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EXHIBIT 10.92
EXECUTION COPY
AFS - MEGA
VENDOR AGREEMENT
This agreement ("Agreement") is made and entered into effective as of
January 1, 2005 by and between The MEGA Life and Health Insurance Company, an
Oklahoma domiciled life and health insurance company ("CARRIER"), and the
Americans for Financial Security, Inc., a non-profit corporation organized under
the laws of the District of Columbia ("AFS").
WHEREAS, AFS is a member organization that provides or makes available to
its members a variety of services and benefits, including health insurance
products and other insurance related products;
WHEREAS, CARRIER is in the business of selling life and health insurance
and other insurance related products;
WHEREAS, CARRIER currently has association group insurance policies
("Association Group Policies") in force with the Multiple Association Insurance
Trust, an Alabama trust (the "Trust"), pursuant to which certificates of
insurance have been and will be issued to members of AFS. CARRIER has also
issued individual insurance policies ("Individual Policies") to members of AFS
in states that do not authorize the marketing and sale of "association group"
policies;
WHEREAS, the Parties entered into that certain Agreement dated February
26, 1999 (the "1999 Agreement") setting forth the terms under which AFS made
available to its members insurance products and other health related products of
CARRIER; and
WHEREAS, the Parties desire to amend, revise and restate in its entirety
the 1999 Agreement defining the relationship between AFS and CARRIER;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, the receipt and sufficiency of which is
acknowledged by all of the Parties hereto, AFS and CARRIER hereby agree as
follows:
1. VENDOR RELATIONSHIP. AFS agrees that, during the Term hereof and upon the
terms and conditions contained herein, it will make available to members of AFS
such Association Group Policies, Individual Polices and other insurance related
products (collectively, the "Products") offered by CARRIER as the Parties may
agree from time to time. CARRIER shall be solely responsible for designing the
Products and for establishing the prices to be charged for such Products,
subject to consultation with AFS. AFS shall be solely responsible for
determining which Products of CARRIER will be made available through AFS to its
members. AFS will make such Products available to its members through its
communications to members and prospective members, through its catalog of
benefits, through newspaper, television and other advertisements and/or through
other means selected by AFS. Nothing contained herein and no performance by AFS
of its obligations hereunder shall be deemed to constitute an endorsement by AFS
of CARRIER or of the Products, and AFS assumes no financial responsibility for
the profitability of any Products sold by CARRIER to members of AFS.
2. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the following meanings:
(a) Administrative Expense means, with respect to any period, costs
incurred by CARRIER for policy issuance and policy maintenance during such
period, but excluding the cost of investigating and paying claims.
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(b) Collected Premium means, with respect to any period, the
insurance premiums actually received in cash by CARRIER in such period.
(c) Governmental Authority means any nation or government, any state
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
(d) Health Policies means individual and association group health
insurance policies (but excluding ancillary products) issued by CARRIER,
which are the principal Products that CARRIER will sell to members of AFS.
(e) Marketing Expense means, with respect to any period, the
insurance commissions paid to outside insurance agents during such period,
plus any out-of-pocket marketing costs incurred in such period by CARRIER
for selling and servicing the Health Policies to members.
(f) Person means any individual, corporation, limited liability
company, business trust, association, company, partnership, joint venture,
Governmental Authority, or other entity.
(g) Term shall have the meaning set forth in Section 24 hereof.
3. LIMITATION ON HEALTH POLICIES MARKETING EXPENSE AND ADMINISTRATIVE EXPENSE.
As partial consideration for AFS's agreement to make the Products available to
its members, CARRIER agrees as follows:
(a) unless otherwise agreed to by the Parties, Marketing Expense
with respect to Health Policies shall not exceed in any calendar year the
following amounts (expressed as a percentage of Collected Premiums in such
calendar year): (i) 44.5% of first year Collected Premiums, (ii) 30% of
second year Collected Premiums and (iii) 15% of all Collected Premiums
after the second policy year; and
(b) unless otherwise agreed to by the Parties, Administrative
Expense in any calendar year with respect to Health Policies shall not
exceed 10% of Collected Premiums in such calendar year.
4. CARRIER'S REPORTS.
(a). Annual Reports. Except for the reports provided pursuant to Section
4(a)(i), within ninety (90) days after the end of each calendar year during the
Term hereof, CARRIER shall submit written reports to AFS setting forth the
following information:
(i) Financial Status of CARRIER Report, including CARRIER's most
recent annual audited statutory financial statements filed with the state
insurance departments and CARRIER's current ratings with any rating
agencies, which reports shall be submitted to AFS on or before June 15 of
each year for the most recent calendar year.
(ii) Health Insurance in Force Report, including, with respect to
members of AFS, the number of policies in force and the amount of Earned
Premiums thereon for the most recent calendar year.
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(iii) Claims Report, which shall be substantially in the form, and
contain substantially the information, as set forth in Schedule 4(a)(iii)
hereto.
(iv) Complaints Report, including the number of complaints received
regarding claims handling and regarding agent conduct, the source of such
complaints (department of insurance, members of AFS or other) and the
number of claims disposed of during the most recent calendar year on
Health Policies issued by CARRIER.
(v) Litigation Report. The number of legal actions brought against
CARRIER with respect to any Products sold to members of AFS, the number of
such actions disposed of during the most recent calendar year and a brief
description of any material litigation pending at year-end.
(vi) Certificate of Compliance, containing the calculation of
CARRIER's compliance with the limitation on Marketing Expense and the
limitation on Administrative Expense for the most recent calendar year
and, if CARRIER did not comply with any of such limitations, CARRIER's
plan for curing such non-compliance.
(b) Quarterly Reports. If requested by AFS, within sixty (60) days
following the end of each calendar quarter during the Term hereof (other than
the fourth quarter of each year), CARRIER shall provide to AFS unaudited
statutory financial statements of CARRIER as filed with the Oklahoma state
insurance department, and a Health Insurance in Force Report, as described in
Section 4 (ii) above, in each case as of the end of and for such calendar
quarter.
(c) Other Reports. CARRIER shall also provide such other reports as may
reasonably be requested by AFS during the Term hereof.
5. NOTICE OF RATE INCREASES. CARRIER shall provide to AFS not less than forty
five (45) days' advance written notice of any proposed rate increases for the
Health Policies, such notice to include a statement that such premium rate
increase is deemed necessary based upon the analysis of the actuarial department
of CARRIER. AFS shall have the right to provide to CARRIER input with respect to
proposed rate decisions, and CARRIER agrees to share claim information and
experience with AFS to permit AFS to provide such input. CARRIER agrees to
consider recommendations by AFS and to provide its rationale to AFS for
decisions regarding rate increases that are contrary to AFS's recommendations.
Notwithstanding the foregoing, CARRIER shall at all times retain the right to
determine in its sole and absolute discretion the amount and timing of any rate
increase on Health Policies.
6. MUTUAL DISCLOSURES. Each of CARRIER and AFS agrees that it will promptly
notify the other Party of any lawsuits, complaints or notices of investigations
that it receives which will or may involve the other Party.
7. CONFIDENTIALITY. Each of the Parties recognizes that in the course of
exercising its rights and performing its obligations under this Agreement it
will come into possession of confidential or proprietary information of the
other Party or of customers of the other Party ("Confidential Information").
Each Party agrees that it will not disclose to anyone not a Party to this
Agreement any Confidential Information of the other Party or its customers and
will not use any such Confidential Information except to the extent necessary to
carry out its obligations hereunder. Each Party agrees to comply with the
confidentiality requirements imposed on it by state and Federal law, including
the Health Insurance Portability and Accountability Act of 1996 ("HIPPA").
Confidential Information does not include information which (i) is or becomes
generally available to the public other than pursuant to a violation of
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this Agreement, (ii) was available to the Parties on a non-confidential basis
prior to its disclosure by the other Party or its customer to such Party or
(iii) became available to a Party on a non-confidential basis from a third party
who was not bound by a confidentiality agreement with respect to such
information.
8. REPRESENTATIONS AND WARRANTIES.
(a) CARRIER hereby represents and warrants to AFS as follows:
(i) CARRIER is a corporation duly organized, validly existing and in
good standing under the laws of the State of Oklahoma and has all
necessary corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby and to perform its
obligations hereunder.
(ii) All corporate and other actions or proceedings required to be
taken by or on the part of CARRIER to authorize and permit the execution
and delivery by it of this Agreement, the performance by it of its
obligations hereunder, and the consummation by it of the transactions
contemplated herein and therein, have been duly and properly taken.
(iii) This Agreement constitutes the legal, valid and binding
obligation of CARRIER, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
(iv) CARRIER is duly licensed and has authority to issue
"association group" health insurance policies and certificates, individual
policies of health insurance and multiple employer trust policies of
health insurance to insureds in each of the states in which CARRIER is
currently issuing such policies, and CARRIER will obtain and retain all






