|
Exhibit
10.17
MANAGING GENERAL AGENCY
AGREEMENT
This Agreement is entered
into between American Physicians Insurance Company, a Texas
Insurance Company (hereinafter called “Company”) and
American Physicians Insurance Agency, Inc., a Texas corporation
(hereinafter called “Managing Agent”). The effective
date of this Agreement is April 1, 2007.
RECITALS
WHEREAS , the Company
has been engaged in the business of insuring medical professional
liability risks for physicians, surgeons and ancillary medical
personnel since 1976; and
WHEREAS , the Company
previously engaged in the insurance business as a reciprocal
exchange; and
WHEREAS , all
management and day-to day services for the Company were performed
by a corporate attorney-in-fact from 1976 until the Company was
converted from a reciprocal exchange to a stock insurance company;
and
WHEREAS , the Managing
Agent has an existing Managing General Agency Agreement with the
Company; and
WHEREAS, the corporate
attorney-in-fact for the Company was an entity that is affiliated
with Managing Agent; and
WHEREAS , the Company
has recently converted to a stock insurance company and the parties
desire to replace both the existing Management Agreement with the
attorney-in-fact and the existing Managing General Agency Agreement
with this Agreement; and
WHEREAS , in order to
provide continuity of business for the converted Company and its
policyholders as well as maintaining responsibilities for
performing insurance service functions, the Company believes it is
desirable to appoint the Managing Agent to continue to provide
management and agency functions for the Company; and
WHEREAS , the Managing
Agent desires to continue to provide management, day-to day
services such as marketing, appointment and supervision of agents,
sales and distribution, underwriting, claims handling, risk
management, policy administration, and other administrative
services for the Company;
NOW, THEREFORE , in
consideration of the mutual covenants and agreements made and given
herein, and for other valuable consideration, receipt of which is
hereby acknowledged, the parties hereto mutually agree as
follows:
SECTION 1: AGENCY
APPOINTMENT AND AUTHORITY
1.1. Appointment . The
Company hereby appoints the Managing Agent as its exclusive
Managing Agent to perform the duties set forth herein. Managing
Agent is vested with full authority to accomplish, effect and
execute such duties upon the terms and conditions set forth
below.
1.2. Acceptance of
Appointment . The Managing Agent hereby accepts the above
appointment and agrees to perform its duties under this Agreement
to the best of its ability, knowledge, skill and
judgment,
1.3. Duties and
Responsibilities of the Managing Agent . The Managing Agent is
authorized to perform the following activities for
Company:
a. Underwriting :
Provide all underwriting services such as the development of the
underwriting guidelines, evaluation of risk and issuance of
binders, policies and endorsements of the Company
(“Policies”). The Managing Agent will work directly
with the Medical Director of the Company and premium rates will be
approved by the Company. The lines of insurance include medical
professional liability insurance in Texas and other jurisdictions
where the Company is licensed. The maximum premium volume, limits
of liability, exclusions, territorial limitations, policy
cancellation provisions, and maximum policy period shall be part of
underwriting that shall be approved by the Company after
consultation with API Advisory, LLC.
b. Marketing and Sales
Material : Create marketing and sales promotional material
relating to the business for the Company. The Company shall have
the right to review and approve, in writing, all consumer material
relating to the Policies prior to the Managing Agent printing the
material. The Managing Agent shall be responsible for all costs
associated with printing and distribution of consumer material.
Managing Agent shall be responsible for the solicitation and
evaluation of applications for coverage in compliance with
underwriting guidelines acceptable to the Company.
c. Accounting and
Reporting : Provide the required accounting and reporting
services for the Company including annual reports to the Texas
Department of Insurance and other regulatory agencies. Managing
Agent shall, not less than monthly, submit an account report to the
Company which includes a statement of written, earned, and unearned
premiums, loss and loss expenses paid and outstanding, losses
incurred but not reported and any management fees. The Managing
Agent may satisfy its reporting requirement by confirming the
insurer’s rending of such account received by or confirmed to
the insurer not later than 60 days from the close of the month for
which business is reported. Managing Agent shall keep the account
on file for at least five years and shall make the account
available to the Commissioner of Insurance (the
“Commissioner”) for review. Managing Agent shall
maintain records for each insurer for which it does business
separately and maintain records for at least five years or until
the completion of a financial examination by the insurance
department of the state in which the insurer is domiciled,
whichever is longer.
d. Billings : Bill,
collect and remit to the Company all premiums for Policies issued
under the terms of the Company’s financing arrangements.
Managing Agent shall transmit return premiums, maintain the
necessary records to support each transaction and regularly submit
reports to the Company in accordance with the accounting and
records
2
guidelines specified by the
Company. Managing Agent shall remit funds due to the Company not
later than 30 days from the end of the month in which the coverage
is issued.
e. Commissions : Be
entitled to retain out of premiums collected the commissions paid
to Agents by the Managing General Agent specified in Appendix
I–Commissions.
f. Policy Cancellation
: Cause cancellation or non-renewal of Policies on any risk bound
by the Managing Agent for nonpayment of premium or other causes as
the Managing Agent may deem to be in the interests of the Company,
or as directed by the Company in accordance which the laws of the
applicable jurisdiction.
g. Agents : Accept
proposals of insurance from other agents, brokers or other
solicitors.
h. Select and Appoint
Agents : Select and appoint all producing agents for Company.
If applicable law requires agents to be appointed by the Company,
the Company agrees to extend its appointment to such agents for
purposes of producing business for the Company. In addition,
Managing Agent shall monitor and enforce full compliance of all
agents with all laws, regulations, rules and other legal
requirements applicable to activities of agents. The Managing Agent
agrees that it shall be responsible for ensuring compliance by
agents. At the Company’s request, the Managing Agent will
terminate any agent appointed by the Company.
i. Special Services :
Provide directly, or through appropriate representatives, special
services as may be required for or by individual risks. Subject to
applicable laws, the Managing Agent may charge a fee for such
services and the Company will be responsible for reimbursing the
Managing Agent for such services.
j. Residual Market
Assessments : Determine applicability to the business of the
Company of any legally-mandated residual market or other special
assessment fund, including, but not limited to, state guaranty
funds. If applicable, the Managing Agent shall determine premium
surcharges, collect funds from the insureds, and regularly remit
all such funds directly to the catastrophe or other special
assessment fund and shall send the Company a report detailing
premium surcharge calculations and indicating amounts payable to
the applicable state(s).
k. Credit Extensions :
Be fully responsible for the amount of the premium due to the
Company on risks or Policies written or bound under this Agreement
in which the Managing Agent has extended payment options, whether
or not Managing Agent has collected the premium from the insureds
or policyholders and/or their authorized representatives, unless
non-payment of premium is the result of any act or omission of the
Company.
l. Governmental
Contacts : Notify the Company as soon as reasonably
practicable, and in any event within ten (10) business days,
in writing, of all contacts and correspondence received from
insurance regulatory and other governmental authorities
3
by Managing Agent or agents
directly or indirectly involving Company and forward promptly upon
receipt all summonses, complaints, subpoenas or other court
documents and cooperate fully with Company in making any
responses.
m. Claims
Administration : Manage all aspects of the insurance claims
originating from Policies, perform all claims administration for
the Company and regularly submit reports on claims administration
to the Company. This authority shall include, without
limitations:
(1) handling all submitted
claims according to the requirements of any appropriate legislative
and regulatory authority; accepting and reviewing all submitted
claims and loss reports; determining coverage for, administering,
adjusting, settling, resisting or otherwise handling all submitted
claims and losses in accordance with the authority granted by
Company; administering, adjusting, settling, resisting, or
otherwise handling all submitted claims and losses in accordance
with Company’s specific written instructions, as may be
amended in writing from time to time; filing any reports,
maintaining licenses and any other authorizations necessary or
required by law to carry out Managing Agent’s obligations and
duties under this Agreement; establishing and maintaining claim
and/or loss files for all submitted claims and losses, which shall
be available at no additional charge to Company or Company’s
designee, for review or audit at reasonable intervals and with
reasonable prior notice by Company or Company’s designated
auditor. In the event of a dispute, Company shall have final
authority over disputes concerning claims settlement and setting of
loss reserves.
(2) Managing Agent shall make
available for review with reasonable prior notice by Company all,
financial, operational, historical and procedural records
pertaining to claims; retain and store files for each claim in
accordance with the period of time, location and format required by
applicable law and any File Retention and Destruction Policy set
forth by the Company. If electronic claim files are used, the
Managing Agent must submit transmissions on a weekly
basis.
(3) Company and Managing
Agent agree that Managing Agent shall have authority to make
payments and settlements according to the terms of this Agreement
and without Company’s prior approval up to the limits set
forth below. Managing Agent agrees to obtain approval of the
President of the Company before making payments or settlements
based on the lesser of (i) 1% of the Company’s surplus
as of December 31 of the last completed calendar year, or
(ii) $250,000.
(4) Managing Agent shall
promptly report to the President of the Company any claim that
involves a coverage dispute, a demand in excess of policy limits;
or allegations of bad faith, violations of the Deceptive Trade
Practices Act, or violations of the Insurance Code, Chapter
541.
4
n. Staff : Maintain a
staff of competent and trained personnel, supplies and equipment
for the purpose of performing its duties under this Agreement and
shall promote and safeguard the best interest of the Company and
perform all acts reasonably necessary to insure the efficient and
proper conduct of the services covered by this
Agreement.
o. Compliance : Use
best efforts to observe and comply, and cause any designee(s) to
observe and comply, with all applicable laws and regulations
relating to the services and insurance business covered by this
Agreement.
p. Material Changes in
Managing Agent. Managing Agent shall notify the Company in
writing within 30 days if there is a change in ownership of 10% or
more of the outstanding stock of the Managing Agent, any principal
officer of the Managing Agent, or any director of the Managing
Agent.
SECTION 2: LIMITATIONS ON
MANAGING AGENT AUTHORITY
2.1. Compliance with
Underwriting Guidelines . The Managing Agent shall not accept
proposals or bind the Company for insurance on risks not included
in the types of insurance specified on risks deemed unacceptable
pursuant to the Company’s underwriting guidelines.
2.2. Special
Acceptance . If the Managing Agent believes a risk should be
considered even though it is not a risk described in
Section 2.1 above, the Managing Agent will submit such
an application to the Company President or Medical Director for
approval.
2.3. Legal Proceedings
. The Managing Agent shall not institute legal proceedings on
behalf of the Company except (a) for collection of premium,
(b) litigation of insured claims or (c) as otherwise
agreed in writing by the Company and the Managing Agent.
2.4. Reinsurance . The
Company shall retain sole authorization for the placing of
reinsurance on all business subject to this Agreement. The Managing
Agent may not bind reinsurance or retrocession on behalf of the
Company and may not commit the Company to participation in
insurance or reinsurance syndicates. Managing Agent shall not cede
reinsurance on behalf of the insurer to a reinsurer that would not
qualify for reinsurance credit under Article 5.75-1 of the
Insurance Code and the rules promulgated thereunder. The Managing
Agent shall comply with T EX . I NS
.C ODE §40053.109 and regulations adopted
thereunder.
SECTION 3:
RESPONSIBILITIES OF MANAGING AGENT AND COMPANY
3.1. Licensing .
Throughout the term of this Agreement the Managing Agent shall at
its expense obtain, maintain and furnish evidence to the Company
that the Managing Agent and all its agents have obtained and
maintained all the necessary licenses and permits from all
regulatory agencies having jurisdiction over the Managing Agent and
its agents relating to the business covered by this Agreement and
shall notify the Company’s Compliance Officer promptly of any
license change, termination, suspension or cancellation.
5
3.2. Administration .
The Managing Agent shall maintain a staff of competent and trained
personnel, supplies and equipment for performing its duties under
this Agreement. The Managing Agent shall use its best efforts to
promote and safeguard the best interest of the Company, and to
perform all acts necessary to insure the efficient and proper
conduct of the insurance business covered by this
Agreement.
3.3. Record Keeping and
Reporting . The Managing Agent shall keep and maintain a record
of each Policy issued for the Company and keep accurate books and
records which shall, among other things, refer to each Policy
issued and related premiums billed and collected, earned and
unearned, pursuant to this Agreement. Without limiting the
provisions of Section 6.3 , the Managing Agent shall
make such books and records available to the Company, the Texas
Department of Insurance and their respective authorized
representatives for inspection and copying at all reasonable times
and will promptly forward copies of the same to the Company or the
Texas Department of Insurance upon request.
3.4. Insurance Rules and
Regulations . In the conduct of its duties hereunder the
Managing Agent shall observe and comply, and shall cause its agents
to observe and comply with all insurance regulatory laws and
regulations relating to the insurance business covered by this
Agreement. The Managing Agent shall, at its own expense, provide
statistical reporting information regarding the Company as required
by applicable law or the Company. The Managing Agent shall provide
all information for the Company’s rate and form filings and
all other information available to the Managing Agent as needed for
applicable regulatory requirements. The Managing Agent agrees to
submit to the authority and jurisdiction of the Commissioner and
the Texas Department of Insurance at any time in any regulatory
investigations, actions, inquiries, examinations, directives or
requests for information.
3.5. Policy Approvals
. The Managing Agent shall provide to the Company such information,
as available to the Managing Agent, that the Company reasonably
requires in order to file for approval with any applicable
regulatory agencies of all Policy forms, rate schedules and other
documents as may be required by regulatory authorities.
3.6. Compliance . The
Managing Agent shall observe and comply, and shall cause its agents
to observe and comply, with all applicable requirements imposed by
law regarding (a) cancellation, non-renewal and/or counter
signature, (b) the licensing and solicitation of insurance and
(c) other applicable matters pertaining to the
Company.
3.7. Expenses of Managing
Agent . The Managing Agent shall be responsible for its own
expenses associated with the Managing Agent’s performance of
its duties under this Agreement including the payment for
advertising, promotion and marketing campaigns; salaries, payroll
taxes, benefits and travel for all employees and officers of
Ma
| 
