CLAIMS ADMINISTRATION AGREEMENT

A.

All subject claims shall be handled by AFP until their final disposition, except as otherwise indicated in this Agreement, and in compliance with all applicable laws, regulations and guidelines. AFP shall establish and maintain claim files on each claim reported and advise the insured of procedures to be followed when a claim arises.

B.

Reporting Requirements

2.

All claims involving any one of the following criteria outlined below will be considered a “Catastrophic Occurrence.”

a.

Incidents involving a fatality.

b.

Brain damage injuries (skull fracture, concussion, loss of consciousness, etc.)

c.

Spinal injury with potential for paraplegia or quadriplegia.

d.

Dismemberment or other serious disfigurement potential.

e.

Injuries involving nerve damage.

f.

Burn injuries.

g.

Injuries involving a fracture or multiple fractures.

h.

Serious vision and/or hearing impairment injuries.

i.

Environmental claims.

j.

Any claim involving extra contractual obligations, excess, or direct claims against the company or State Insurance Department inquiries.

k.

Any claims or loss involving class actions.

l.

Any claim alleging sexual abuse or molestation.

m.

Any claim valued in excess of $500,000 indemnity.

3.

All Catastrophic Occurrences, as defined in Section A(2), will be subject to the following additional reporting requirements:

a.

AFP will report such claims to the Company immediately upon notice or receipt by AFP and on a monthly basis, as described in Section F.

b.

AFP will report these claims, regardless of its opinion as to likelihood of liability for each such Catastrophic Occurrence.

c.

AFP will also provide a written report concerning the development of these Catastrophic Occurrence Claims on a regular basis, at intervals not to exceed 90 days or sooner upon notice of material development.

C.

AFP’s Authority

1.

All claims shall be autonomously handled by AFP and shall have authority to initiate or transact a settlement or compromise, or make full payment of the indemnity demands for such claims.

2.

AFP shall provide immediate written notice to the Company of any claim in which coverage is denied to an Insured without the advice of outside counsel. A complete copy of the claim file shall accompany such notice and all subsequent correspondence received or produced information shall immediately be forwarded to the Company.

3.

AFP shall provide immediate written notice to the Company of any claim immediately upon AFP reasonably determining that the expected indemnity value will equal or exceed $500,000. A complete copy of the claim file shall be sent to the Company upon their request.

4.

AFP is authorized to incur such reasonable expenses allocable to individual claims as are necessary for the proper administration of this Agreement.

D.

Indemnity Payments

1.

Claim payments do not require written authority and approval from the Company.

2.

Indemnity payments will be made by the Company at the request of AFP within 48 hours of receipt from the reinsurer of the indemnity amount requested.

E.

Expense Payments

1.

Expenses not incurred directly by AFP:

a.

Expense payments do not require written authority and approval from the Company.