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EXHIBIT 10.6
KMIC INSURANCE COMPANY
AGENCY AGREEMENT
Kentucky Medical Insurance Company, a Kentucky insurance corporation
("KMIC") and KMA Agency of Kentucky ("Agent"), (sometimes commonly referred
to as the "Parties") agree as follows:
A. AUTHORITY OF AGENT
Subject to requirements imposed by law, the underwriting rules,
procedures and regulations of KMIC and this agreement, the Agent is
authorized to:
1. solicit, receive and transmit to KMIC, proposals for insurance
contracts for which a commission is specified in the schedule of
commissions provided by KMIC.
2. Produce and deliver certificates of insurance and written binders
in accordance with KMIC's underwriting requirements. The Agent is
not authorized to accept or bind any risk or to otherwise
obligate KMIC without specific authority from KMIC.
3. Provide all usual and customary services of an Agent on all,
policies placed with KMIC subject to the following:
a. KMIC will not be responsible for Agency expenses including
but not limited to salaries, benefits, bonus payments, rent,
transportation, employee hire or solicitor's fees, postage,
telegrams, telephone, advertising, licensing fees or any
other Agency expenses whatsoever.
b. The Agent will not undertake or initiate advertising of any
nature in connection with business or policies related to
KMIC without the approval of KMIC.
c. The Company realizes that with multiple Agents representing
it in Kentucky, conflicts may arise between Agents. In those
situations the first legitimate submission received, as
determined in the sole discretion of the Company shall be
the prevailing submission. In the case of an Agent of record
letter, if the two Agents in conflict cannot reach an
agreement, the Company may, but is not required to, refuse
or withdraw its quotation. Otherwise, the policyholder's
written statement designating the Agent or broker shall
control. The Company will not accept agent of record letters
from other agents concerning business currently written by
Agent.
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d. All future agency or broker appointments in Kentucky for
physician professional liability will be made by the Agent
with Company approval.
4. To promptly report all claims and losses of which the Agent has
knowledge and properly notify KMIC when the Agent receives notice
of the commencement of any related legal action. Agent shall
refrain from admitting or denying liability on the part of the
company in connection with any claim or lawsuit.
5. Appoint subagents to distribute KMIC's products and services as
appropriate in the State of Kentucky, provided that such
appointments are done with the prior approval of KMIC and upon
receipt of KMIC's written acceptance of the subagent. Subagent
contracts must be approved by KMIC. Agent shall instruct and
oversee any subagents so as to assure compliance with the terms
and requirements of this agreement. The following three agencies
who are currently appointed by KMIC shall be considered appointed
under the terms of this paragraph as subagents of the Agent,
effective on the date this entire agreement becomes effective:
|X| Van Zandt, Xxxxxx & Xxxx, Inc.
|X| Xxxxxx & Xxxxxx, Inc.
|X| Gross Insurance Agency
B. COMMISSIONS
1. Commissions shall be paid in accordance with Exhibit A which is
attached and incorporated by this reference. Commissions may be
revised: by mutual agreement between the Agent and KMIC; or
independently by KMIC after giving the Agent 90 days advance
notice of the proposed changes and the effective date.
Commissions may also be altered by KMIC for failure by Agent to
comply with the minimum production goal specified in the attached
Exhibit A. Any return commissions otherwise due KMIC under this
Agreement will be calculated at the rate initially applicable.
2. Commissions on premiums shall be paid to the Agent by the 15th of
the month following the month in which such premiums are received
and recorded by KMIC, subject to deduction by KMIC of any return
commissions due from the Agent.
3. The Agent agrees to return commissions on policy cancellations or
reductions at the same rate at which such commissions were
originally retained. The payment of commission by the Company to
the Agent is contingent upon the Agent being legally licensed.
Any revocation or
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cancellation of the Agent's license is grounds for nonpayment of
commissions.
X. XXXX BILLED POLICIES
For business subject to Exhibit A and placed with KMIC and billed by
KMIC directly to the policyholder, the following shall apply in
addition to all the other provisions of this agreement:
1. The processing and submittal of all such business shall be
subject to provisions outlined in KMIC's written requirements and
forms as they may be implemented by KMIC from time to time;
2. The Agent shall submit the appropriate premium to KMIC without
deduction of commission.
3. Commissions on premiums shall be paid to the Agent within 30
business days of the month in which such premiums are received
and recorded by KMIC, subject to deduction by KMIC of any return
commissions due from the Agent.
D. POLICY CANCELLATION
Cancellation of any policy in force, when requested by the
policyholder, will be honored by KMIC, except for those KMIC is not
otherwise permitted to cancel.
E. OWNERSHIP OF EXPIRATIONS
In the event of termination, KMIC owns all expirations.
F. AGENT'S ERRORS AND OMISSION INSURANCE
The Agent will maintain valid errors and omissions insurance, with
minimum limits of $1,000,000 per incident, which shall contain terms
and limits of coverage acceptable to KMIC covering the Agent's
solicitors and each of its employees. The Agent shall provide KMIC a
copy of each policy, as requested.
G. AGENCY SALE OR TRANSFER
The Agent agrees to provide KMIC with at least ninety (90) days advance
written notice of any sale, merger, consolidation or other transfer of
the Agent's business. Upon such written notice, KMIC will have
forty-five days after receiving notice to respond, and may, at its
election:
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1. Assign this agreement to the successor, or
2. Enter into a new agency agreement with the successor, or
3. Terminate this agreement.
H. TERMINATION OF AGREEMENT
1. This agreement shall terminate:
a. Automatically if any public authority cancels or declines to
renew the Agent's license or Certificate of Authority.
b. Immediately when either party gives detailed written notice
to the other of alleged gross and willful misconduct, fraud,
material misrepresentation, or failure to pay Agent's return
account less commission within 30 days after written
remedial demand by KMIC.
c. Pursuant to G,3 above.
2. This Agreement shall terminate, upon either party giving at least
one hundred twenty (120) days advance written notice to the
other, if not otherwise contrary to applicable law or this
Agreement.
3. If the Agent is delinquent in either accounting or payment of
monies due KMIC, KMIC may by written notice to the Agent
immediately terminate, suspend or modify any of the provisions of
this agreement. Such action shall not be taken by KMIC over minor
differences between the records of the Agent and KMIC.
4. All supplies, including forms and policies furnished by KMIC and
any copies or other reproductions of them, shall remain the
property of KMIC and shall be returned to KMIC or its
representative upon demand.
I. INDEMNIFICATION
The respective parties shall indemnify and hold one another harmless
against all civil liability including damages, fines, penalties,
approved attorney fees, costs of investigation and defense reasonably
incurred arising out of a direct result of:
1. Any KMIC act or omission damaging to the Agent, except to the
extent the Agent has caused, compounded, or contributed to such
error, in which case Agent shall indemnify KMIC to the extent of
the damages caused by or attributable to Agent.
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2. Any Agent act or omission damaging to KMIC, except to the extent
the KMIC has contributed to such error, or where Agent's
reasonable use of KMIC's forms, procedures or instructions has
caused such damage, in which case KMIC shall indemnify Agent to
the extent of the damages caused by or attributable to KMIC.
3. The Agent and KMIC shall properly notify one another upon
receiving notice off the commencement of any action related to
such liabilities. KMIC shall be entitled to participate in any
such action or to assume the defense of any such action. If KMIC
assumes the defense of any such action, it shall not be liable to
the Agent for any legal or other expenses subsequently incurred
on the Agent's behalf absent KMIC's advance approval of such
expenses.
4. Neither party shall, except at its own risk and expense,
voluntarily assume any liability, make any payment or incur any
expense without the prior written consent of the other.
J. MISCELLANEOUS
1. Amendment. This agreement may be amended only in writing by
mutual agreement of the Agent and KMIC.
2. Non Waiver. Any failure by KMIC to insist upon compliance with
any provisions of this Agreement or of the rules and regulations
of KMIC shall not be construed as or constitute a waiver of them
by KMIC.
3. Integrated Agreement. This Agreement and its attachments as
modified from time to time supersedes and replaces as of its
effective date, all previous agreements, if any, between KMIC and
the Agent.
4. Independent Contractor. The Agent is an independent insurance
agent and independent contractor, and not an employee, manager,
officer or owner of KMIC.
5. Applicable Law. This Agreement shall be interpreted under the
laws of the State of Kentucky. Any provisions of this Agreement
or any amendments to the Agreement that are or become in conflict
with any applicable statutes or regulations shall be deemed to be
amended to conform to those statutes or regulations.
6. Counterparts. This Agreement and any Exhibits which require
signatures may be executed in counterparts which shall together
be regarded as binding upon the Parties.
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7. Authority. The persons signing below represent and warrant that
they are duly authorized representatives of the respective
Parties, fully willing and able to execute this Agreement.
Signed and effective this 13th Day of October, 1998.
AGENT
By: J. Xxxxxx Xxxxxxx
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Its: President
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KENTUCKY MEDICAL INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chief Marketing
Officer of Xxxxxxxx-Xxxxxxxxx
Management Company and Authorized
Representative of KMIC
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EXHIBIT A
AGENCY AGREEMENT FOR PHYSICIAN PROFESSIONAL LIABILITY BUSINESS
SCHEDULE OF COMMISSIONS AND WRITTEN PREMIUM
KMA AGENCY, INC.
On Business Produced by KMA Agency New Renewal
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Physicians Professional Liability 4.5% 4.5%
On Business Produced by Subagents New Renewal
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Physicians Professional Liability 10% 10%
An annual year end production bonus program will be instituted between KMIC and
the Agency. At or about the beginning of each year an annual target shall be
established by KMIC, in consultation with the Agency, for the bonus program
percentage awards for that year which will be payable in February following the
year for which the bonus was earned.
For the 1998 Bonus Program, the total net written premium to be produced by
Agent is $13,000,000 by December 31, 1998. If total net written premium produced
by Agent does not reach $13,000,000, the commission rate may (at KMIC's
discretion) reduce to 3.5% on New Business Policies and 3.5% on Renewal Policies
effective January 1, 1999.
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