ADMINISTRATIVE SERVICE AGREEMENT
THIS
AGREEMENT is made this _________
day of
December, 2006 by and between Reserve National Insurance Company (hereinafter
referred to as “Administrator”) and American Capitol Insurance
Company
(hereinafter referred to as “Insurer”).
RECITALS
WHEREAS,
Insurer is a legal reserve insurance company licensed pursuant to the Texas
Insurance Code (“Code”); and
WHEREAS,
Administrator is a capital stock insurance company domiciled in Oklahoma, and
has registered or will register as a third party administrator to the extent
required by applicable law; and
WHEREAS,
Insurer and Administrator are desirous of entering into an agreement reflecting
the rights of the parties hereto with respect to the administration of the
insurance business of Insurer subject to the Coinsurance Agreement (“Coinsurance
Agreement”) which was entered into by and between Administrator and Insurer
effective on December 31, 2006.
WITNESSETH
NOW,
THEREFORE, for and in consideration of these premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1.
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The
Insurer agrees to provide Administrator with the information and
support
reasonably required by the Administrator to perform its duties pursuant
to
this Agreement.
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2.
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The
Administrator shall perform the following
duties:
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A.
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Prepare
and mail premium notices to the insureds reasonably in advance of
the
premium due dates in accordance with guidelines established
by Insurer and agreed to by Administrator. Xxxxxxxx
shall be run and mailed at least once a
month.
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B.
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Prepare
and mail past due notices and lapse notices. With the cooperation
of
Insurer, prepare and send reinstatement applications consistent with
policy provisions. Upon receipt of completed reinstatement applications,
Administrator will perform appropriate underwriting and Administrator
will
proceed with policy issuance or denial in accordance with the underwriting
guidelines applied by Administrator to its similar business including
preparation and issuance of policies and policy
certificates.
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C.
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Receive
claims, verify coverage, request and collect proof of claim, review
and
pay claims in accordance with the Coinsurance Agreement. Administrator
agrees to be current in awareness of and compliance with the applicable
prompt payment laws.
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D.
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Collect
and record premiums as provided in the Coinsurance Agreement. Initial
correspondence sent by Administrator to any policyholder shall notify
and
summarize to said policyholder the relationship among Insurer,
Administrator, and the policyholder. The written notice must be approved
by Insurer before distribution to policyholders and must state the
amount
of premium specified. The payment of premiums to the Administrator
by or
on behalf of an insured is considered to have been received by the
Insurer. However, the payment of return premium by the insurer to
the
Administrator is not considered payment to the
insured.
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E.
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Maintain
administrative and statistical records which will determine the insurance
status of each insured or certificate holder including, but not limited
to, the effective dates, termination dates, nature of coverage, lapse
dates, benefit assignments, beneficiary designations (if applicable),
and
appropriate address of record. This record keeping shall include
the
posting of premium payments.
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F.
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Maintain
all licenses required by applicable statutes, rules and regulations.
Conduct its activities pursuant to this Agreement in compliance with
all
applicable statutes, rules or regulations or pursuant to an exemption
therefrom.
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G.
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Handle
all routine correspondence and other general clerical administration
of
the insurance plans subject to this Agreement, maintain all files
relating
to such correspondence and general clerical
administration.
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H.
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Make
available to Insurer all information necessary to maintain its general
ledger and prepare statutory financial
statements.
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3.
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Insurer
hereby agrees to remain solely liable for and covenants to indemnify
and
hold harmless Administrator against any and all loss, cost, expense,
claims, damages, liabilities and expenses including legal fees and
costs
(“Loss” or “Losses”) assessed against or incurred by Administrator with
respect to any action, demand, proceeding, suit, settlement or compromise
concerning claims arising out of or related to: (i) the insurance
administered under this Agreement pursuant to actions or inactions
of the
Administrator taken or not taken in reliance upon instructions provided
by
the Insurer; or (ii) the willful misconduct, negligent or bad faith
acts
or omissions of the Insurer or the Insurer’s agents, servants or
employees. Administrator shall remain solely liable for the willful
misconduct, negligent or bad faith acts or omissions of Administrator
and
shall indemnify and hold harmless Insurer for any loss or losses
Insurer
may sustain by virtue of such acts.
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4.
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Administrator
shall maintain adequate books and records of all transactions among
it,
Insurer and the insureds under this Agreement and the business being
administered in connection therewith to comply with regulatory examination
requirements and statutory retention
requirements.
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5.
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It
is understood and agreed that all records in any form including film
or
electronic media, pertaining to each covered plan hereunder (including
but
not limited to, all individual applications, files and correspondence
related thereto) which are generated by Administrator are the property
of
Insurer. It is understood and agreed that Insurer shall have access
to all
records to the extent necessary to fulfill contractual obligations
to
insureds, comply with its statutory and regulatory obligations, and
conduct audits of Administrator.
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6.
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The
initial term of this Agreement shall be for a period of one (1) year
and
shall commence on the effective date of this Agreement. Either party
may
terminate the Agreement at any time on or after the expiration of
the
initial term by giving ninety (90) days prior written notice. This
Agreement will automatically terminate in the event that Administrator’s
obligations under the Coinsurance Agreement are converted to assumption
reinsurance with respect to those policies which are subject to assumption
reinsurance. Unless otherwise terminated, the Agreement shall be
automatically renewed for additional one year terms. Notwithstanding
anything to the contrary, in the event of fraud, bankruptcy or insolvency
of one party, this Agreement may be terminated immediately by the
other
party upon written notice. Furthermore, in the event of a breach
of any of
the conditions or promises contained in this Agreement or the failure
to
perform any of the duties by one party, if the breach or failure
is not
cured within 30 days after written notice, this Agreement may be
terminated immediately by the other party upon written notice.
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7.
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No
rights, interests or obligations arising hereunder shall be subject
to
assignment by either party, except with written consent of the other
party. Any assignment of rights, interests or obligations will be
ineffective.
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8.
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No
amendment or modification of, or supplement to, this Agreement shall
be
binding unless in writing and duly executed and delivered by each
party
hereto to the other party.
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9.
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It
is understood and agreed that the Administrator shall be considered
an
independent contractor. Nothing contained herein shall be construed
as
constituting a partnership, employment relationship, or joint venture
between the Administrator and Insurer. This Agreement shall be binding
upon the parties hereto and their respective successors and
assigns.
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10.
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Pursuant
to the provisions of the Health Insurance Portability and Accountability
Act of 1996 and federal regulations issued pursuant thereto, and/or
the
Xxxxx-Xxxxx-Xxxxxx Act, the NAIC Insurance Information and Privacy
Protection Model Act, the NAIC Privacy of Consumer Financial and
Health
Information Model Regulation and/or similar laws and regulations
as
enacted in various states, the parties recognize that, in the performance
of their respective obligations under this Agreement, they each may
obtain
from the other nonpublic personal or privileged information about
individuals collected or received in connection with insurance
transactions under the policies. Each of the parties agrees not to
disclose such information to third-parties without the individual’s
written authorization unless such disclosure is otherwise permitted
by
law, and each of the parties shall also maintain the confidentiality
of
all other information related to the policies and all other information
denominated as confidential by the other party provided to it in
connection with this Agreement and shall not disclose such information
to
any third parties except as may be required by regulatory authorities,
or
pursuant to legal process; provided however, if any state in which
policies have been issued have more restrictive confidentiality
requirements, the parties will comply with those laws to the extent
applicable.
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11.
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This
Agreement shall be construed in accordance with and governed by the
laws
of the State of Oklahoma.
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12.
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This
Agreement contains the entire agreement of the parties regarding
the
subject matter hereof and supersedes any prior or contemporaneous
oral or
written agreement.
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13.
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If
any clause(s) of this agreement shall be held invalid by a court
of law,
the remaining clauses shall survive and remain
enforceable.
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14.
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Effectiveness
of Notice - Notices mailed by registered or certified mail, return
receipt
requested are effective three days after mailing. Notices that are
mailed
hereunder shall be given to the parties at the following addresses,
or at
such other address for a party as shall be specified by
notice:
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If
to
Administrator:
Reserve
National Insurance Company
0000
Xxxxxxxxx Xxxxx Xxxx.
Xxxxxxxx
Xxxx, XX 00000
ATTN:
Xxxx Xxxxxxxx
If
to
Insurer:
American
Capitol Insurance Company
c/o
UTG
0000
Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx,
Xxxxxxxx 00000
ATTN:
Xxx
Xxxxxx
or
to
such other address as hereafter shall be furnished as provided in this Section
15
by any
of the parties hereto to the other parties hereto.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the date and year first above written.
Reserve
National Insurance Company
By:
/s/ Kempner Xxx Xxxx
Xxxxxxx
Xxx Xxxx, President
American
Capitol Insurance Company
By:
/s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx
X. Xxxxxx, Senior Vice-President
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