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EXHIBIT 10.49
CLAIMS ADMINISTRATION
SERVICES AGREEMENT
THIS CLAIMS ADMINISTRATION SERVICES AGREEMENT ("Agreement") dated as of the 1st
day of October, 1997 ("Effective Date"), is made by and between The Millers
Mutual Fire Insurance Company, a Texas mutual insurance company ("MILLERS
MUTUAL"), The Millers Casualty Insurance Company, a Texas insurance company
("MILLERS CASUALTY"), and INSpire Insurance Solutions, Inc., a Texas corporation
("INSPIRE").
Whereas, Millers Mutual and Millers Casualty shall be collectively
referred to as the "CUSTOMER"; and
Whereas, Customer and INSpire are parties to an Amended Service
Contract, effective July 1, 1997, as amended (the "Prior Service
Contract"), pursuant to which INSpire provides certain claims
administration services to Customer; and
Whereas, Customer is desirous of INSpire providing claims
administration services for which Customer is otherwise responsible in
providing insurance to its customers, as set forth in this Agreement;
and
Whereas, INSpire wishes to provide such Services for Customer; and
Whereas, Customer and INSpire desire to amend and restate in its
entirety the Prior Service Contract; and
Whereas, the parties hereto wish to reduce their Agreement to writing;
Now, therefore, for and in consideration of the premises set forth
below and other good and valuable consideration, the receipt and
sufficiency of which is expressly acknowledged, Customer and INSpire
hereby agree as follows:
ARTICLE 1. SERVICES
The "Services" to be performed by INSpire are set forth in Exhibit I to
this Agreement. All claims adjusting functions shall be performed by properly
trained and licensed insurance adjusters.
ARTICLE 2. TERM
2.1 The term of this Agreement shall commence on the Effective
Date and shall have a "Minimum Term" of 60 full calendar
months unless terminated earlier pursuant to the provisions of
this Agreement. The Agreement shall automatically be renewed
and extended after the conclusion of the Minimum Term for an
additional renewal term or terms of 36 months unless
terminated pursuant to the provisions of Article 8.
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ARTICLE 3. DUTIES OF INSPIRE
3.1 INSpire shall dedicate in its discretion the appropriate
human, equipment and computer resources to provide and, during
the term of this Agreement, will provide, Customer with the
Services enumerated in Exhibit I of this Agreement for the
Lines of Business and States specified in Exhibit I.
3.2 INSpire shall investigate, evaluate, and handle each claim
reported within the established authority for claims as set
forth in Exhibit I attached hereto and made part of the
Agreement.
3.3 INSpire will designate an employee to act as liaison with
Customer to facilitate the provision of the Services.
3.4 INSpire shall maintain the confidentiality of data or
information which is the property of Customer and which is
directly accessible to INSpire in the implementation and
performance of the Services.
3.5 INSpire shall maintain complete, accurate and orderly claims
books, files, records and accounts of all transactions in
accordance with generally accepted insurance and accounting
practices.
3.6 INSpire shall maintain permanent copies of all claims and
correspondence related to the claims. INSpire shall not
destroy these permanent copies without the written
permission of the Customer for a period of at least five (5)
years from the date of the last file activity, or the period
specified by the applicable state statute regulating
preservation of records, whichever is longer. At the end of
such five year period, upon INSpire's written request for
instructions, the Customer shall authorize INSpire to either
(a) destroy the closed files or (b) return such files to
Customer at Customer's expense. Notwithstanding the
foregoing, any claim file involving a minor shall be
separately identified and returned to Customer at the end of
such five year period. Claim files shall be the property of
the Customer. Upon an order of liquidation of Customer, the
files shall become the sole property of Customer or
Customer's estate. INSpire may, at its discretion, use
magnetic, optical, and other types of technology to store
such data.
3.7 All claims still open upon termination or cancellation of this
Agreement will require that one of the following to occur:
a. All open claims will be handled on the pre-agreed
monthly fee per claim; or
b. All open claims will be handled on a time and expense
basis at then current prevailing rates; or
c. All claims will be returned to Customer, with any holdover
reverting to a time and expense basis at then current
prevailing rates. INSpire and Customer will mutually agree
on this determination.
3.8 INSpire acknowledges and agrees that Customer, being at risk
and having
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ultimate responsibility for the claims to be administered by
INSpire, shall at all times have ultimate discretion with
respect to all matters pertaining to the claims.
3.9 INSpire will not assume the responsibility for direct
notification to any excess or quota share insurance carrier of
claims; however, reports will be provided as requested by
Customer.
3.10 INSpire and Customer acknowledge that this Agreement does not
apply to policies written by Customer through any managing
general agencies.
ARTICLE 4. DUTIES OF CUSTOMER
4.1 Customer agrees that all claims occurring during the term of
this Agreement will be reported to INSpire, unless otherwise
notified by the Customer and approved by INSpire. Customer
will provide all information relevant to particular claims to
INSpire in order for INSpire to fulfill its duties and
obligations as set out in Exhibit I.
4.2 Customer has ultimate authority and responsibility for
authorizing claims payment and settlement.
ARTICLE 5. AUDIT PROVISIONS
INSpire shall maintain records of amounts billable to and payments made on
behalf of Customer. In addition, INSpire shall maintain records of the data
utilized to perform the Services defined in Exhibit I of the Agreement until
five years following the date of last file activity, or the period specified by
the applicable state statute, whichever is the later unless such records are
earlier returned to Customer. INSpire agrees to provide reasonable supporting
documentation concerning any disputed invoice amount to Customer within 15 days
after Customer provides written notification of the dispute to INSpire. Customer
and an auditor selected by Customer shall have access to all such records for
the purposes of audit and verification during normal business hours during the
full term of this Agreement and during the respective periods in which INSpire
is required to maintain such records.
ARTICLE 6. PRICE AND PAYMENT
6.1 Customer agrees to pay Service Fees and Rates as specified in
Exhibit II hereto.
6.2 The Services Fees and Rates in Exhibit II hereto may be
increased effective as of each anniversary of the Effective
Date during the existence of this Agreement by the
percentage change in the United States Consumer Price Index
for all Urban Users (CPI-U) published by the United States
Bureau of Labor Statistics, for the immediately preceding
calendar year. In the event a vendor supplying any service
or product to INSpire required for INSpire to provide the
Services to Customer increases its rates charged to INSpire,
INSpire may increase the contracted rates set forth herein
to include such increased costs.
6.3 The Service Fees and Rates may increase by mutual agreement,
if changes in the Services mutually agreed to in writing
substantially alter the servicing personnel,
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equipment, or result in the servicing being done on a
different system.
6.4 When Customer requests INSpire personnel to travel to any
location for the purpose of performing specific claims work
under this Agreement, the Customer will, in addition to the
charges specified for Services, pay INSpire for all reasonable
travel, lodging and out-of-pocket expenses.
6.5 Customer agrees to pay all tariffs and taxes that are now or
may become applicable to the Services rendered hereunder, as
measured by payments made by Customer to INSpire under this
Agreement, or as required to be collected by INSpire or paid
by INSpire to tax authorities based on this Agreement. This
provision includes but is not limited to sales, use, or any
other form of tax based on Services performed, but does not
include taxes based upon the net income of INSpire.
6.6 Service Fees and Rates for Services will be due and payable
15 days after the close of the month in which services are
performed.
6.7 Customer agrees that INSpire will have the right to
renegotiate the Service Fees in the event of statutory,
regulatory, or judicial changes that require additional
activities not contemplated at the inception of this
Agreement.
ARTICLE 7. LICENSE, TRADE SECRET AND PROPRIETARY RIGHTS
7.1 Although INSpire from time to time may use its own proprietary
computer software products in the performance of the Services
enumerated in Exhibit I of this Agreement, this Agreement does
not grant a license or any other interest to Customer for the
use of any software products.
7.2 This Agreement grants to Customer no right to possess or
reproduce, or any other interest in, the computer software
programs performing all or any part of the Services or their
specifications in any tangible or intangible medium.
Customer may not mortgage, hypothecate, sell, assign,
pledge, lease, transfer, license or sublicense the computer
software programs performing all or any part of the
Services, nor allow any person, firm, or corporation to
transmit, copy or reproduce the computer software programs
performing all or any part of the Services or their
specifications in whole or in part. In the event Customer
shall come into possession of the computer software programs
performing all or any part of the Services, Customer shall
immediately notify INSpire and return the computer software
programs performing the Services and all copies of any kind
thereof to INSpire upon INSpire's request.
7.3 Customer promises and agrees not to disclose or otherwise make
computer software programs performing all or any part of the
Services available to any person other than employees of
Customer required to have such knowledge for normal use of
them. Customer agrees to obligate each such employee to a
level of care sufficient to protect the computer software
programs performing all or any part of the Services from
unauthorized disclosure.
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7.4 INSpire warrants and represents that it owns, or is licensed
with respect to, all software it will employ in the
performance of this Agreement. In the event this Agreement
is terminated, INSpire will grant a license, upon terms and
conditions set forth in a licensing agreement, to Customer
to use the software which INSpire employs in the performance
of this Agreement to the extent INSpire is not otherwise
prohibited from doing so by contract or by operation of law.
INSpire shall use its best efforts to deliver the software,
as well as all necessary manuals, to the Customer
immediately upon delivery of data to the Customer.
7.5 THE OBLIGATION OF CUSTOMER UNDER THIS ARTICLE SHALL CONTINUE
AFTER THIS AGREEMENT IS TERMINATED.
ARTICLE 8. TERMINATION
8.1 Either party may terminate this Agreement without cause at the
expiration of the Minimum Term set forth in Section 2.1,
provided the other party receives at least six (6) months
prior written notice of termination. Termination without cause
during any renewal term would also require six months notice.
8.2 Either party may terminate this Agreement upon breach by the
other party of any one or more of the terms and conditions of
this Agreement or the related Exhibits, provided that the
party in breach is notified in writing by the other party of
the breach and the breach is not cured or a satisfactory
resolution agreed upon in writing within thirty (30) days of
such written notification, or if such breach is non-monetary
and is of such a nature that it cannot reasonably be cured
within such time commenced to cure same and does not
diligently continue to and actually cure same within a
reasonable period thereafter. The obligation of INSpire
referred to in this Section 8.2 shall include, and shall be
limited to:
(a) the obligation to observe and comply with applicable
laws, regulations, rules and rates affecting the
transaction of business hereunder; and
(b) the obligation to provide Services set forth in
Exhibit I.
8.3 In the event either party makes a general assignment for the
benefit of creditors or files a voluntary petition in
bankruptcy or petitions for reorganization or arrangement
under the bankruptcy laws, or if a petition in bankruptcy is
filed against either party and remains undismissed for a
period of thirty (30) days, or if a receiver or trustee is
appointed for all or any part of the property and assets of
either party, the other party may terminate the Agreement
immediately.
8.4 Rights Upon Termination. Upon expiration or termination of
this Agreement:
(a) The obligations of the Customer and INSpire to the date
of termination shall be discharged promptly;
(b) INSpire shall promptly return to the Customer any forms
or other
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supplies imprinted with the Customer's name, regardless of
who incurred the cost for same.
ARTICLE 9. LIMITATION OF LIABILITY AND REMEDIES
9.1 If data is processed in error due to an error or defects in
the Services provided by INSpire, then upon INSpire receiving
notice of such error or defect, INSpire shall reprocess such
data without charge to Customer.
9.2 INSpire shall indemnify, protect, defend and hold Customer,
its officers, directors, shareholders and employees harmless
from and against any and all losses, damages, liabilities,
fines, settlements, penalties and judgments (including
reasonable costs and attorney's fees) (herein "Damages")
arising out of or resulting from the negligent, willful or
intentional acts of INSpire performed in connection with
this Agreement or arising from a breach of this Agreement by
INSpire . Customer shall indemnify, protect, defend and hold
INSpire, its officers, directors, shareholders and employees
harmless from and against any and all Damages arising out of
or resulting from the negligent, willful or intentional acts
of Customer performed in connection with this Agreement or
arising from a breach of this Agreement by Customer. This
indemnity shall survive the earlier expiration or
termination of this Agreement.
9.3 In providing services hereunder, INSpire shall have a duty to
act, and cause its affiliates and designees to act, in a
reasonably prudent manner. Neither INSpire, nor any officer,
director, employee or agent of INSpire shall be liable to
Customer for any error of judgment or for any loss incurred by
Customer in connection with the matters to which this
Agreement relates, except a loss resulting from the gross
negligence or willful misconduct on the part of INSpire.
9.4 Customer's remedies and INSpire's liability for breaches of
this Agreement and errors or defects in the delivery of
Services are limited to the remedies and liabilities set forth
in Sections 8.2, 9. 1, 9.2 and 9.3 of this Agreement.
INSpire's remedies and Customer's liability for breaches of
this Agreement are limited to the remedies and liabilities set
forth in Section 8.2, 9.2 and 9.3 of this Agreement.
ARTICLE 10. GENERAL
10.1 The parties shall not be liable or deemed to be in default for
any delay or failure in performance under this Agreement or
interruption of Service resulting, directly or indirectly,
from acts of God, 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.
10.2 All notices which are required to be given or submitted
pursuant to this Agreement shall be in writing and shall be
either delivered in person or sent by certified mail, return
receipt requested, to the address set forth herein or to
such other address as the parties may from time to time
designate in writing for such purposes. Notices shall be
deemed to have been given at the time when personally
delivered or, if mailed in a certified post-paid envelope,
upon the fifth
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day after the date such notice shall be postmarked. All
notices to INSpire shall be addressed to the attention of
the Chief Financial Officer.
10.3 The parties covenant and promise not to disclose the terms and
conditions of this Agreement to any third party unless
expressly agreed to by the parties. Notwithstanding the
foregoing, the parties agree that disclosure may be made to
any auditors, regulators, carriers, or reinsurers on a need to
know basis only without prior consent.
10.4 This Agreement and any Exhibits made a part hereof: (a)
constitute the entire Agreement between the parties and
supersede and merge any and all prior discussions,
representations, negotiations, correspondence, writings and
other Agreements and together state the entire understanding
and agreement between INSpire and Customer with respect to
the Services described; (b) may be amended or modified only
in a written instrument agreed to and signed by INSpire and
Customer; and, (c) shall be deemed to have been entered into
and executed in the State of Texas and shall be construed,
performed and enforced in all respects in accordance with
the laws of that state. For purposes of venue, this
Agreement is performable in Tarrant County, Texas.
10.5 Neither party hereto shall be deemed to have waived any rights
or remedies accruing to it hereunder unless such waiver is in
writing and signed by such party. No delay or omission by
either party hereto in exercising any right shall operate as a
waiver of said right on any future occasion. All rights and
remedies hereunder shall be cumulative and may be exercised
singularly or concurrently.
10.6 The descriptive headings of this Agreement are intended for
reference only and shall not affect the construction or
interpretation of this Agreement.
10.7 Wherever the singular of any term is used herein it shall be
deemed to include the plural wherever the plural thereof may
be applicable.
10.8 The parties shall not assign this Agreement or any of its
rights hereunder without the prior written consent of the
other party which consent shall not be unreasonably withheld
unless the proposed assignment is to a competitor of the other
party.
10.9 If any provision of this Agreement or any Exhibit hereto or
the application thereof to any party or circumstances shall,
to any extent, now or hereafter be or become invalid or
unenforceable, the remainder of this Agreement shall not be
affected thereby and every other provision of this Agreement
shall be valid and enforceable, to the fullest extent
permitted by law.
10.10 In the event of any action between Customer and INSpire
seeking enforcement of any of the terms and conditions of this
Agreement, the prevailing party to such action shall be
awarded its reasonable costs and expenses, including its court
costs and reasonable attorney's fees.
10.11 The parties hereto are independent contractors of one another,
and they should
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not in any instance be construed as partners or joint
ventures.
INSPIRE AND CUSTOMER CERTIFY BY THEIR UNDERSIGNED AUTHORIZED
AGENTS THAT THEY HAVE READ THIS AGREEMENT, INCLUDING ALL
EXHIBITS HERETO, AND AGREE TO BE BOUND BY ITS TERMS AND
CONDITIONS.
EXECUTED to be effective the ___ day of _________, 19___.
INSpire Insurance Solutions, Inc. The Millers Mutual Fire Insurance Company
BY: BY:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
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EXHIBIT I
CLAIMS ADMINISTRATION SERVICES AGREEMENT
by and between
INSPIRE INSURANCE SOLUTIONS, INC.
and
MILLERS INSURANCE GROUP
A. SERVICES:
During the term of this Agreement INSpire shall provide the Claims
Administration Services defined below for the Lines of Business (Section B of
this Exhibit I) for the States specified (Section C of this Exhibit I) written
by or through Customer. INSpire will, in accordance with guidance and direction
provided by the Customer provide all Clairns Administration Services and general
management of these Services described herein for subject claims as follows:
1. Customer grants INSpire the authority to investigate, evaluate, and handle
each claim reported according to applicable state law, the terms and
conditions of the policy and any written standards provided by Customer.
INSpire shall not have any authority to alter or discharge any policy or
waive any policy provision or condition.
2. INSpire will set up a claims operation center that will function as a
control unit.
3. Coverage will be verified on all cases.
4. INSpire will administer the appraisal/assessment process and will use in
this endeavor a combination of staff, independent appraisers and direct
repair facilities.
5. INSpire will perform all reasonable and necessary administrative and
clerical work in connection with claim or loss reports.
6. INSpire will establish and maintain a claim file for each reported claim or
loss. The claim file will have a daily activity log, which shall be
available for review at any and all reasonable tirnes by the Customer
subject to the provisions of Article 5 of the Agreement.
7. INSpire will record and report each claim promptly to the Customer with a
recommended reserve. INSpire shall consult with Customer with respect to
any of the following:
(a) Any loss or claim resulting in legal action being instituted against
INSpire or the Customer;
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(b) Any loss or claim causing a complaint to be filed with any regulatory
authority;
(c) Any inquiry from any regulatory authority, including but not limited
to any insurance department, with respect to any claim or claims, even
if no complaint causes such inquiry;
(d) Any claim in which INSpire deems appropriate to rescind policy
coverage for material misrepresentation;
(e) Any claim involving an allegation of extra contractual obligations, or
bad faith claim handling;
(f) Any claim involving a fatality, amputation, spinal cord or brain
damage, loss of eyesight, extensive xxxxx, poisoning, or multiple
fractures; or
(g) Any claim that the customer desires to be kept advised of during the
life of the claim;
(h) Any claim where there has been a demand for policy limits and INSpire
does not evaluate the value of the claim to include settlement at that
amount.
8. INSpire will provide monthly and year-to-date reports on all claims
activity including new claims reported, claims pending, claims closed and
reserve changes. The reports will include:
(a) Information and statistical data (i) required by Insurance Services
Office ("ISO"), and (ii) necessary for Customer to prepare any reports
required by the National Association of Insurance Commissioners, or
(iii) other reports reasonably requested by Customer;
(b) Loss Runs with paid claims and outstanding reserves remaining at the
end of each monthly report period, categorized as indemnity, medical
payment, or loss adjustment expense, plus any other information
required by the Annual Statement instructions or state regulatory
agencies;
(c) Check Registers;
(d) Reports needed by Customer for the filing of reinsurance claims or
quarterly reinsurance updates.
9. INSpire will perform a periodic review at mutually agreed upon intervals of
outstanding claim reserves, and recommend changes to outstanding claim
reserves.
10. INSpire will prepare checks and vouchers, compromises, releases, agreements
and any other documents reasonably necessary to finalize and close claims.
INSpire will issue
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payments of claims and allocate loss adjustment expenses only within the
guidelines as authorized by Customer.
For purposes of settling claims and paying claim-related expenses, Customer
has agreed to establish, maintain and fund a separate bank account from
which INSpire may draw against as hereinafter set forth (the "Claim
Account").
Customer agrees to deposit additional funds into the Claims Account on a
weekly basis if necessary to maintain it at a level sufficient to allow
INSpire to carry out its obligations under this Agreement. INSpire shall
regularly provide information and estimates to Customer to enable Customer
to maintain the Claims Account at an appropriate level. Customer shall
provide to INSpire such information as is necessary for INSpire to draw
checks on the Claims Account.
INSpire hereby guarantees that any check it prepares will be signed and
issued only in accordance with the procedures adopted by Customer. Any
check prepared by INSpire on the Claims Account must be signed by two
authorized individuals.
INSpire shall promptly deposit any monies collected through salvage and
subrogation to the Claim Account, and maintain a register of all such
collections and deposits (the "Salvage and Subrogation Register"). The
Salvage and Subrogation Register shall include, but shall not be limited
to, the following information: date of deposit, date of receipt of funds,
the claim number, the payer, and the amount and purpose of such payment.
(The Claim Register shall include, but shall not be limited to, the
following information: claim number, date of check, payee, amount and check
number).
INSpire shall reconcile the Claim Register and the Salvage and Subrogation
Register to the Claim Account on a monthly basis.
11. Service standards and claims documentation will be in accordance with
standards set by Customer and agreed to by INSpire. INSpire will be in
compliance with all state regulations dealing with the adjusting and
handling of claims. INSpire will periodically review the development of the
claims handling procedure with the Customer to identify problems and
recommend corrective action.
12. INSpire will diligently pursue and prosecute Customer's salvage and
subrogation rights relating to any losses. INSpire will use reasonable
efforts to collect and deposit funds arising from the enforcement of such
rights into the Claim Account. INSpire will report monthly on
salvage/subrogation receipts.
13. INSpire will provide Special Investigative Services in accordance with
guidelines agreed to by Customer on a time and expense basis.
14. INSpire will provide Customer claim information to prepare reports (i)
required by the Internal Revenue Service, and (ii) other reports reasonably
requested by Customer.
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B. AUTHORIZED LINES OF BUSINESS:
Private Passenger Automobile, Homeowners, Commercial Casualty Multi-Peril,
Commercial Property, Farm-owners, Umbrella.
C. AUTHORIZED STATES:
Alabama Louisiana Oklahoma
Arizona Michigan Oregon
Arkansas Minnesota South Carolina
California Mississippi South Dakota
Colorado Missouri Tennessee
Florida Montana Texas
Idaho Nebraska Utah
Illinois Nevada Washington
Indiana New Mexico Wisconsin
Iowa North Carolina Wyoming
Kansas North Dakota
Kentucky Ohio
D. LOCATION OF PROVISION OF SERVICES;
INSpire shall provide the Services defined above at an INSpire service
center.
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EXHIBIT II
SERVICE FEES & RATES
CONSULTANTS $125.00 per hour
PROGRAMMERS $125.00 per hour
CLAIMS ADMINISTRATION SERVICES
Fees will be based on a charge per claim as defined below. A claim is
defined as an open feature as shown below. Monthly maintenance fees are for
claims open greater than 31 days at each month end.
FEATURE NEW CLAIM FEE MONTHLY FEE
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Auto BI/UM $450 $100
Auto Non-BI/UM $250 $50
Auto First Party $150 $50
Homeowners $600 $60
Commercial Property $700 $70
Commercial Casualty $1,000 $100
Subrogation 25% of recoveries
Salvage 15% of recoveries
SIU Services $60.00/hr. plus outside fees
Homeowner, Commercial Property and Commercial Casualty claims with an incurred
loss greater than $100,000 will be billed at "time and expense", rather than the
rates shown on the above schedule. "Time and expense" is defined as $60.00 per
hour plus any outside adjusting fees.
EXPENSES EXCLUDED.
Legal, Reconstruction Experts, Agronomist and Engineers.
SPECIAL FEES
Claim system modifications requested and approved by Customer will be
charged to the Customer on a time and materials basis utilizing the
appropriate mix of service personnel required to perform the modification.
Additional reports or modifications to agreed upon reports will also be
charged to Customer on a time and materials basis utilizing the appropriate
mix of service personnel required to perform the modifications or produce
new reports. Hourly rates for such personnel are listed above.
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