EXHIBIT 10.27
SURPLUS LINES PROGRAM ADMINISTRATOR AGREEMENT
by and between
COMMERCIAL UNDERWRITERS INSURANCE COMPANY
(the "Company")
and
CHUBB CUSTOM MARKET INC.
(the "Program Administrator")
TABLE OF CONTENTS
Section Page
------- ----
1. Appointment 2
2. Authority 2
3. Definitions 2
4. Representations and Warranties 2
5. The Program Administrator's Services 3
6. Limitation of Program Administrator's Powers 4
7. Company's Duties 5
8. No Claims Authority 6
9. Premiums 6
10. Program Administrator's Expense 7
11. Fees and Commissions 8
12. Maintenance of Files 8
13. Access to Files and Audits 8
14. Term and Termination 9
15. Confidentiality 9
16. Indemnification 10
17. Governing Law 10
18. Independent Contractor 10
19. Notices 11
20. Territory 11
21. Currency 11
22. Errors and Omissions; Fidelity Bond; Other Insurance 12
23. Advertising and Representation 12
24. Licensing 12
25. Employee Non-solicitation 13
26. Supplies 13
27. Company's Right to Cancel or Non-Renew 13
28. Regulatory Notices 13
29. Arbitration 13
30. General Provisions 15
EXHIBIT A. Underwriting Guidelines 17
SURPLUS LINES PROGRAM ADMINISTRATOR AGREEMENT
This Program Administrator Agreement ("Agreement") is effective June 11, 2002
between Commercial Underwriters Insurance Company a California corporation with
offices at 000 Xxx Xxxxxx, 0xx xxxxx, Xxxxxxxxxx, Xxx Xxxxxxxxx 00000-0000 (the
"Company"), and Chubb Custom Market, Inc. a New Jersey corporation with offices
at 00 Xxxxxxxx Xxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "Program
Administrator").
In consideration of the mutual promises and covenants herein contained and other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and subject to all terms and conditions hereof, the Company and
the Program Administrator agree as follows:
SECTION 1 - APPOINTMENT
The Company appoints the Program Administrator to act as a program administrator
to perform Services on the Company's behalf with respect to the Business. The
Program Administrator accepts such appointment, and agrees to perform the
Services on the Company's behalf with respect to the Business, to comply with
the requisite underwriting guidelines contained in the Underwriting Guidelines,
and strive to achieve an underwriting profit with regards to same.
SECTION 2 - AUTHORITY
The Company hereby grants to the Program Administrator the authority to perform
on the Company's behalf any and all of the Services set forth in Section 5, as
well as any and all necessary or appropriate services related thereto (the
"Authority"). This Authority is governed by the Agreement, including the
Underwriting Guidelines, state laws and regulations, and instructions given by
the Company from time to time.
SECTION 3 - DEFINITIONS
The term "Business", wherever used in this Agreement, shall mean the lines of
insurance delineated in Exhibit A to this Agreement, together with any
amendments or supplements thereto as prepared and provided in writing by the
Company to the Program Administrator in accordance with the provisions of
Section 30 (d) hereof.
The term "Policy" or "Policies", wherever used in this Agreement, shall mean
insurance contracts and declaration pages, including any addenda or endorsements
attached thereto, issued by the Company under this Agreement.
The term "Underwriting Guidelines" wherever used in this Agreement, shall mean
the underwriting guidelines as delineated in Exhibit A to this Agreement,
together with any amendments or supplements thereto provided in writing by the
Company to the Program Administrator in accordance with the provisions of
Section 30 (d) hereof.
SECTION 4 - REPRESENTATIONS AND WARRANTIES
(a) The Program Administrator represents and warrants that it is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with full
corporate power and authority to
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conduct its business as it is now being conducted, to own or use the
properties or assets that it purports to own or use, and to perform
all of its obligations under this Agreement.
(b) The Program Administrator represents and warrants that it has taken
all corporate action necessary, in order to execute, deliver and
perform fully its obligation under this Agreement and to consummate
the transactions contemplated herein.
SECTION 5 - THE PROGRAM ADMINISTRATOR'S SERVICES
The Program Administrator will perform and shall have the authority to perform
the following services ("Services") with respect to Business placed with the
Company under this Agreement:
(a) Solicit and receive applications for insurance, evaluate, negotiate,
rate, underwrite and bind insurance on behalf of, and in the name of
the Company, issue quotes, cover notes and binders consistent the
Underwriting Guidelines, subject to the applicable surplus lines
insurance laws and regulations, and instructions given by the
Company from time to time;
(b) Develop and maintain proper files on Business placed under this
Agreement, which will be the joint property of the Company and the
Program Administrator, except as to the ownership of expirations as
set forth in Section 14 (e) hereof;
(c) Provide proper and timely cancellation or non-renewal and increase
in premium or reduction in coverage notice to policyholders,
certificate holders and regulatory bodies as required by the Policy,
any applicable statute or regulation, any applicable regulatory
order, or the Company;
(d) Collect and account for premiums and endorse checks payable to the
Company, if such checks are received by the Program Administrator in
the regular course of its duties, to collect premium monies on the
Company's behalf;
(e) To remit premiums received, net of the compensation due to the
Program Administrator in accordance with the provisions of Section 9
hereof, and to return unearned premiums when appropriate;
(f) To cancel Policies for non-payment of premium;
(g) Secure and maintain any and all licenses for the Program
Administrator as may be required by applicable law;
(h) Insure that all surplus lines taxes, fees, assessments, and charges
on premiums are paid in full and on a timely basis;
(i) Cooperate fully with the Company to facilitate the investigation and
adjustment of any claims when requested by the Company;
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(j) Meet all service level objectives contained in the Underwriting
Guidelines;
(k) Issue Policies, endorsements on those Policies, certificates of
insurance under those Policies, or any addendum under those
Policies, where Company is a quota share participant on any risk
underwritten pursuant to the authority granted by this Agreement.
Company will provide appropriate electronic or other documentation
containing the following Signatory Authority: Xx. Xxxxxx X. Xxxxxxx,
of Manchester, New Hampshire, being President and CEO of the
Company, with Administrative Offices at 000 Xxx Xxxxxx, 0xx Xxxxx,
Xxxxxxxxxx, Xxx Xxxxxxxxx, 00000-0000;
(l) Request that the Company issue, for all Policies where Company is
not a quota share participant on a risk, such Policies, endorsements
on those Policies, certificates of insurance under those Policies or
any addendum under those Policies. Company will issue the
aforementioned Policy documents in accordance with the service
standards specified in Section 7 (b) hereof;
(m) Cooperate fully with the Company in performing all aspects of this
Agreement, and faithfully promote and safeguard the Company's best
interests at all times; and
(n) Maintain adequate facilities, equipment, and staff with the skill,
knowledge and ability to support and carry out the Program
Administrator's obligations under this Agreement.
SECTION 6 - LIMITATION OF PROGRAM ADMINISTRATOR'S POWERS
In addition to any other limitations contained in this Agreement, any exhibit
hereto or any Underwriting Guidelines or written instruction which may be issued
from time to time by the Company to the Program Administrator, the Program
Administrator will have no power to do, nor will it represent itself as having
power to do, nor will it do, any of the following:
(a) Directly or indirectly solicit, sell, offer, bind, issue or deliver
any insurance at any reduction or deviation from the rates, terms or
conditions specified in writing therefore by the Company, or
deviate, in any manner, from the written rates and forms promulgated
by the Company;
(b) Purport to effect coverage subsequent to the effective date of the
Policy without the prior written approval of the Company, except (i)
for new business, during the 15-day period after the coverage
effective date, and (ii) for renewal business, during the 30-day
period after the coverage effective date, but in each case only if
the insured has warranted in writing that there are no known losses;
(c) Cede to any facultative reinsurer any risk, or portion of a risk
which is written on a surplus lines basis and is eligible for
placement under this Agreement, until the Company's capacity is
exhausted;
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(d) Effect or authorize a flat cancellation more than 30 days after the
effective date of the Policy without prior written approval of the
Company, except where the premium has not been collected in full;
(e) Issue any binder or cover note other than in accordance with the
Underwriting Guidelines without prior approval of the Company;
(f) Waive a forfeiture or issue a guaranty, unless specifically
authorized to do so by the Company;
(g) Extend the time for the payment of premiums or other monies due to
Company;
(h) Waive any premium payment;
(i) Withhold any monies or property of or owing to the Company;
(j) Offer or pay any rebate of premium to any party;
(k) Make, alter or discharge any of the terms and conditions of any
Policy, contract or receipt of the Company without the prior
approval of the Company;
(l) Reinstate Policies or certificates cancelled by the Company (other
than for non-payment of premium) without the prior approval of the
Company;
(m) Negotiate or place any reinsurance on behalf of the Company,
irrespective of whether such reinsurance is elective or required by
the Underwriting Guidelines;
(n) Make any agreements rendering or purporting to render the Company
liable for the payment or repayment of expense, commissions,
administrative fees or service fees, or any other sum without the
prior approval of the Company;
(o) Make, accept or endorse notes or otherwise incur any liability on
behalf of the Company, other than the insurance expressly described
in Exhibit A hereto, for which the Program Administrator is
authorized;
(p) Transact business in contravention of the rules and regulations of
any insurance department or any governmental authority having
jurisdiction over any of the matters pertaining to this Agreement;
(q) Transact business in contravention of any written instructions
issued by the Company;
(r) Engage any attorney to represent the Company for any purpose
whatsoever without the Company's prior written approval; and
(s) Assign or delegate its rights and duties hereunder or appoint any
producer without prior approval of the Company, provided, that the
Program Administrator may employ other entities to assist it in
performance of its duties under this Agreement:
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SECTION 7 - COMPANY'S DUTIES
The Company will have the following duties in connection with this Agreement:
(a) To cooperate fully with the Program Administrator in all aspects of
this Agreement, including but not limited to the Program
Administrator's performance of the Services with respect to the
Business;
(b) To send to the Program Administrator all Policies and other
documents requested within 30 days of the Program Administrator's
receipt of the binder or request;
(c) To maintain adequate facilities and adequate staff (including but
not limited to claims, accounting and the like) with the necessary
skill, knowledge and ability to support and carry out the Company's
obligations under the Business written by the Program Administrator
pursuant to this Agreement;
(d) To maintain files as necessary and appropriate to perform its
obligation's hereunder and the Business written by the Program
Administrator pursuant to this Agreement;
(e) To maintain at all times in full force and effect all licenses,
certificates of authority and approvals required for it to transact
surplus lines insurance and otherwise to perform all of its
obligations under this Agreement;
(f) To pay promptly all commissions due to the Program Administrator
under this Agreement; and
(g) To fulfill in good faith all obligations under the Business written
by the Program Administrator on the Company's behalf pursuant to
this Agreement.
SECTION 8 - NO CLAIMS AUTHORITY
The Program Administrator has no authority to adjust or settle any claim or suit
under the Policies written or bound under this Agreement. The Program
Administrator, when notified of a claim or suit, will promptly report to the
Company all such claims or suits, and forward copies of all legal process or
other claim related communications promptly on receipt.
SECTION 9 - PREMIUMS
(a) The Program Administrator will prepare and submit to the Company a
monthly statement of all premiums written and premium adjustments
made (whether additional or return) with respect to all business and
transactions effective in that month (the "Account Current") within
the 21st day following the end of the month;
(b) The Program Administrator agrees to pay to the Company all premiums
collected by the Program Administrator under this Agreement, net of
commissions, not later than the 45th day following the end of the
month in which the policy is written. If there is non-payment of
premium for a Policy, the Program Administrator will cancel the
Policy, such cancellation to be effective not later than 20 days
after the Program Administrator
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becomes aware of the non-payment and will make reasonable attempts
to collect any earned premium. The Program Administrator shall be
liable for any uncollected premium where a cancellation cannot be
accomplished retroactive to inception;
(c) All premiums received by the Program Administrator pursuant to this
Agreement will be held by the Program Administrator in a fiduciary
capacity in an interest bearing bank account in a bank reasonably
acceptable to the Company. Interest earned there on shall accrue
exclusively to the Program Administrator. The Program Administrator
will not commingle any premium monies collected pursuant to this
Agreement with operating funds or funds held by the Program
Administrator in any other capacity;
(d) The Program Administrator will send to the Company all binders,
cover notes and cancellations within 30 days of the date the binder,
cover note or cancellation was effective;
(e) The Program Administrator agrees to provide the Company with the
following information:
1. Monthly Summary Report for New Business which will include the
following elements and will be sorted by Line of Business and
effective date and listed by account name:
- line of business
- effective date
- Account name
- Policy Limits
- Attachment Point
- Premium
- Broker Commission
- Producer/Broker Name & Location
- Policy Term
- Account Description Number
2. A monthly Account Current report (Bordereau) of status of
collections and on open items reflecting accounting.
(f) The Program Administrator is not responsible to remit premiums due
for premium audits if the Program Administrator makes all reasonable
efforts to collect the audit premium due but is unable to do so, and
so informs the Company of that fact within 30 days of the date of
the premium audit. In such event, the Program Administrator will not
receive any commissions for any amounts subsequently collected by
the Company; and
(g) The Program Administrator shall not make any charge or demand any
payment from any insured or insured's representative for any Policy
placed with the Company under this Agreement, except for: (1) the
gross Policy premium specified in the Company's contract of
insurance, (2) the applicable state tax(es), and (3) any Policy fee,
service charge, or similar charge
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expressly authorized by the appropriate state insurance supervisory
official(s) or the laws or regulations of the applicable state.
SECTION 10 - PROGRAM ADMINISTRATOR'S EXPENSES
The Program Administrator will be responsible for all expenses incurred by it in
the performance of its obligations under this Agreement including all expenses
of its offices, and including commissions to producing brokers or agents, and
other fees and expense of whatever kind.
SECTION 11 - FEES AND COMMISSIONS
(a) The Program Administrator's remuneration for the Services provided
under this Agreement will be commissions as indicated below or as
may individually negotiated:
LINE OF BUSINESS COMMISSION
---------------- ---------------------------------
All Lines 7.5% plus broker commissions
paid, the total not to exceed 20%
The Program Administrator shall deduct and retain commission on "net
written premiums" collected hereunder. For the purpose of this
Agreement, "net written premiums" means gross premiums written less
cancellation and return premiums.
(b) For premiums collected directly by the Company, the Company shall
prepare and submit to the Program Administrator within fifteen (15)
days after the end of each month a detailed statement of all
premiums collected and premium adjustments made (whether additional
or return) with respect to the Business transacted pursuant to this
Agreement, and stating the commission thereon at the rate specified
in paragraph (a) of this Section. Payment of the stated commission
shall accompany the statement.
SECTION 12 - MAINTENANCE OF FILES
The Program Administrator shall maintain files of the Business transacted by it
pursuant to this Agreement. Such files will be turned over to the Company
promptly on the termination of this Agreement. The Program Administrator may
retain copies of such files.
SECTION 13 - ACCESS TO FILES AND AUDITS
(a) Upon written notice being given to the Program Administrator, the
Company shall have access at any reasonable time during the term of
this Agreement and subsequent to its termination to all files of the
Program Administrator which pertain to this Agreement. At the
Company's expense, copies of the whole or part of any such files
will be provided, subject to Section 15 of this Agreement. The
Company may audit the performance of the Program Administrator under
this Agreement and may perform a financial audit of the Program
Administrator's records under this Agreement upon thirty (30) days
prior written notice to the Program Administrator.
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(b) Upon written notice being given to the Company, the Program
Administrator shall have access at any reasonable time during the
term of this Agreement and subsequent to its termination to all
files of the Company which pertain in any way to this Agreement
including the Program Administrator's commission under this
Agreement. At the Program Administrator's expense, copies of the
whole or part of any such files will be provided, subject to Section
15 of this Agreement.
SECTION 14 - TERM AND TERMINATION
(a) This Agreement shall remain in force from the effective date set
forth in the first paragraph on page 2 hereof until terminated as
set forth in this Section 14.
(b) This Agreement may be terminated at any time by either party giving
written notice sent in accordance with Section 19 hereof specifying
the effective date of termination, which shall not be less than
sixty (60) days thereafter.
(c) Except where the parties agree that there is a good faith dispute,
either party may terminate this Agreement at any time in the event
that the other party fails to account for or pay monies due under
this Agreement by giving written notice sent in accordance with
Section 19 hereof specifying the effective date of termination,
which shall not be less than ten (10) days thereafter. Such
termination will not become effective if the other party accounts
for and pays all monies due prior to the effective date of the
termination.
(d) At either party's option, this Agreement shall terminate
automatically upon (i) the liquidation or dissolution of all or a
substantial portion of either party's business, (ii) the insolvency
or bankruptcy of either party, (iii) the commission of an act of
bankruptcy by either party, (iv) the making of an assignment for the
benefit of creditors by either party, (v) the institution of any
proceeding by or against either party (A) seeking to adjudicate it a
bankrupt or insolvent, or (B) seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, which proceeding
is not dismissed within 30 days, or (vi) the institution of any
proceeding by or against either party seeking the entry of an order
for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property.
(e) After the effective date of termination of this Agreement, the
Program Administrator shall not (i) issue any quotes, cover notes,
policies of insurance or certificates of insurance having an
inception date subsequent to the effective date of such termination,
or (ii) extend, renew or increase the Company's liability on any
existing Policy or contract. Notwithstanding the termination of this
Agreement, the Company and the Program Administrator shall remain
subject to this Agreement as respect the Business bound prior to the
effective date of the termination. Expirations on the Business
written pursuant to this Agreement prior to its termination will be
and remain the
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property of the Program Administrator, provided the Program
Administrator has paid all moneys owed to the Company under this
Agreement.
(f) The provisions of Section 12, 15, 16 and 17 hereof shall survive any
termination of this Agreement.
SECTION 15 - CONFIDENTIALITY
Each party acknowledges that it may receive confidential or proprietary
information or trade secrets (collectively "Confidential Information") of the
other party. Each party agrees (i) to hold such Confidential Information in
confidence and to protect such Confidential Information with at least the same
degree of care as it normally exercises to protect its own confidential or
proprietary information or trade secrets of a similar nature, (ii) to use such
Confidential Information solely for the purpose of performing its obligations
under this Agreement, (iii) to reproduce such Confidential Information only to
the extent necessary for such purpose, (iv) to restrict disclosure of such
Confidential Information to its employees, officers, directors, shareholders,
consultants and agents with a need to know for the purposes of performing its
obligations under this Agreement and to inform such employees, officers,
directors, shareholders, consultants and agents of its confidentiality
obligations under this Agreement, and (v) not to disclose such Confidential
Information to any third party (including, without limitation, in any public
statement or announcement) without the prior written approval of the other
party. These restrictions on the use or disclosure of Confidential Information
shall not apply to any Confidential Information (i) after it has become
generally available to the public without breach of this Agreement, (ii) which
is disclosed by a party under legal process (with reasonable prior notice to the
other party) provided such disclosure is not protected by a confidentiality
agreement or order, or (iii) which a party agrees in writing is free of such
restrictions.
SECTION 16 - INDEMNIFICATION
(a) The Program Administrator agrees to indemnify and hold the Company
and its officers, directors, and employees harmless from any damage
and against any liability for loss, cost, expenses, fines,
penalties, including punitive or exemplary damages, and all cost of
defense: (i) resulting from any act, error, or omission, whether
intentional or unintentional, by the Program Administrator and its
officers, directors, employees, and its producers, related to or
which arise out of the business covered by this Agreement, or (ii)
resulting from any obligation, act, or transaction created or
performed by the Program Administrator in violation of, in excess
of, or in contravention of the power and authority of the Program
Administrator set forth in this Agreement.
(b) The Company agrees to indemnify and hold the Program Administrator
and its officers, directors, employees, and its producers harmless
from any damage and against any liability for loss, cost, expenses,
fines, penalties, including punitive or exemplary damages, and all
cost of defense: (i) resulting from any act, error, or omission,
whether intentional or unintentional, by the Company and its
officers, directors, and employees, related to or which arise out of
the business covered by this Agreement, or (ii) resulting from any
obligation, act, or transaction created or performed by the Company
in violation of, in excess of, or in contravention of the power and
authority of the Company set forth in this Agreement.
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SECTION 17 - GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to the principles of conflict of
laws thereof.
SECTION 18 - INDEPENDENT CONTRACTOR
The Program Administrator's status will be that of an independent contractor in
all relations with the Company. Nothing in this Agreement will be construed as
creating the relation of employer and employee between the Program Administrator
and the Company, or between the Company and any of the Program Administrator's
directors, officers, employees or representatives. The Program Administrator
will not represent that it is, or that any of its employees are an employee of
the Company. The Program Administrator will be free to exercise independent
judgment as to the time, place and manner of developing business to be placed
under this Agreement and servicing policyholders.
SECTION 19 - NOTICES
All notices and other communications required or permitted to be given under
this Agreement shall be in writing and will be deemed to have been duly given on
the date delivered by hand, by overnight courier service, by messenger, or upon
delivery by registered or certified mail (return receipt requested) postage
prepaid, to either party hereunder at the following addresses, unless a party
has specified a different address in writing:
If to the Program Administrator:
Chubb Custom Market, Inc.
00 Xxxxxxxx Xxxx Xxxx,
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
If to the Company:
Commercial Underwriters Insurance Company
000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx, 00000-0000
Attention: Xxxxxx X. Xxxxxxx
With a copy to:
Allied World Assurance Company, Ltd.
The Bermuda Commercial Bank Building
00 Xxxxxxxx Xxxxxx
Xxxxxxxx XX 00, Xxxxxxx
Xxxxxxxxx: Xxxxx Xxxxxxx
SECTION 20 - TERRITORY
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The authority of Program Administrator shall apply only to risks located in the
United States of America as delineated in Exhibit A to this Agreement. Such
territory is not assigned exclusively to the Program Administrator and the
Company reserves the right to administer any insurance procured by an insured or
as a result of another producer's or administrator's efforts.
SECTION 21 - CURRENCY
Unless otherwise agreed by the parties in writing, all transactions will be
reported and paid in U.S. dollars.
SECTION 22 - ERRORS AND OMISSIONS: FIDELITY BOND; OTHER INSURANCE
(a) The Program Administrator warrants that it now has and will maintain
during the term of this Agreement insurance coverage for errors and
omission liability in amounts not less than that indicated on
Exhibit B to this Agreement, with an insurer (the "E&O Carrier")
that is reasonably acceptable to the Company. The Program
Administrator shall provide the Company with a certificate of
insurance in its name containing the following provision: "The
Company will receive 30 days' written notice of any change,
cancellation or other termination of this policy."
(b) The Program Administrator will maintain a fidelity bond covering all
operations and employees, servicing the business of this Agreement,
in an amount indicated on Exhibit B to this Agreement, with an
insurer, and on a form and with a deductible that is reasonably
satisfactory to the Company. The Program Administrator will provide
the Company with a certificate for the fidelity bond in its name
containing the following provision: "The Company will receive 30
days' written notice of any change, cancellation or other
termination of this policy."
(c) The Program Administrator will also maintain General Liability
Insurance, Automobile Liability Insurance, and Worker's Compensation
Insurance in amounts adequate and customary for the conduct of the
Program Administrator's business and as required by law.
SECTION 23 - ADVERTISING AND REPRESENTATION
The Program Administrator and the Company shall not in any advertising, sales
literature or press release (i) use the name of the other party, or the other
party's parent, or any subsidiary, affiliates or member companies or associated
companies of the other party (collectively "Other Party), or (ii) use the Other
Parties logos, trademarks, tradenames or service marks, unless prior written
consent of the Other Party having ownership of said materials has been obtained.
Any such approval will not, in any event, be construed as charging or binding
the Other Party to bear any part of the cost or expense thereof. Use of the
Other Parties logos, trademarks, tradenames, or service marks in conjunction
with materials connected with any program or Policy shall not be construed to
mean that the party using such materials has acquired any ownership interest in
any of the Other Parties logos, trademarks, tradenames, or service marks.
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SECTION 24 - LICENSING
The Program Administrator warrants that it understands the requirements of the
surplus lines insurance laws of the several states in its dealings with the
Company on a non-admitted basis; is responsible for the proper filing of surplus
lines affidavits and payment of surplus lines taxes and compliance with all
other insurance laws applicable to surplus lines, including those requiring
notice of cancellation, notice of non-renewal, increase in premium or decrease
in coverage; and now has and shall maintain during the term of this Agreement
the license or licenses necessary to place the surplus lines business described
in this Agreement. If the Program Administrator complies with such licensing
laws by using the license of a principal, director, officer, or other employee
of the Program Administrator, the Program Administrator will be responsible for
ensuring that the licensee complies with all requirements of this Agreement and
specifically with this Section.
SECTION 25 - EMPLOYEE NON-SOLICITATION
The Program Administrator and the Company covenant and agree that they will not,
based upon the transactions contemplated herein, for a period of three years
from and after the date this Agreement is executed, solicit for employment,
advise or encourage any employee of the other party to terminate employment with
the other party, or knowingly interfere or attempt to interfere with the
employment relationship between the other party and any of its employees who
perform services for it.
SECTION 26 - SUPPLIES
The ownership of all books, supplies, undelivered policies or other property
furnished by the Company to the Program Administrator will be vested in the
Company, and such items will be delivered to the Company or its authorized
representatives promptly upon the termination of this Agreement or at any time
upon the request of the Company. The Program Administrator agrees, without
expense to the Company, to surrender such items upon termination of this
Agreement or upon request. The Program Administrator has no authority to release
blank policy or certificate supplies to subproducers.
SECTION 27 - COMPANY'S RIGHT TO CANCEL OR NON-RENEW
In accordance with the laws of any applicable jurisdictions, the Company will
have the right, at any time, and from time to time, to cancel or non-renew any
Policies or contracts of insurance placed by the Program Administrator under
this Agreement. The Company will notify the Program Administrator when the
Company cancels or non-renews any such Policies or contracts of insurance.
Further, the Company reserves the right to withdraw the Program Administrator's
power to place any one or more particular programs, Policies, or particular
lines or classes of insurance at any time for any reason. The Company's right to
withdraw the Program Administrator's power or to decline particular risks or
classes of risk may be exercised by the Company at any time upon written notice
to the Program Administrator at the address and in the manner specified in
Section 19.
SECTION 28 - REGULATORY NOTICES
The Program Administrator will forward promptly to the Company all
correspondence pertaining to this Agreement received from any government
regulatory agency at the address and in the manner specified in Section 19.
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SECTION 29 - ARBITRATION
(a) Resolution of Disputes, Choice of Law & Venue - As a condition
precedent to any right arising hereunder, any dispute not resolved
by mediation between the Company and the Program Administrator
arising out of the provisions of this Agreement or concerning its
interpretation or validity, whether arising before or after
termination of this Agreement, shall be submitted to arbitration in
the manner hereinafter set forth, and shall be governed by and
construed in accordance with the laws of the State of New York,
without giving effect to the principles of conflict of laws thereof.
The arbitration shall be held in the State of New Jersey.
(b) Composition of Panel - Unless the parties agree upon a single
arbitrator within fifteen (15) days after the receipt of a notice of
intention to arbitrate, all disputes shall be submitted to an
arbitration panel composed of two arbitrators and an umpire chosen
in accordance with Paragraph C. hereof.
(c) Appointment of Arbitrators - The members of the arbitration panel
shall be chosen from persons knowledgeable in the insurance
business. Unless a single arbitrator is agreed upon, the party
requesting arbitration (hereinafter referred to as the "claimant")
shall appoint an arbitrator and give written notice thereof by
certified mail, to the other party (hereinafter referred to as the
"respondent") together with his notice of intention to arbitrate.
Within thirty (30) days after receiving such notice, the respondent
shall also appoint an arbitrator and notify the claimant thereof by
certified mail. Before instituting a hearing, the two arbitrators so
appointed shall choose an umpire. If, within twenty (20) days after
the appointment of the arbitrator chosen by the respondent, the two
arbitrators fail to agree upon the appointment of any umpire, each
of them shall nominate three individuals to serve as umpire, of whom
the other shall decline two and the umpire shall be chosen from the
remaining two by drawing lots. The name of the individual first
drawn shall be the umpire.
(d) Failure of Party to Appoint an Arbitrator - If the respondent fails
to appoint an arbitrator within thirty (30) days after receiving a
notice of intention to arbitrate, the claimant's arbitrator shall
appoint an arbitrator on behalf of the respondent, such arbitrator
shall then, together with the claimant's arbitrators, choose an
umpire as provided in paragraph (c) of this Section.
(e) Submission of Dispute to Panel - Unless otherwise extended by the
arbitration panel or agreed to by the parties, each party shall
submit its case to the panel within thirty (30) days after the
selection of the umpire.
(f) Procedure Governing Arbitration - All proceedings before the panel
shall be informal and the panel shall not be bound by the formal
rules of evidence. The panel shall have the power to fix all
procedural rules relating to the arbitration proceeding. In reaching
any decision, the panel shall give due consideration to the customs
and usage's of the insurance business.
(g) Arbitration Award - The arbitration panel shall render its decision
within thirty (30) days after termination of the proceeding, which
decision shall be in
14
writing, stating the reasons therefore. The decision of the majority
of the panel shall be final and binding on the parties to the
proceeding.
(h) Cost of Arbitration - Unless otherwise allocated by the panel, each
party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other parties the expense of the umpire
and the arbitration.
SECTION 30 - GENERAL PROVISIONS
(a) WAIVER. No failure or delay in exercising any right, power and
privilege under this Agreement will operate as a waiver thereof. No
waiver on the part of any party of any right, power or privilege
under this Agreement, nor any single or partial exercise of any such
right, power or privilege, will preclude any other or further
exercise thereof or the exercise of any other such right, power or
privilege. No waiver or modification of this Agreement shall be
effective unless it be in writing and signed by an officer of the
Company.
(b) ENTIRE AGREEMENT. This Agreement, including all exhibits hereto
which are made a part hereof by reference thereto, constitutes the
entire agreement and understanding between the parties with respect
to the subject matter hereof. Each party understands that all prior
understandings or agreements, whether written or oral, by any party
hereto or by any director, officer, employee, Program Administrator
or representative of any party hereto, are hereby superseded.
(c) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which is deemed to be an original, and all such counterparts
shall together constitute the same agreement.
(d) AMENDMENTS. This Agreement may be modified or amended only by
written agreement signed by authorized representatives of both
parties. Any and all changes to the Underwriting Guidelines shall be
mutually agreed upon by the parties and shall be by written
agreement signed by authorized representatives of both parties.
(e) SEVERABILITY. If any provision of this Agreement shall be rendered
illegal or unenforceable by the laws, regulations or public policy
of any jurisdiction, such provision shall be considered void in that
jurisdiction, but this shall not affect the validity or
enforceability of any other provision of this Agreement or the
enforceability of such provision in any other jurisdiction.
(f) CAPTIONS. All headings in this Agreement are provided for
convenience of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement.
(g) NO THIRD PARTY RIGHTS. Nothing in this Agreement, express or
implied, is intended to confer upon any person other than the
parties hereto any rights or remedies of any nature whatsoever under
or by reason of this Agreement or any provision of this Agreement.
15
(h) INTERPRETATION. This Agreement shall be construed neither against
nor in favor of either party, but rather in accordance with the fair
meaning of its provisions.
(i) ASSIGNMENT. Neither party may assign its rights or responsibilities
under this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
(j) OFFSET. The Company and the Program Administrator may offset any
balance or amount due from one party to the other under this
Agreement; however, in the event of insolvency of any party hereto,
offset shall only be allowed in accordance with applicable statutes
and regulations. If the Company is comprised of more than one
entity, all such entities will be considered the Company for
purposes of offset.
(k) SUCCESSORS & ASSIGNS. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties
hereto, their successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the
date indicated below.
COMMERCIAL UNDERWRITERS INSURANCE CHUBB CUSTOM MARKET INC.
COMPANY
BY: /s/ Marry Xxxxxxxx BY: /s/ Xxxx X. Xxxxxxxx
------------------------------- ---------------------------------
Signature Signature
Marry X. Xxxxxxxx Xxxx X. Xxxxxxxx
----------------------------------- -------------------------------------
(Type or print name) (Type or print name)
Title: Vice President & Assitant Title: President - Chubb Custom
Seretary Insurance Company
---------------------------- ------------------------------
Date: June 14, 2002 Date: June 11,2002
----------------------------- -------------------------------
16
EXHIBIT A
UNDERWRITING GUIDELINES
TERRITORY:
It is agreed and understood that the Territory within which the Program
Administrator will operate is limited to those states of the United States of
America where the Company has authority for the SURPLUS LINES of business
provided that appropriate licenses are secured by the Program Administrator,
unless otherwise limited or restricted by the Company's Underwriting Guidelines
delineated below.
OVERALL GUIDELINES: the following general guidelines apply to all products and
classes of business underwritten by the Program Administrator on behalf of the
Company.
1. In addition to these guidelines, all accounts involving the Company
are subject to the Program Administrators own underwriting
guidelines. In instances where the Program Administrator's own
guidelines indicate a higher minimum premium than those contained
herein, the higher minimum premiums apply.
2. Accounts requiring deviation from any of the established parameters
must be referred to the Company.
3. The Program Administrator is responsible for clearing all risks in
the Company's risk reservation system for all accounts involving the
Company to ensure that the Company is not over line on any account.
4. All minimum premiums indicated are specific to the Company portion
of the account and are not inclusive of other carrier premiums.
5. The Program Administrator in its sole discretion shall determine the
classification of the type of risk.
17
PROPERTY
Program Administrator authority specifically excludes railroads rBNS and Casinos
TYPE 1: SURPLUS LINES PROPERTY RISKS
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION % 40%
MAXIMUM PARTICIPATION % 50%
PROGRAM ADMINISTRATOR AUTHORITY $2,500,000*
MINIMUM ATTACHMENT $1,000,000
MINIMUM PREMIUM $ 50,000
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $2,500,000*
MINIMUM ATTACHMENT $1,000,000
MINIMUM PREMIUM $ 50,000
* $5,000,000 limit available for habitational risks with low cat exposure.
TYPE 2: NON-SURPLUS LINES PROPERTY RISKS
EXAMPLES: Including but not limited to airports, hospitals, electronics
(no chip fabricators), bio-tech, Fortune 2500 -> 1000.
Program Administrator authority specifically excludes railroad risks and
casinos.
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION % 40%
MAXIMUM PARTICIPATION % 50%
PROGRAM ADMINISTRATOR AUTHORITY $2,500,000
MINIMUM ATTACHMENT $1,000,000
MINIMUM PREMIUM $ 25,000
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $2,500,000
MINIMUM ATTACHMENT $1,000,000
MINIMUM PREMIUM $ 25,000
SPECIFIC DEDUCTIBLE RULES FOR QUOTA-SHARE: in addition to the above guidelines,
the program administrator will apply the Company's specific deductible forms
provided by the Company to the Program Administrator for earthquake, flood,
windstorm and habitational business.
18
Rider A to come
CASUALTY
SEGMENT: TECHNOLOGY E&O - MEDIUM HAZARD
EXAMPLES: Including but not limited to custom software developers and
system integrators with average contract size less than
$5,000,000 and overall consulting exposure less than 20% of
sales.
MAXIMUM ANNUAL REVENUE: $700 MILLION
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION 33.3% (1/3)
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 5,000,000
MINIMUM ATTACHMENT $ 1,000,000
MINIMUM PREMIUM $6,000 PER MILLION /
$ 30,000 PER POLICY
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 5,000,000
MINIMUM ATTACHMENT $ 5,000,000
MINIMUM PREMIUM $6,000 PER MILLION /
$ 30,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 60%
19
SEGMENT: TECHNOLOGY E&O - HIGH HAZARD
EXAMPLES: Including but not limited to Business to Customer ecommerce
platforms and solutions. Typically, but not always, consulting
is greater than 50% of sales or average contract size is greater
than $10,000,000.
MAXIMUM ANNUAL REVENUE: $700 MILLION
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 5,000,000
MINIMUM ATTACHMENT $ 1,000,000
MINIMUM PREMIUM $6,000 PER MILLION /
$ 30,000 PER POLICY
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 5,000,000
MINIMUM ATTACHMENT $ 5,000,000
MINIMUM PREMIUM $6,000 PER MILLION /
$ 30,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 60%
SEGMENT: LEISURE RISKS
EXAMPLES: Including but not limited to stadiums, sports teams, casinos,
hotels
MAXIMUM ANNUAL REVENUE: $700 MILLION
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 1,000,000
MINIMUM PREMIUM $6,000 PER MILLION /
$ 30,000 PER POLICY
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 10,000,000
MINIMUM PREMIUM $3,000 PER MILLION /
$ 30,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 60%
20
SEGMENT: TRANSPORTATION
EXAMPLES: Including but not limited to truckers, including long haul
trucking
MAXIMUM FLEET: 300 TRUCKS
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 2,500,000
MINIMUM ATTACHMENT $ 5,000,000
MINIMUM PREMIUM $15,000 PER MILLION /
$ 30,000 PER POLICY
SEGMENT: PRODUCTS
EXAMPLES: Including but not limited to single injury / person severity
(mostly manufacturing / industrial equipment), up to $15,000,000
combined line
MAXIMUM ANNUAL REVENUE: $700 MILLION
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 1,000,000
MINIMUM PREMIUM $6,000 PER MILLION /
$ 30,000 PER POLICY
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 10,000,000
MINIMUM PREMIUM $3,000 PER MILLION /
$ 30,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 60%
21
SEGMENT: ENERGY
EXAMPLES: Including but not limited to independent power producers, mining
MAXIMUM ANNUAL REVENUE: $700 MILLION
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 1,000,000
MINIMUM PREMIUM $5,000 PER MILLION /
$ 30,000 PER POLICY
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 10,000,000
MINIMUM PREMIUM $3,000 PER MILLION /
$ 30,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 60%
SEGMENT: ALL OTHER CASUALTY
MAXIMUM ANNUAL REVENUE: $700 MILLION
COVERAGE APPROACH: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 1,000,000
MINIMUM PREMIUM $5,000 PER MILLION /
$ 30,000 PER POLICY
COVERAGE APPROACH: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 10,000,000
MINIMUM PREMIUM $3,000 PER MILLION /
$ 30,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 60%
22
SPECIALTY
PRODUCT: D&O
SEGMENT: Financial institutions, telecommunications, retail,
pharmaceutical, oil / gas, hi-tech / bio-tech
MAXIMUM MARKET CAP: UNDER $5 BILLION
MAXIMUM ANNUAL REVENUE: $700 MILLION
LAYERS ATTACHING BELOW $25 MILLION: EXCESS OF LOSS ONLY
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 10,000,000
MINIMUM PREMIUM $10,000 PER MILLION /
$ 100,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 70%
LAYERS ATTACHING ABOVE $25 MILLION: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 25,000,000
MINIMUM PREMIUM $7,500 PER MILLION /
$ 75,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 70%
LAYERS ATTACHING ABOVE $25 MILLION: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 25,000,000
MINIMUM PREMIUM $7,500 PER MILLION /
$ 75,000 PER POLICY
23
PRODUCT: EPL
SEGMENT: Midsize employers
MAXIMUM MARKET CAPITALIZATION: UNDER $5 BILLION
MAXIMUM ANNUAL REVENUE: $700 MILLION
LAYERS ATTACHING BELOW $25 MILLION: EXCESS OF LOSS ONLY
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 10,000,000
MINIMUM PREMIUM $7,500 PER MILLION /
$ 75,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 70%
LAYERS ATTACHING ABOVE $25 MILLION: EXCESS OF LOSS
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 25,000,000
MINIMUM PREMIUM $7,500 PER MILLION /
$ 75,000 PER POLICY
MINIMUM PREMIUM AS % OF
PRECEDING EQUAL LAYER 70%
LAYERS ATTACHING ABOVE $25 MILLION: QUOTA-SHARE
MINIMUM PARTICIPATION 40%
MAXIMUM PARTICIPATION 50%
PROGRAM ADMINISTRATOR AUTHORITY $ 10,000,000
MINIMUM ATTACHMENT $ 25,000,000
MINIMUM PREMIUM $7,500 PER MILLION /
$ 75,000 PER POLICY
24
EXHIBIT B
INSURANCE REQUIREMENTS
The Program Administrator certifies that it has insurance coverage inforce,
meeting the following requirements:
Fidelity Bond $1,000,000
Errors / Omissions Liability $1,000,000 per event, $1,000,000 aggregate
25
