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                                                                    EXHIBIT 10.8

               1995 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN

                                       OF

                    AMERICAN PHYSICIANS SERVICE GROUP, INC.

                              A Texas Corporation


                              I.  Purpose of Plan

     The purpose of this 1995 Incentive Stock Option Plan (this "Plan") is to
strengthen American Physicians Service Group, Inc. a Texas corporation (the
"Corporation"), and its subsidiaries, by providing stock options as a means to
attract, retain and motivate corporate personnel.

                              II.  Administration

     This Plan shall be administered by a committee (the "Committee") composed
of members selected by, and serving at the pleasure of, the Board of Directors
of the Company (the "Board").  The Committee shall be constituted so as to
permit the Plan to comply with Rule 16b-3, as currently in effect or as
hereinafter modified or amended ("Rule 16b-3"), promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act").  Consistent with Rule 16b-3
each committee member shall be a disinterested person, i.e., a person who has
not been granted any equity security pursuant to a plan of the corporation or
any of its affiliates during the one year prior to his becoming a committee
member or during the period he serves as a committee member.  The Committee
shall have the sole authority to select the persons entitled to receive Options
(as defined below) from among those eligible hereunder (the "Optionees") and to
establish the number of shares that may be issued under each Option to such
persons; provided, however, that, notwithstanding any provision in this Plan to
the contrary, the maximum number of shares of common stock, $.10 par value per
share of the Company (the "Common Stock") that may be subject to Options granted
under the Plan to an individual Optionee during any calendar year may not exceed
150,000 (subject to adjustment in the same manner as provided in Article IX
hereof to prevent dilution.)  The limitation set forth in the preceding sentence
shall be applied in a manner which will permit compensation generated under the
Plan to constitute "performance-based" compensation for purposes of section
162(m) of the Internal Revenue Code of 1986, as amended ( the "Code"),
including, without limitation, counting against such maximum number of shares,
to the extent required under section 162(m) of the Code and applicable
interpretive authority thereunder, any shares subject to Options that are
cancelled or repriced.  The Committee shall have the power to make all
determinations necessary for the administration of the Plan, subject to the
restrictions on committee power set forth in Texas law.

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                             III.  Grant of Options

     The Corporation is authorized to grant incentive stock options ("Incentive
Stock Options") as defined in section 422 of the Code and options that are not
intended to be Incentive Stock Options (hereafter "Non-Qualified Stock Options"
and, together with Incentive Stock Options, the "Options").  Any Option granted
under this Plan shall be granted within 10 years form the date this Plan is
adopted, or the date this Plan is approved by the stockholders pursuant to
Article X, whichever is earlier.  No option granted under this Plan shall be
exercisable by its terms after the expiration of 10 years from the grant of the
Option.  Options may be granted only to individuals, (a) who are employees
(including officers and directors who are also employees) of the Company or any
parent or subsidiary corporation (as defined in section 424 of the Code) of the
Company or (b) who are directors of the Company who are not members of the
Committee, at the time the Option is granted.  Options may be granted to the
same individual on more than one occasion.

     Incentive Stock Options may not be granted to persons who own stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Corporation, or of its parent or subsidiary, if any,
within the meaning of section 422(b)(6) of the Code, unless (i) at the time such
Option is granted the option price is at least 110% of the fair market value of
the Common Stock subject to such Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of the grant.

     To the extent that the aggregate fair market value of Common Stock (as
determined in good faith by the Committee at the time the Incentive Stock Option
is granted), with respect to which Incentive Stock Options are exercisable for
the first time by an individual during any calendar year (under all incentive
stock option plans of the Corporation and any parent or subsidiary corporation)
exceeds $100,000, such excess Incentive Stock Options shall be treated as Non-
Qualified Stock Options.  The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other administrative
pronouncements which of an Optionee's Incentive Stock Options will not
constitute Incentive Stock Options because of such limitation and shall notify
the Optionee of such determination as soon as practicable after such
determination.

                           IV.  Stock Subject to Plan

     The aggregate number of shares of Common Stock that may be issued pursuant
to Options granted under this Plan shall not exceed 800,000 shares of Common
Stock (subject to adjustment as provided in article VIII).  Such shares may
consist of authorized but unissued shares of Common Stock or previously issued
shares of Common stock reacquired by the Company.  Any of such shares which
remain unissued and which are not subject to outstanding Options at the
termination of this Plan shall cease to be subject to this Plan, but, until
termination of this Plan, the Company shall at all times make available a
sufficient number of shares to meet the requirements of this Plan.  Should any
Option hereunder expire or terminate prior to its exercise in full, the shares
of Common Stock theretofore subject to such Option may again be subject to an
Option granted under this Plan to the extent permitted under Rule 16b-3.  The
aggregate number of shares which may be issued under this 

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Plan shall be subject to adjustment as provided in Article VIII hereof. Exercise
of an Option in any manner shall result in a decrease in the number of shares of
Common Stock which may thereafter be available, both for purposes of the Plan
and for sale to any one individual, by the number of shares as to which the
Option is exercised. Separate stock certificates shall be issued by the Company
for those shares acquired pursuant to the exercise of an Incentive Stock Option
and for those shares acquired pursuant to the exercise of any Non-Qualified
Stock Options.

                             V.  Option Agreements

     Each Option shall be evidenced by a written agreement between the Company
and the Optionee ("Option Agreement") which shall contain such terms and
conditions as the Committee deems necessary, including, without limitation,
terms and conditions relating to the termination of Options.  The terms and
conditions of the respective Option Agreements need not be identical.  Moreover,
an Option Agreement may provide for the payment of the option price, in whole or
in part, by the delivery of a number of shares of Common Stock (plus cash if
necessary) having a fair market value equal to such option price.

                               VI.  Option Price

     The purchase price for a share of Common Stock subject to an Incentive
Stock Option granted pursuant to this Plan shall not be less than the fair
market value of the Common Stock subject to such Incentive Stock Option at the
time such Option is granted.  The purchase price for  a share of the Common
Stock subject to a Non-Qualifying Stock Option granted pursuant to this Plan
shall be not less than 100% of the fair market value of the Common Stock subject
to such Non-Qualifying Stock Option on the date such Option is granted.

     For all purposes under the Plan, the fair market value of a share of Common
Stock on a particular date shall be equal to the average of the high and low
sales prices of the Common Stock (i) reported by the National Market System of
NASDAQ on that date or (ii) if the Common Stock is listed on a national stock
exchange, reported on the stock exchange composite tape on that date; or, in
either case, if no prices are reported on that date, on the last preceding date
on which such prices of the Common Stock are so reported.  If the Common Stock
is traded over the counter at the time a determination of its fair market value
is required to be made hereunder, its fair market value shall be deemed to be
equal to the average between the reported  high and low or closing bid and ask
prices of the Common Stock on the most recent date on which the Common Stock was
publicly traded.  In the event the Common Stock is not publicly traded at the
time a determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.

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                         VII.  Options Nontransferable

     Each Option and all rights granted thereunder shall not be transferable
other than by will or the laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by the Optionee or the
Optionee's guardian or legal representative; provided, however, that on and
after the date the Corporation elects to have this Plan governed under the
amendments to Rule 16b-3 effective on or after May 1, 1991, this Plan shall be
deemed to be amended to limit the transferability of Options, including any
exceptions thereto, to the same extent provided by Rule 16b-3 as so amended.

                   VIII.  Recapitalization of Reorganization

     In the event of a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, an appropriate and
proportionate adjustment shall be made in the number of shares of Common Stock
for which Options may be granted pursuant to Article Iv hereof.  A corresponding
change shall be made to the number and kind of shares, and the exercise price
per share, of unexercised Options.

            IX.  Merger, Consolidation or Dissolution of Corporation

     Following the merger of one or more corporations into the Corporation, or
any consolidation of the Corporation and one or more corporations in which the
Corporation is the surviving corporation, the exercise of Options under this
Plan shall apply to the shares of the surviving corporation.

     Not withstanding any other provision of this Plan, all Options under this
plan shall terminate on the dissolution or liquidation of the Corporation, or on
any merger or consolidation in which the Corporation is not the surviving
corporation.

                           X.  Effective Date of Plan

     This Plan shall be effective on approval by the outstanding shares or
unanimous written consent of the stockholders of the Corporation in the manner
required by Rule 16b-3.

                     XI.  Amendment of Termination of Plan

     The Board in its discretion may terminate this Plan at any time with
respect to any shares of Common Stock for which Options have not theretofore
been granted.  The Board shall have the right to alter or amend this Plan or any
part hereof from time to time; provided, that no change in any Option heretofore
granted may be made which would impair the rights of the Optionee without the
consent of such Optionee; and provided, further, that (i) the Board may not make
any alteration or amendment which would decrease any authority granted to the
Committee hereunder in contravention of Rule 16b-3 and (ii) the Board may not
make any alteration or amendment which would materially 

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increase the benefits accruing to participants under the Plan, increase the
aggregate number of shares which may be issued pursuant to the provisions of the
Plan, change the class of individuals eligible to receive Options under the Plan
or extend the term of the Plan, without the approval of the Stockholders of the
Company.

                        XII.  Compliance with Section 16

     With respect to persons subject to Section 16 of the 1934 Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act.  To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.


                                    By:        
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                                       Kenneth S. Shifrin, Chairman of the Board

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