to transact the type of insurance for which
he is appointed.
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D. Notwithstanding any other provision of this agreement,
without prior approval of Insurance Company, pay or commit
Insurance Company to pay a claim over a
specified amount, net of reinsurance, which shall not exceed
one (1%) percent of Insurance Company's policyholder's
surplus as of December 31, of the last completed calendar
year.
E. Collect any payment from a reinsurer or commit Insurance
Company to any claims settlement with a reinsurer, without
prior approval of Insurance Company. If prior approval is
given, a report shall be promptly forwarded to Insurance
Company.
F. Permit its sub-producer to serve on its Board of Directors.
G. Appoint a sub-MGA.
H. Jointly employ an individual who is employed with the
Insurance Company.
Section 16
Fees
16.1 In exchange for these services, Insurance Company shall pay
to Summit as compensation for services rendered hereunder an
amount equal to 14.5% of collected earned normal premium,
payable by the 15th of the following month. Earned normal
premium shall be defined as annual premium less any approved
discounts, credits or adjustments, as approved by Insurance
Company.
16.2 The fees to be received by Summit shall not include the
following expenses: commission payments to agents,
reinsurance fees or professional fees, such as audit fees,
accounting fees and fees for outside professional services.
Section 17
Licensing of MGA
Summit shall at all times during the term of this agreement maintain
such licenses and approvals as are required for any of the various
services to be performed by Summit on behalf of Insurance Company.
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Section 18
Non-Assignability
This contract may not be assigned in whole or in part by Summit.
Section 19
Bond of Agent
On written request of Insurance Company, Summit agrees to furnish to
Insurance Company at Summit's cost and expense, a fidelity bond,
reasonable in amount, of a reputable insurance company in a sum
satisfactory to Insurance Company providing for the faithful
accounting of all monies collected by Summit under this agreement.
Section 20
Confidentiality
20.1 Summit agrees that all knowledge and information whether
printed, written or oral that Summit may receive from
Insurance Company or from its employees or consultants of
Insurance Company, or by virtue of the performance of
services under and pursuant to this agreement, relating to
costs, business affairs, policyholders' lists, procedures,
future plans, or technical data that belong to Insurance
Company or to those with whom Insurance Company has
contracted regarding such information, and all information
provided by Summit to Insurance Company, directly or
indirectly, in reports of work done, together with any other
information acquired or gained by Summit as done, together
with any other information acquired or gained by Summit as a
direct result of Summit's assignment to provide services
under and pursuant to this agreement, shall for all time and
for all purposes be regarded by Summit as strictly
confidential and held by Summit in confidence, and solely for
Insurance Company's benefit and use, and shall not be
directly or indirectly used by Summit or directly or
indirectly disclosed by Summit to any person whatsoever
excepting to Insurance Company or with Insurance Company's
prior written permission.
20.2 Insurance Company hereby acknowledges that Summit may
represent other Insurance Companies within the state of
Louisiana.
Section 21
Governing Regulations
Summit shall comply with all regulations of any federal, state or
municipal authority having jurisdiction over the activities of the
Insurance Industry.
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Section 22
Bankruptcy
If bankruptcy proceedings, whether voluntary or involuntary, are
commenced against either Insurance Company or Summit, or if either
party enters into a composition agreement with its creditors, either
party may terminate this agreement by giving 15 days written notice to
the other party.
Section 23
Choice of Law
This agreement has been made and entered into in the State of
Louisiana and the laws of Louisiana govern the validity and
interpretation of this agreement and the performance due hereunder.
Section 24
Accounting
Summit shall render an accounting to Insurance Company detailing all
transactions and remit all funds due under this contract on not less
than a monthly basis.
Section 25
Integration
The drafting, execution and delivery of this agreement by the parties
have been induced by no representations, statements, warranties or
agreements other than those expressed in this agreement. This
agreement embodies the entire understanding of the parties, and there
are no further or other agreements or understandings, written or oral,
in effect between the parties relating to the subject matter hereof
unless expressly referred to in this agreement.
Section 26
Modification
This agreement may not be modified unless such modification is in
writing and signed by both parties to this agreement.
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Section 27
Signature
This agreement shall not go into force until signed by Summit and by a
duly authorized officer of Insurance Company. The Parties signing this
document have verified their capacity to bind the parties stated
herein.
IN WITNESS WHEREOF, the parties have executed this agreement on May
29, 1997.
Summit Consulting, Inc. of Louisiana
By: /S/ XXXXX X. CHILDS, JR.
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Xxxxx X. Childs, Jr., President
Louisiana Employers Mutual Insurance Co.
By: /S/ XXXXX X. XXXXXXXXXX, XX.
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Xxxxx X. Xxxxxxxxxx, Xx., President
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NOTARY PUBLIC
