Exhibit 10.16
POLICY ADMINISTRATION
SERVICES AGREEMENT
This Policy Administration Services Agreement ("Agreement") is effective
as of the 1st day of October, 1997 ("Effective Date"), by and between INSpire
Insurance Solutions, Inc., a Texas corporation with principal offices at 300
Burnett, Fort Worth, Texas 76102 ("INSpire"), and The Millers Mutual Fire
Insurance Company and The Millers Casualty Insurance Company, having their
principal place of business at 300 Burnett Street, Fort Worth, Texas 76102
(collectively, the "Customer").
Whereas, Customer is desirous of INSpire providing Policy Administration
Services for which Customer is otherwise responsible in providing insurance to
its customers, as set forth in this Agreement;
Whereas, INSpire wishes to provide such Services for Customer;
Whereas, the parties hereto wish to reduce their Agreement to writing;
and
Whereas, Customer is comprised of The Millers Mutual Fire Insurance
Company and The Millers Casualty Insurance Company.
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. INSpire shall not be involved in the production of business on
behalf of Customer other than as set forth in Exhibit I.
ARTICLE 2. TERM
2.1 The term of this Agreement shall commence on the Effective Date and
shall have a "Minimum Term" of 24 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 term or terms of 12
months unless terminated pursuant to the provisions of Article 8.
2.2 The "Implementation Period" shall begin on the Effective Date of this
Agreement and shall end on the date INSpire notifies Customer that
INSpire is capable of receiving all future applications on behalf of
Customer. During the Implementation Period, INSpire shall prepare an
analysis of the lines of business included within the terms of this
Agreement. Customer shall assist INSpire during such "Implementation
Period" with the gathering of appropriate data, information,
background, and other facts as needed by INSpire to enable INSpire to
perform the Services enumerated in Exhibit I of this Agreement.
ARTICLE 3. DUTIES OF INSPIRE
3.1 The Implementation Period will be used to assemble the staff, arrange
for furniture and fixtures, and prepare for the start of business. All
procedures required to conduct business as well as the requisite staff
training will occur during this period.
3.2 INSpire shall, as it shall determine in its discretion, dedicate 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.
3.3 INSpire shall 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 files, records
and accounts of all transactions in accordance with generally accepted
insurance and accounting practices. INSpire shall be responsible for
the timely remittance of all premiums due Customer.
3.6 INSpire shall maintain permanent copies of all policies and
applications and correspondence related to the policies. 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
termination date of the applicable policies, or the period specified by
the applicable state statute regulating preservation of records,
whichever is longer. INSpire may, at its discretion, use magnetic,
optical, and other types of technology to store such data.
3.7 INSpire acknowledges and agrees that Customer, being at risk and having
ultimate responsibility for the policies to be administered by INSpire,
shall at all times have ultimate discretion with respect to all matters
pertaining to the policies.
ARTICLE 4. DUTIES OF CUSTOMER
4.1 Customer shall provide the data necessary, in a timely manner and in a
format acceptable to INSpire, for INSpire to perform the Services
defined in Exhibit I of this Agreement. Customer acknowledges that
delays in delivery of required information will result in a similar
delay in fulfilling Services.
4.2 Customer acknowledges that INSpire assumes no risk or responsibility
for Customer's claims administration, claim payments or recovery
pursuant to this Agreement.
4.3 Customer will provide INSpire with the policy jackets and the
information and specifications necessary to perform the Services
defined in Exhibit I of this Agreement, including but not limited to
Customer's banking institution account information, corporate and
subsidiary logos (if applicable), style and specifications of
printed documents such as insurance policies, and all other
information and specifications necessary to perform the Services.
4.4 Customer shall appoint a Project Manager with sufficient authority
within Customer's organization to facilitate Customer's role as INSpire
performs the Services enumerated in Exhibit I of this Agreement.
4.5 Customer will be responsible for and make available to INSpire any
software products, systems and/or licenses to INSpire necessary to
perform the Services enumerated in Exhibit I.
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 termination date of the applicable policies, or the
period specified by the applicable state statute, 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 upon
mutually agreed upon prior notice 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.
INSpire shall provide access to its books, records and bank accounts to the
insurance departments of all applicable jurisdictions in a form usable by the
departments.
ARTICLE 6. PRICE AND PAYMENT
6.1 Customer agrees to pay Service Rates as specified in Exhibit II
hereto.
6.2 The Service Rates in Exhibit II hereto may be changed effective as of
each anniversary of the Effective Date during the existence of this
Agreement by the percentage increase 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 Rates may increase by mutual agreement, if changes in the
Services mutually agreed to in writing substantially alter the
servicing personnel, 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 policy administration 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 for Services will be due and payable 15 days after the
close of the calendar month for which the Services are provided.
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.
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 to be 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 prior to the terminations of the renewal
term.
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
notice period, if the breaching party has not within such time
commenced to cure same and does not diligently continue to and actually
cure same within a reasonable period thereafter. The obligations of
INSpire referred to in this Section 8.2 shall include, but shall not be
limited to:
(a) the obligation to deposit, report and remit premiums;
(b) the obligation to remit return premiums to insureds when due;
(c) the obligation to process all policies, endorsements, and
notices of cancellation or non-renewal, pursuant to Customer's
underwriting guidelines or other instructions;
(d) the obligation to observe and comply with applicable laws,
regulations, rules and rates affecting the transaction of
business hereunder; and
(e) the obligation to provide the 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 policies, forms
or other supplies imprinted with the Customer's name, regardless
of who incurred the cost for same.
(c) INSpire shall promptly provide the Customer, without charge, with
a tape back-up of all data files (the "Data").
ARTICLE 9. LIMITATION OF LIABILITY AND REMEDIES
9.1 If data is processed in error due to an error or defect 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 INSpire's liability to Customer for Damages arising from errors and
defects in performing the Services (whether the damage is based in tort
or contract, law or equity) is limited to an amount not to exceed the
usual and customary charges paid to INSpire under this Agreement in any
one month of this Agreement plus costs and attorney's fees as provided
in Section 10.11. With respect to breach of this Agreement which does
not result in or constitute a termination or repudiation of this
Agreement, Customer's liability to INSpire for Damages is limited to an
amount not to exceed the usual and customary charges paid to INSpire
under this Agreement in any one month of this Agreement plus costs and
attorney's fees as provided in Section 10.11.
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 Sections 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
Services 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 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 or regulators on a need to
know basis only without prior consent.
10.4 This Agreement and any Exhibits made a part hereto: (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 in 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 not in any instance be construed as partners or joint venturers.
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 1st day of October, 1997 (the "Effective
Date").
INSpire Insurance Solutions, The Millers Mutual Fire Insurance
Inc. Company
By: /S/ JEFFREY W. ROBINSON By: /S/ JOY J. KELLER
--------------------------- ------------------------------
Name: Jeffrey W. Robinson Name: Joy J. Keller
Title: Executive Vice President Title: Executive Vice President and CFO
Date: December 31, 1997 Date: December 31, 1997
The Millers Casualty Insurance
Company
By: /S/ JOY J. KELLER
-----------------------------
Name: Joy J. Keller
Title: Executive Vice President and CFO
Date: December 31, 1997
<PAGE>
EXHIBIT I
to the
POLICY ADMINISTRATION SERVICES AGREEMENT
by and between
INSPIRE INSURANCE SOLUTIONS
and
MILLERS INSURANCE GROUP
A. SERVICES
During the term of this Agreement, INSpire shall provide the Policy
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 Policy Administration Services and general
management of these Services described herein for the subject business as
follows:
1. INSpire will issue the Customer's policies, process renewals,
cancellations, and reinstatements. INSpire will use such non-renewal or
cancellation notices as may be required by Policy wording or regulatory
authority.
2. Invoices will be processed for additional premiums and renewal bills.
3. Refunds will be processed for return premiums.
4. Inquiries from agents, insureds, and other relevant third parties
(mortgagees, lienholders, etc.) will be handled on behalf of the
Customer.
5. The necessary services to insure personnel assigned to support the
Customer are provided with the necessary space, furniture, fixtures,
electrical power, computer connections, telephones, and other required
assets to support the services.
6. The mailing of all necessary policy documents to relevant parties.
7. Customer billing will be supported through direct bill. Direct
premiums will be submitted through lockbox technology.
8. Accounting services of receiving and distributing premiums, maintaining
trust accounts, accounts and paying agent commissions, in accordance with
the Customer's obligations including but not limited to:
a. Premium Bank Account. Promptly upon receipt thereof, INSpire
shall deposit all premiums and other funds collected for business
written under this Agreement into a deposit-only bank account to
be established and controlled by the Customer (the "Premium Bank
Account"). Until such deposit is made, INSpire shall hold all
premium and return premium in a segregated account and shall be
deemed to have a fiduciary responsibility to the Customer to turn
over such funds to Customer.
b. Operating Account. After Customer has established and funded a
separate bank account which INSpire may draw upon to pay return
premium due policyholders (hereinafter called the "Operating
Account"), INSpire shall reconcile all disbursements from the
Operating Account each month by type and amount of disbursement
(e.g., return premium, commissions due Agents) and furnish a copy to
the Customer.
c. Reports. All reports and reconciliations to be provided to the
Customer under this Agreement (whether in hard copy or maintained
on computers) shall be forwarded within seven (7) business days
after the end of each month.
9. INSpire will provide reports reasonably requested by Customer in the
Customer's ordinary course of business.
10. Commission Handling. The INSpire Servicing Office will calculate and pay
commissions to the producer on Customer's behalf, or will invoice and
receive the return of commissions from the producer on return premium
transactions; the INSpire servicing office will prepare a magnetic tape of
commission data for Customer to prepare Federal 1099 tax statements for
commissions paid to producers.
11. Additional reports or modifications to agreed upon reports will be charged
to the Customer on a time and materials basis utilizing the appropriate
mix of service personnel required to perform the modifications or produce
new reports. Rates for such personnel are listed in Exhibit II.
B. AUTHORIZED LINES OF BUSINESS:
Personal Lines:
Automobile, Dwelling Fire, Homeowners, Inland Marine, Non-Standard
Auto, Umbrella.
C. AUTHORIZED STATES:
Alabama, Idaho, Louisiana, New Mexico, Oregon and Texas and such other
jurisdictions as the parties may from time to time agree upon.
D. LOCATION OF PROVISION OF SERVICES:
INSpire shall provide the Services defined above at a INSpire service
center designated by INSpire.
<PAGE>
EXHIBIT II
SERVICE RATES
CONSULTANTS $125.00 per hour
PROGRAMMERS $125.00 per hour
POLICY ADMINISTRATION SERVICES
$6.68 per month, per in-force policy.
Policy administration fees are subject to a minimum of $100,000 per month,
during which services are provided.
SPECIAL FEES
When requested and authorized by the Customer, processing system
modifications will be charged to the Customer on a time and materials
basis utilizing the appropriate mix of service personnel required to
perform the modifications. Hourly rates for such personnel are listed
above.
TRAVEL
Customer will reimburse INSpire for all travel necessary for work
performed under this agreement.
