SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
PARTNER AGENT PROGRAM AGREEMENT
This Partner Agent Program Agreement (“Agreement”) is
entered into as of the 11
th
day of May, 2005 (the “Effective Date”) by and between
Specialty Underwriters’ Alliance, Inc. and its property and
casualty insurance subsidiaries and affiliates (collectively the
“Company”) and Specialty Risk Solutions, LLC (the
“Partner Agent”).
The parties hereto agree to develop and administer an insurance
program known as described in Exhibit A attached hereto. This
Agreement pertains only to that Program business, with the Company
and the Partner Agent agreeing as follows:
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A.
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Partner Agent’s authority is
subject to the terms of this Agreement and Company’s Program
description, underwriting guidelines, system templates, service
standards, form and rate and other filings, and authority limits
provided by Company to Partner Agent (“Company
Guidelines”). Company appoints Partner Agent as its
exclusive Partner Agent for five (5) years for the
Program from the Effective Date within the territory specified in
the Company Guidelines solely for the following
purposes:
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1.
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To
solicit, receive, and bind proposals for commercial lines insurance
in accordance with the Company Guidelines.
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2.
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To
pre-screen applications and estimate rates and/or premiums in
accordance with the Company Guidelines.
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3.
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To
endorse in-force policies in accordance with Company
Guidelines.
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4.
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To
collect, receive, account for, and pay to Company, premiums on
policies written by Company, and to refund to the policyholder or
insured, as appropriate (or to Company if requested by Company),
return premiums as provided in the applicable policy.
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5.
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To
issue, countersign (where necessary), and deliver policies executed
by authorized officers of Company.
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6.
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To
effect conditional renewals, cancellation and non-renewal of
policies in accordance with Company Guidelines and applicable
law.
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B.
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Partner Agent may delegate its
authority in writing to designated employees.
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C.
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Partner Agent’s authority is
subject to compliance with (and Partner Agent shall not alter,
modify, or change and shall not waive any provision in) the
applicable forms, rules, or rates of Company, according to their
exact terms and to all applicable laws and regulations.
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D.
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Company shall have the right to
reject any application or business submitted by Partner Agent or to
modify, cancel, or refuse to renew any policies written by Company
hereunder by giving Partner Agent written notice of effective date
of changes that would affect this business.
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E.
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Partner Agent shall, within twenty
(20) calendar days of the inception of coverage, provide to
Company all data and statistical information relating to the
underwriting of accounts. Partner Agent is authorized to issue
binders, certificates or other evidence of insurance.
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F.
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The
Company Guidelines may be amended or new Company Guidelines may be
adopted at the Company’s discretion without the need to amend
this Agreement. Such amendments or new Company Guidelines will be
provided to the Partner Agent in writing and must be implemented by
Partner Agent in accordance with Company’s instructions.
Company will give Partner Agent reasonable notice in which to enact
such changes.
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G.
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Company retains the right to modify,
cancel, conditionally renew or non-renew any and all policies
solely in Company’s discretion.
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H.
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Partner Agent has no authority to
solicit, negotiate or place any reinsurance on behalf of
Company.
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A.
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Partner Agent represents and
warrants that (i) Partner Agent has any and all ownership or
other rights in the business contemplated herein necessary to place
such business with Company under this Agreement; (ii) Partner
Agent placing business under this Agreement is not in violation of
any duty or obligation owed to any other entity or person; and
(iii) Partner Agent is, and will continue to be, authorized and
licensed to perform all acts set out in this Agreement while
providing services under this Agreement.
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B.
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The
Program, as more specifically described in the Company Guidelines
and in Exhibit A of this Agreement, will be mutually
exclusive, unless otherwise stated in this Agreement. Partner Agent
will be allowed to complete existing obligations under insurance
policies with other insurance carriers for the Program. Unless
otherwise specifically stated in this Agreement, Company will not
accept business encompassed within the Program from any entity
other than Partner Agent during the term of this Agreement. Partner
Agent shall exclusively represent Company and shall not represent
any other insurance company or similar entity in relation to the
Program. Partner Agent may be allowed to write business with other
insurance carriers for any portion of the Program not offered by
Company (“Other Business”) so long as Partner Agent
notifies Company in writing of Other Business and Company has a
right of first refusal to write Other Business. In the event that a
conflict exists as to whether Partner Agent is authorized to
represent an existing or prospective policyholder, Company may
honor the policyholder’s written producer of record
designation signed by the policyholder. Notwithstanding the
foregoing, Company shall be under no obligation to honor a written
producer of record designation from a policyholder before accepting
business from a designated Partner Agent, and Company’s
determination of which agent of Company represents Company with
regard to a particular policyholder shall be final and
binding.
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C.
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Partner Agent shall be responsible
for compliance with all applicable state and federal laws,
regulations, rules, and requirements relating to the performance of
Partner Agent’s obligations and the general standards, rules,
and regulations of the insurance industry and all Company
Guidelines as provided by Company in writing.
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D.
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Partner Agent shall keep true,
separate, accurate, and complete records of all transactions
related to the policies and all correspondence.
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E.
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All
records and documents applicable to the business relationship
between Company and Partner Agent shall be maintained by Partner
Agent in a form and manner that is (i) requested by Company, and
(ii) secure and in accordance with Company’s record
retention guidelines and insurance regulatory practices. Such
records and documents shall continue to be maintained in a secure
manner during the Term and for a period of no less than five
(5) years (or such longer period as Company may request or is
needed in order to preserve such records and documents under state
statutes of limitations) after termination of this
Agreement. At the end of such five (5)-year period or at any time
Company requests, Partner Agent shall provide Company with
originals or copies of such records and documents. No records or
documents shall be destroyed at any time prior to five
(5) years or according to state regulation without
Company’s prior written consent.
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F.
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All
records and documents of Partner Agent may be audited, examined,
and/or copied by representatives of Company at any time during
normal business hours and shall be made available for examination
to reinsurers, or to any state insurance department or regulatory
body which so requires. Additionally, Partner Agent shall permit
authorized employees and representatives of Company to review the
operations of Partner Agent, both at its place of
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business and at other locations
during business hours upon ten (10) days written notice by
Company.
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G.
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Partner Agent shall notify Company
within forty-eight (48) hours of notice or receipt of any
complaint filed with any state insurance department or other
regulatory authority relating to the policies, whether against
Company or Partner Agent. The parties will work together to
promptly and adequately respond to any such complaint. If requested
by Company, Partner Agent shall prepare a response to any such
complaint or, at Company’s discretion, provide a complete
written account to Company such that Company can respond; however,
no response shall be sent by Partner Agent prior to consulting with
Company regarding such response. Company retains the final
authority on all responses relating to complaints against Company.
Company may establish formal complaint handling procedures for
Partner Agent to follow which are consistent with the requirements
set forth herein.
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H.
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Partner Agent shall not contact any
state insurance department or other regulatory authority, directly
or indirectly, with regard to Company’s business without the
prior written consent of Company. Partner Agent shall notify
Company immediately in the event that Partner Agent receives any
contact from any such department or authority with regard to
Company’s business.
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I.
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Partner Agent shall utilize
automated business processing through Company’s centralized
technology system (“Company System”). Partner Agent
shall be responsible for any integration required for Company
System to operate with other third party systems of Partner
Agent.
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J.
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If
Company provides access to Company information or networks through
computer access, Partner Agent shall be responsible for maintaining
the security and integrity of such information and of
Company’s systems. Partner Agent shall not introduce into
Company’s systems any virus or other harmful agent. Partner
Agent shall be responsible for assuring the quality of policy,
premium, accounting and statistical data submitted to Company
consistent with Company standards. Partner Agent agrees to adhere
to the terms and conditions governing Partner Agent’s use of
any existing Company website or any website Company may own, make
available, operate, acquire, use from time to time, create or
sponsor in the future, and related services available under any
such website. These terms and conditions regarding use of any
website or the content of any website may change without notice to
Partner Agent. Partner Agent’s use of these websites
constitutes agreement to the terms and conditions that exist at
each point in time Partner Agent uses any such website. Partner
Agent may not use the name, logo, or service mark of Company or any
of its affiliates in any advertising, promotional material,
internet site, or in any material disseminated by Partner Agent
without the prior written consent of Company. Partner Agent shall
maintain copies and provide an original to Company of any
advertisement or other materials approved by Company along with
full details concerning where, when, and how it was used. Use of
any authorized item shall be limited to the scope of the current
request and approval, unless specifically authorized for broader
use by Company. Partner Agent must obtain re-authorization of all
items at least annually.
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K.
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All
expenses associated with Partner Agent’s performance
hereunder shall be the responsibility of Partner Agent, including
but not limited to general office expenses, automation expenses,
systems integration expenses, marketing expenses, broker, producer,
or countersigning commissions, fees, and taxes.
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L.
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Partner Agent agrees that the
Company rates, rating manuals, forms, Company Guidelines, program
analysis, underwriting records, management reports, and any
information as may have been or shall be provided by Company to
Partner Agent (the “Company Confidential Information”)
are confidential and proprietary to Company, shall be considered
trade secrets of Company, and shall not be disclosed to any third
parties. Partner Agent agrees to maintain the confidentiality of
the Company Confidential Information. Partner Agent shall be
responsible to ensure that Partner Agent’s employees, agents,
and representatives are aware of and sensitive to the proprietary
nature of the Company Confidential Information, of the importance
of confidentiality, and need to comply with the confidentiality
requirements in this Agreement. All Company Confidential
Information shall be returned by Partner Agent to Company
immediately upon request.
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M.
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Partner Agent agrees that Partner
Agent and its employees, agents, and representatives are
(i) aware of the sensitive and proprietary nature of any and
all information each may receive with regard to applicants,
policyholders, beneficiaries of policies, and claimants (the
“3 rd Party Confidential
Information”); and (ii) aware of and will comply with:
(a) any and all applicable laws, regulations, rules, and
requirements relating to the 3 rd Party Confidential Information;
(b) the general standards, rules, and regulations of the
insurance industry relating to the 3 rd Party Confidential Information; and
(c) all written instructions provided to Partner Agent from
time to time by Company relating to the 3 rd Party Confidential Information.
Partner Agent shall comply with Company’s privacy policies
and shall hold all 3 rd Party Confidential Information in
trust and confidence in compliance with Company’s privacy
policy, and shall use the 3 rd Party Confidential Information only
for the purpose contemplated in this Agreement. Partner Agent
agrees that it shall immediately refer any question concerning any
aspect of Company’s privacy policy to Company for
resolution.
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N.
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If
requested by Company, Partner Agent agrees to become a member of
Company’s Partner Agent committee (“Partner Agent
Advisory Committee”). Partner Agent or appropriate designee
shall attend all meetings of the Partner Agent Advisory Committee,
provide input at such meetings, and cooperate fully with the
Partner Agent Advisory Committee in all aspects.
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O.
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Partner Agent agrees to purchase a
certain amount of Class B exchangeable common stock
(“Partner Agent Stock”) as more specifically outlined
in the Securities Purchase Agreement dated as of the date hereof by
and between the Company and the Partner Agent (“Securities
Purchase Agreement”) which is hereby incorporated by
reference as an integral part of this Agreement.
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III.
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OBLIGATIONS OF
COMPANY
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A.
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Company shall act in accordance with
the terms of this Agreement and will pay Partner Agent a commission
in accordance with Exhibit A (“Commission”) and a
share of profits in accordance with Exhibit B (“Profit
Sharing” which, together with “Commission”, is
the “Compensation”) attached hereto and referenced
herein. Partner Agent shall be responsible for paying any
compensation due to its sub producers.
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B.
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Company shall provide for the
payment of all excise taxes, premium taxes (except surplus lines
taxes) and assessments;
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C.
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Company shall appoint Partner Agent
as required by various state laws and regulations;
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D.
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Company will develop and maintain
Company System.
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A.
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Partner Agent shall immediately
notify and cooperate with Company if Partner Agent receives notice
of any claim or potential claim which could involve Company, any of
its affiliates or subsidiaries, or the business written
hereunder.
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B.
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Partner Agent has no authority to
adjust or settle any claims arising out of or in connection with
policies, shall not make any statements regarding the application
of coverage to specific situations, whether actual or hypothetical,
and shall not commit Company to any liability in connection with
any actual or potential claim or loss.
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C.
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Partner Agent shall immediately
report all claims, or potential claims, suits, or losses relating
to the policies to Company or to an assigned adjuster or claim
representative who has been designated by Company. Partner Agent
shall cooperate fully with Company or the assigned adjuster or
claim representative in the investigation, adjustment, settlement,
and payment of claims and coverage matters. All records, files,
correspondence, or other materials pertaining to claims shall be
the sole property of Company.
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D.
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Company will consult with Partner
Agent on the selection of vendors and claims handling procedures
(“Vendor Selection and Claims Procedures”). Company
retains sole discretion for Vendor Selection and Claims
Procedures.
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A.
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Company shall pay Partner Agent the
Commission and Profit Sharing as respectively described in
Exhibit A and Exhibit B.
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B.
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With one hundred eighty
(180) days advance written notice, for reasons related to
regulatory constraints or industry issues including but not limited
to Program coverage resulting in an insurance industry or market
downturn, the Company reserves the right to adjust Partner
Agent’s Commission as described in Exhibit A.
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C.
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Effective at any time after a
minimum of one hundred eighty (180) days advance written
notice to Partner Agent, Company may adjust the current payout
period of Profit Sharing as described in Exhibit B.
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D.
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It
is understood and agreed that the Compensation paid hereunder shall
be full compensation for all services rendered by Partner Agent
pursuant to this Agreement.
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E.
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Partner Agent shall refund
Commission, or other fees or amounts retained by Partner Agent, to
the policyholder or insured, as appropriate, or to Company if
requested by Company, from Partner Agent’s own funds on a
pro-rata basis on return premiums at the same rate as paid to
Partner Agent.
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F.
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The
Commission applicable to multiple year policies (if Company has
bound such policies through Partner Agent) shall be the Commission
that is in effect for such policy during the year in which the
policy is initially written, and such Commission shall apply
throughout the term of any such policy.
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G.
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Partner Agent shall have no
authority to, and shall not collect any fee(s) on, the policies
unless specifically authorized by Company and permitted by
law.
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H.
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Partner Agent shall calculate
Comm
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