<PAGE>
                                                                   EXHIBIT 10.35










                             MASTER AGENCY AGREEMENT
                                     between
                    AMERICAN PHYSICIANS ASSURANCE CORPORATION
                                       and
                             SCW AGENCY GROUP, INC.


















<PAGE>

                             MASTER AGENCY AGREEMENT
                                TABLE OF CONTENTS


<TABLE>
<S>      <C>                                                                                                    <C>

I.       AUTHORITY OF AGENCY:.....................................................................................1

II.      DEFINITIONS:.............................................................................................1

         A.       Adoption Agreement..............................................................................1

         B.       Agent of Record Letter..........................................................................2

         C.       APA Medical Professional Liability Book of Business.............................................2

         D.       *...............................................................................................2

         E.       Controlling Interest............................................................................2

         F.       Competing Insurer...............................................................................3

         G.       Customer........................................................................................3

         H.       Designated Markets..............................................................................3

         I.       Designated Products.............................................................................3

         J.       Effective Date..................................................................................3

         K.       Exclusive Market................................................................................3

         L.       Expirations.....................................................................................3

         M.       Late Payment Interest Rate......................................................................3

         N.       Permitted Transfer..............................................................................3

         O.       Restricted Transaction..........................................................................3

         P.       Shareholder(s)..................................................................................4

         Q.       Underwriting Rules..............................................................................4

III.     TERM, RENEWAL AND TERMINATION:...........................................................................4

         A.       Initial Term....................................................................................4

         B.       Renewal.........................................................................................4
</TABLE>


* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

<PAGE>

<TABLE>
<S>      <C>                                                                                                    <C>
         C.       Termination.....................................................................................4

IV.      AGENCY'S OBLIGATIONS AND SCOPE OF AUTHORITY:.............................................................4

         A.       Grant of Authority..............................................................................5

         B.       Reasonable Commercial Effort....................................................................5

         C.       Compliance with Underwriting Rules..............................................................5

         D.       Expansion into New Designated Markets...........................................................5

         E.       Agreement to Exclusively Market in the State of Michigan........................................5

         F.       Designated Markets Other than the Exclusive Market..............................................6

         G.       Selling Process.................................................................................7

         H.       Billing, Collection and Processing..............................................................7

         I.       Books, Records and Reporting....................................................................8

         J.       Maintenance of Licensing........................................................................9

         K.       Errors and Omissions Insurance..................................................................9

         L.       Independent Contractor..........................................................................9

         M.       Use of Sub-agents...............................................................................9

V.       COMPANY'S OBLIGATIONS:..................................................................................10

         A.       Licensing and Registration.....................................................................10

         B.       Agent of Record................................................................................10

         C.       Books, Records and Reporting...................................................................11

         D.       A.M. Best Rating...............................................................................11

         E.       Withdrawal.....................................................................................11

VI.      COMMISSIONS:............................................................................................12

         A.       Commission Rates...............................................................................12

         B.       Payment Terms..................................................................................13

         C.       Miscellaneous..................................................................................13
</TABLE>



<PAGE>

<TABLE>
<S>      <C>                                                                                                   <C>
VII.     OWNERSHIP OF EXPIRATIONS:...............................................................................14

         A.       Acknowledgment of Ownership of Certain Expirations by the Agency...............................14

         B.       Transfers of Certain Expirations...............................................................15

         C.       Release Regarding Kentucky and Nevada..........................................................14

         D.       Ownership of Data..............................................................................15

         E.       Rights of Company to Pursue Michigan Medical Professional Liability
                  Business.......................................................................................15

         F.       Miscellaneous..................................................................................16

VIII.    TERMINATION:............................................................................................16

         A.       Automatic Termination..........................................................................16

         B.       Termination for Cause..........................................................................16

         C.       Termination Without Cause......................................................................18

IX.      REMEDIES:...............................................................................................17

         A.       Termination of Agency Representation...........................................................18

         B.       Run-off........................................................................................18

         C.       Right to Solicit Michigan Customers............................................................18

         D.       Right of Set-off...............................................................................18

X.       ASSIGNMENT, SALE OR TRANSFER OF THE AGENCY'S ASSETS:....................................................18

         A.       Restricted Transaction.........................................................................18

         B.       Company's Right of First Refusal...............................................................18

         C.       Prohibition to Insurer Acquirors...............................................................19

         D.       Company's Right to Direct Communication With Third Parties.....................................19

         E.       Sub-Agents.....................................................................................20

         F.       Permitted Transfer.............................................................................20

         G.       Agreements With Shareholders and Key Employees.................................................20
</TABLE>



<PAGE>

<TABLE>
<S>      <C>                                                                                                    <C>
XI.      INDEMNIFICATION:........................................................................................20

         A.       Indemnification by the Company.................................................................20

         B.       Indemnification by the Agency..................................................................20

         C.       Notice and Opportunity to Defend...............................................................20

         D.       Settlement.....................................................................................21

         E.       Interest on Late Payment.......................................................................21

XII.     DISPUTE RESOLUTION:.....................................................................................21

         A.       Binding Arbitration............................................................................21

         B.       Limitation on Damages..........................................................................22

XIII.    MISCELLANEOUS:..........................................................................................22

         A.       Amendment......................................................................................22

         B.       Non-Waiver.....................................................................................22

         C.       Integrated Agreement...........................................................................22

         D.       Applicable Law.................................................................................22

         E.       Counterparts...................................................................................23

         F.       Authority......................................................................................23

         G.       Assignment.....................................................................................23

         H.       Confidentiality................................................................................23

         I.       Exhibits.......................................................................................24

         J.       Notices........................................................................................24

         K.       Headings.......................................................................................24

         L.       Representations and Warranties of the Agency...................................................24

         M.       Representations and Warranties of the Company..................................................25
</TABLE>


<PAGE>

                                     APA/SCW

                             MASTER AGENCY AGREEMENT

         This Agreement is made effective 1st day of January, 2004, between
AMERICAN PHYSICIANS ASSURANCE CORPORATION, a Michigan insurance company (the
"Company"), and SCW AGENCY GROUP, INC., a Michigan corporation, and its
subsidiaries and affiliates (the "Agency"). The Company and the Agency are
referred to individually as a "Party" or collectively as the "Parties."

                                    RECITALS:

         A. The Company desires to maintain for the term of this Agreement a
mutually beneficial relationship with the Agency and to consolidate into this
Agreement all terms and conditions of its relationship with the Agency relative
to the Company's medical professional liability business.

         B. The Agency desires to maintain for the term of this Agreement a
mutually beneficial relationship with the Company and to consolidate into this
Agreement all terms and conditions of its relationship with the Company relative
to the Company's medical professional liability business.

         C. The Company and the Agency desire to enter into this Agreement with
the intent that the medical professional liability products and services to be
offered by the Company and the production of new professional liability business
by the Agency, together with the servicing of existing insureds, shall
strengthen the long-term competitive positions of both Parties and shall
contribute to the mutual growth and benefit of both Parties during the term of
this Agreement.

         In consideration of the recitals, the mutual covenants and agreements
below, the Company and the Agency agree as follows:

I. AUTHORITY OF AGENCY: The Company hereby appoints the Agency as an agent of
the Company to sell and service Designated Products in Designated Markets,
subject to the terms and conditions of this Agreement.

II. DEFINITIONS: In addition to terms defined elsewhere in this Agreement, the
following terms shall have the following meanings for purposes of this
Agreement.

         A. ADOPTION AGREEMENT. An "Adoption Agreement" means any addendum,
exhibit or agreement executed by the Parties by which the Parties agree that
this Agreement shall apply to one or more Designated Markets listed in such
Adoption Agreement.

<PAGE>

Master Agency Agreement                                                   Page 2


         B. AGENT OF RECORD LETTER. "Agent of Record Letter" shall mean a
written request directed to the Company by an insured served by the Agency that
the Company recognize an agent other than the Agency as the insured's agent of
record.

         C. APA MEDICAL PROFESSIONAL LIABILITY BOOK OF BUSINESS. Agency's "APA
Medical Professional Liability Book of Business" shall mean and is limited to
the Agency's medical professional liability insurance business for insureds of
the Company, including but not limited to:

         1.       Renewals and Expirations owned by the Agency pursuant to this
                  Agreement.

         2.       All of the Agency's related written or otherwise recorded
                  documentation (including electronic and computerized records),
                  expiration and other related data or information, whether
                  compiled by Agency or by other agents, sub-agents or employees
                  of Agency, including but not limited to any customer lists,
                  prospect lists, policy forms, rating information, expiration
                  dates and all other expiration data, information on risk
                  characteristics, information concerning insurance markets for
                  large or unusual risks, and all other records of and
                  pertaining to the medical professional liability accounts and
                  customers of Agency, past and present, insured by the Company;

         3.       Goodwill of the Agency's APA medical professional liability
                  insurance business; and

         4.       All of the Agency's right, title and interest, if any, in
                  expirations owned by sub-agents relative to Customers insured
                  by the Company.

         "Agency's APA Medical Professional Liability Book of Business" excludes
         any liabilities, debts and other obligations of any kind of the Agency
         to its shareholders, employees, Customers, sub-agents, other
         professional liability insurers, governmental agencies, or others; the
         Company shall not assume any such liabilities, debts and other
         obligations, all of which shall remain the Agency's sole
         responsibility.

         D.       *

         E. CONTROLLING INTEREST. A "Controlling Interest" means shares
comprising a majority of the voting stock of the Agency or other entity, as the
case may be, or the power or ability to elect or control the voting of more than
a majority of the stock of the Agency.



* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

<PAGE>

Master Agency Agreement                                                   Page 3


         F. COMPETING INSURER. A "Competing Insurer" means any of the following
to the extent offering medical professional liability insurance products or
services in a Designated Market: an admitted, non-admitted, surplus lines,
alternatively financed or self-funded insurer, risk retention group, purchasing
group or other alternative program.

         G. CUSTOMER. A "Customer" shall mean a medical professional liability
insured of the Company and prospective medical liability insureds for which the
Company is willing to furnish, or does furnish, a quote.

         H. DESIGNATED MARKETS. A "Designated Market" means a state or market
area with respect to which the Parties have agreed this Agreement shall apply,
as listed in Exhibit A, or subsequently added to this Agreement by execution of
an Adoption Agreement, pursuant to Section IV.D.

         I. DESIGNATED PRODUCTS. "Designated Products" means and are limited to
the Company's medical professional liability insurance products offered and sold
in each Designated Market. The Parties acknowledge and agree that the Company
shall have absolute discretion concerning which medical professional liability
insurance products to offer and sell, or not to offer or sell, in each
Designated Market, and may offer additional products in or withdraw products
from a Designated Market at any time.

         J. EFFECTIVE DATE. The "Effective Date" of this Agreement shall be
January 1, 2004.

         K. EXCLUSIVE MARKET. "Exclusive Market" means the State of Michigan.

         L. EXPIRATIONS. "Expirations" shall mean all right, title and interest
in and to medical professional liability insurance expirations within the
meaning of applicable state law.

         M. LATE PAYMENT INTEREST RATE. The "Late Payment Interest Rate" means
the "prime interest rate," as published in The Wall Street Journal, plus one
(1%) percent.

         N. PERMITTED TRANSFER. A "Permitted Transfer" means:

         1.       Any transfer of shares of the Agency between the Shareholders,
                  or between the Shareholders and their spouses and children; or

         2.       Any transfer of shares of the Agency by a Shareholder of the
                  Agency to a revocable trust of which he or she is the settlor,
                  or back to himself or herself from such a trust, at any time
                  during the Shareholder's lifetime.

         O. RESTRICTED TRANSACTION. A "Restricted Transaction" means any of the
following:



<PAGE>

Master Agency Agreement                                                   Page 4


         1.       A sale, transfer (for or without consideration), or pledge of
                  all or substantially all of the Agency's business assets in
                  one or more Designated Markets;

         2.       A sale of the Agency's APA Medical Professional Liability Book
                  of Business in one or more Designated Markets;

         3.       A merger or consolidation of the Agency with or into one or
                  more other corporations or entities, if the Shareholders do
                  not own a Controlling Interest in the surviving entity;

         4.       A sale of shares of the Agency constituting a Controlling
                  Interest;

         5.       Grant of a proxy to vote the shares owned by the Shareholders;

         6.       Transfer of a Controlling Interest to a voting trust; or

         7.       Issuance of any shares of capital stock if, after such
                  issuance, the Shareholders would own less than a Controlling
                  Interest.

         8.       A Permitted Transfer shall not constitute a Restricted
                  Transaction.


         P. SHAREHOLDER(s). A "Shareholder" or the "Shareholders" means any one
or all of the current shareholders of the Agency.

         Q. UNDERWRITING RULES. The "Underwriting Rules" mean the Company's
rules, rating classifications and rates governing the underwriting of its
Designated Products. The Company shall have the sole right and discretion to
establish and modify its Underwriting Rules from time to time.

III. TERM, RENEWAL AND TERMINATION:

         A. INITIAL TERM. The initial term of this Agreement shall begin on the
Effective Date and shall last for a period of five (5) years.

         B. RENEWAL. The term of this Agreement shall thereafter automatically
renew for successive periods of five (5) years each, unless this Agreement is
terminated as provided in Section VIII below.

         C. TERMINATION. Notwithstanding the foregoing, this Agreement is
subject to termination, in whole or as to one or more Designated Markets, under
Section VIII.

IV. AGENCY'S OBLIGATIONS AND SCOPE OF AUTHORITY: Subject to the requirements
imposed by law, and the terms of this Agreement:



<PAGE>

Master Agency Agreement                                                   Page 5




         A. GRANT OF AUTHORITY. The Company authorizes Agency to act as its
agent to sell the Company's Designated Products and to service the Company's
Customers in the Designated Markets, subject to any exceptions or specifications
stated in this Agreement or an Adoption Agreement.

         B. REASONABLE COMMERCIAL EFFORT. The Agency shall use reasonable
commercial efforts to promote and sell the Company's Designated Products and
service the Company's Customers in the Designated Markets, subject to the terms
and conditions of this Agreement.

         C. COMPLIANCE WITH UNDERWRITING RULES. In performing its obligations
under this Agreement, the Agency shall at all times comply with the Underwriting
Rules, as adopted, amended and communicated by the Company from time to time.

         D. EXPANSION INTO NEW DESIGNATED MARKETS. The Parties may, at any time,
agree to add one or more Designated Markets to this Agreement, and to have this
Agreement apply to such additional Designated Markets, by the execution of an
Adoption Agreement. The terms and conditions of this Agreement shall apply to
such Designated Markets except to the extent otherwise stated in the Adoption
Agreement. It is the intent of the Parties, in the interest of uniformity and
consistency, that the terms and conditions of this Agreement shall apply to all
Designated Markets except to the extent unique characteristics of a Designated
Market justify different terms or conditions. Each Party shall be responsible
for its own costs and expenses of preparing to commence business in any
additional Designated Markets.

         E. AGREEMENT TO EXCLUSIVELY MARKET IN THE STATE OF MICHIGAN. In the
State of Michigan, the Agency (including its authorized sub-agents) agrees to
provide exclusive services to the Company on the following terms:

         1.       Except as expressly permitted by this Agreement, the Agency
                  shall not quote or otherwise solicit or place medical
                  professional liability insurance coverage for a Customer with
                  any Competing Insurer (including any Approved Competing
                  Insurers) on a direct or brokered basis. The loss of a
                  Customer or potential Customer to an agency representing a
                  Competing Insurer shall not be deemed a breach of this
                  Agreement.

         2.       *

         3.       The Agency represents and warrants to the Company that, as of
                  the Effective Date of this Agreement, it has not been
                  appointed in Michigan by any Competing Insurer, other than the
                  insurers, if any, identified in Exhibit A. The Agency shall
                  use its reasonable best efforts to transfer to the Company, at
                  policy renewal consistent with any contractual obligations to
                  Competing Insurers, any business of prospective Customers
                  which the Agency placed with Competing Insurers before the
                  execution of this Agreement which the Company is willing to
                  quote. Sixty (60) days prior to


* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

<PAGE>

Master Agency Agreement                                                   Page 6


                  each annual renewal, the Agency shall seek a quote from the
                  Company and, if the Company issues a quote within thirty (30)
                  business days as set forth in Section IV.E.5, the Agency shall
                  present the quote to the prospective Customer simultaneously
                  with or prior to the submission of any competing quote.

         4.       *, and request a quote for the Customer, provided that no such
                  request shall be made earlier than ninety (90) days before a
                  coverage expiration date.

         5.       Within thirty (30) business days of receiving a completed
                  request for a quote, along with a completed application and
                  all relevant underwriting information the Company requires to
                  issue a quote, the Company shall notify the Agency whether it
                  will issue a quote or shall give the Agency written notice
                  declining to issue the quote. Upon receiving written notice
                  from the Company declining to issue a quote, *. If the Company
                  fails to issue a quote or written notice declining to quote
                  within the thirty (30) business day period, the Agency shall
                  notify the Company in writing of the failure *.

         6.       Company Quote Confidentiality. The Agency shall at no time,
                  whether during or following termination of the term of this
                  Agreement, release or otherwise apprise any other insurer
                  (including a Competing or Approved Insurer) or source of
                  medical professional liability coverage or any other agent, of
                  any quote, details, price or component of a quote given by
                  Company.

         7.       The Company's appointment of the Agency is non-exclusive as to
                  the Company in all the Designated Markets, including Michigan.
                  The Company may appoint, in its discretion, other agents as
                  deemed necessary by the Company on terms and conditions deemed
                  appropriate by the Company.

         F. DESIGNATED MARKETS OTHER THAN THE EXCLUSIVE MARKET. The Agency is
designated as a non-exclusive agent for the Company with regard to the
Designated Markets other than Michigan.

         G. SELLING PROCESS.

         1.       Advertising and Promotional Materials. The Company may furnish
                  the Agency with advertising materials and other printed
                  materials from time to time. No other advertising material
                  which makes reference to Company products or services may be
                  used by the Agency without prior written


* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

<PAGE>

Master Agency Agreement                                                   Page 7


                  approval from the Company. The Agency shall be deemed to be a
                  trustee for the Company of all such advertising materials and
                  supplies provided by the Company, which supplies shall remain
                  the property of the Company. Upon termination of this
                  Agreement, all Company supplies shall be returned to the
                  Company.

         2.       Notice of Renewals. The Company will furnish Agency with a
                  list of all policies issued through the Agency which are due
                  to renew, at least ninety (90) days in advance of expiration.
                  Such list will include the expiring premium, so long as the
                  information is reasonably available from the computer base
                  currently used by the Company.

         3.       Application for Insurance. All applications and binders for
                  insurance shall be forwarded to the Company within three (3)
                  business days of receipt by the Agency. All applications and
                  binders of coverage shall be in accordance with the Company's
                  Underwriting Rules or other requirements as the Company shall
                  communicate to the Agency from time to time.

         4.       Authority to Bind Insurance. The Agency has no authority to
                  bind the Company or issue a certificate of insurance without
                  the specific written authorization of the Company, and shall
                  not do so. The Company has the exclusive right, authority and
                  discretion whether and under what terms and conditions it will
                  issue insurance.

         H. BILLING, COLLECTION AND PROCESSING.

         1.       Company Responsible for Billing. The Company shall be
                  responsible for all premium billing and collection, including
                  annual audit premiums where applicable, unless otherwise
                  mutually agreed in writing by Agency and Company. Although the
                  Agency may communicate such information to Customers, the
                  Company shall have the right to communicate such matters
                  directly to its Customers.

         2.       Agency Trustee for Premiums Received. The Agency shall remit
                  all monies collected by it or its sub-agents with respect to
                  Company business without deduction of commissions or other
                  amounts payable to the Agency. The Agency shall be deemed to
                  be the trustee for the Company of any monies which the Agency
                  or its sub-agents receive for premiums. Although premium
                  billing is generally done by the Company, if the Agency ever
                  holds such funds, it shall do so for the Company's benefit and
                  in a dedicated premium trust account bearing the Company's
                  name. All such funds shall be the exclusive property of the
                  Company, which at all times shall have the right to immediate
                  possession of such funds, whether such funds are held by the
                  Agency or by a bank or other financial institution.



<PAGE>

Master Agency Agreement                                                   Page 8



                  No funds of the Agency shall be commingled with the Company's
                  funds held in a premium trust account.

         I. BOOKS, RECORDS AND REPORTING.

         1.       Maintenance of Books and Records. The Agency will maintain
                  accurate records and have proper internal controls in place
                  with such records and controls being consistent with typical
                  good business practices of firms similar in size and function
                  to the Agency.

         2.       Annual Reports. At least annually, the Agency shall furnish
                  the Company with (a) such reasonable financial statements or
                  reports as may be requested by the Company, relevant to the
                  medical professional liability insurance business of the
                  Agency and its sub-agents, and (b) confirmation of the absence
                  of transactions, claims, events or contingencies which the
                  Agency knows or should know could have a material impact on
                  its financial statements.

         3.       Ongoing Duty to Report Material Events. The Agency shall give
                  the Company reasonable timely notice of events that are known
                  to the Agency that may render information previously disclosed
                  pursuant to this paragraph to be materially false or
                  misleading.

         4.       Loss Claims. The Agency shall promptly report all claims and
                  losses of which the Agency has knowledge to the Company, and
                  properly notify the Company when the Agency receives notice of
                  the commencement of any related legal action. The Agency shall
                  not admit or deny liability on the part of the Company in
                  connection with any claim or lawsuit.

         5.       Right to Inspect. The Company and its accountants shall have a
                  right of access to the books and records of the Agency related
                  to the medical professional liability business of the Agency
                  at reasonable times during normal business hours, upon
                  reasonable notice and with reasonable frequency, for the
                  purpose of ensuring compliance with this Agreement. Any such
                  inspection shall be conducted in a reasonable manner so as to
                  minimize any disruption to the Agency's business.

         6.       Information Concerning Competing Insurers. Whenever the Agency
                  places a Michigan risk with a Competing Insurer, *.

         7.       Exclusions. Notwithstanding the foregoing, SCW shall have no
                  obligation to disclose information to the Company to the
                  extent such disclosure would be prohibited by law, or by a
                  contract or agreement with a third-party.

* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

<PAGE>

Master Agency Agreement                                                   Page 9



         J. MAINTENANCE OF LICENSING. Agency's authority in each Designated
Market under this Agreement is contingent upon the Agency maintaining any and
all licenses that may be necessary under federal or state law for the Agency to
lawfully perform its duties and obligations in such Designated Market.

         K. ERRORS AND OMISSIONS INSURANCE. The Agency and each of its
sub-agents shall at all times maintain errors and omissions coverage with a
minimum limit of $1,000,000/$3,000,000 from an insurer with an A.M. Best's
rating of no less than A-. The Agency shall annually provide the Company a copy
of its current errors and omissions policy or of a binder for the same
satisfactory to the Company.

         L. INDEPENDENT CONTRACTOR. The Agency at all times shall function as an
independent contractor of the Company. Nothing in this Agreement shall be
construed to create the relationship of employer and employee between the
Company and the Agency or any of its agents. Company will not be responsible for
Agency's expenses related to its performance under this Agreement, including but
not limited to, bonuses, rent, transportation, employee hire or solicitor's
fees, postage, telephone, advertising, licensing fees or any other expenses
unless agreed upon in writing by the Parties.

         M. USE OF SUB-AGENTS.

         1.       The Agency may, subject to the prior written approval of the
                  Company, employ, appoint, reappoint, replace or otherwise
                  contract duly licensed sub-agents. The current authorized
                  sub-agents are listed on Exhibit A, attached. Each sub-agent
                  must be reviewed and re-approved annually in writing by a duly
                  authorized representative of the Company.

         2.       The Company will not unreasonably withhold its approval of a
                  sub-agent, provided that the Agency and the sub-agent have
                  entered into a written agreement which--

                  (a)      Obligates the sub-agent to comply with the terms of
                           Sections IV.E. 2-6, and this Section, to the extent
                           applicable;

                  (b)      Obligates the sub-agent to indemnify, defend and hold
                           harmless the Company against any breach of its
                           sub-agency agreement; and

                  (c)      Which names the Company a third-party beneficiary for
                           the purposes of the provisions referred to in Section
                           IV.M.2(a) and IV.M.2(b) above.

                  (d)      The agreement is not otherwise inconsistent with the
                           terms and conditions of this Agreement.

         3.       The Agency shall be responsible and liable to the Company for
                  any damages suffered by the Company caused by the Agency's
                  failure to take

<PAGE>

Master Agency Agreement                                                  Page 10


                  reasonable measures to enforce its agreements with its
                  sub-agents including, in appropriate circumstances,
                  termination of the sub-agent's agreement. The Agency shall
                  promptly give the Company written notice if and when a
                  sub-agent has materially breached its agreement with the
                  Agency insofar as it pertains to the Company.

         4.       The Agency, at its cost and expense, shall be responsible to
                  compensate each sub-agent from the commission the Agency
                  receives pursuant to this Agreement.



V. COMPANY'S OBLIGATIONS:

         A. LICENSING AND REGISTRATION. The Company will appoint or register the
Agency and its approved sub-agents where required in each applicable Designated
Market.

         B. AGENT OF RECORD.

         1.       Designation as Agent of Record. The Company shall designate
                  the Agency as the agent of record for all medical professional
                  liability business written, purchased or otherwise acquired by
                  the Agency or its sub-agents, unless otherwise agreed by the
                  Agency in writing. Notwithstanding the foregoing, in all
                  Designated Markets, if a medical professional changes
                  employment from a Customer represented by the Agency to a
                  Customer represented by another appointed agent of the
                  Company, then the Company may continue the medical
                  professional's coverage recognizing the other appointed agent
                  as the agent of record.

         2.       Agent of Record Letters.

                  (a)      Michigan. The Company will not accept Agent of Record
                           Letters regarding medical professional liability
                           business in Michigan unless the Company, in its sole
                           discretion and after reasonable inquiry, determines
                           that the request for a change in agent resulted from
                           a substantial performance deficiency by the Agency
                           which, within ten (10) business days of receiving
                           written notice from the Company, it failed to correct
                           and deliver to the Company a letter of rescission
                           from the Customer. In such a case, the Company will
                           become the Agent of Record for the Customer.

                  (b)      Other States. This Agreement does not restrict the
                           Company from accepting Agent of Record Letters from
                           Customers in states other than Michigan, and the
                           Company's policies with regard to Agent of Record
                           Letters may change from time to time.

<PAGE>
Master Agency Agreement                                                  Page 11


         C.       BOOKS, RECORDS AND REPORTING.

         1.       Monthly Accounting. The Company will provide the Agency a
                  monthly accounting of all transactions involving the Agency
                  using industry standards, including name, policy number,
                  effective date, premium and commission.

         2.       Identification of Agency on Notices. The Company shall
                  endeavor to clearly identify the Agency by name on all
                  policies, premium notices and cancellation notices sent to
                  policyholders. The Company shall provide the Agency with a
                  copy of all policy declarations, endorsements and cancellation
                  notices.

         3.       Notice of Renewals. The Company will furnish the Agency with a
                  list of all policies on which the Agency is the agent of
                  record which are due to renew, at least ninety (90) days in
                  advance of expiration. Such list will include the expiring
                  premium, so long as the information is reasonably available
                  from the computer base currently used by the Company..

         D.       A.M. BEST RATING.

         1.       In the event that the Company's A.M. Best's rating falls below
                  B+, the Agency shall thereafter be excused from its
                  exclusivity obligations in Michigan. If, however, the A.M.
                  Best ratings of the Competing Insurer(s) who are writing a
                  majority of the medical professional liability policies by
                  premium volume in Michigan have also fallen below B+ or are
                  rated with the modifier "u" (or its then-current equivalent),
                  the Agency shall not be excused from its obligations under
                  Section IV.E. regarding obtaining quotes from the Company and
                  presenting them to Customers or prospective insureds.

         2.       If the Company regains an A.M. Best rating of B+ or better
                  within six months, the obligations of the Agency under Section
                  IV.E. shall be automatically reinstated. The Agency shall then
                  make a good faith effort to place with the Company, at
                  renewal, all medical professional liability coverages placed
                  with other insurers (including Competing and Approved
                  Competing Insurers) while excused from its exclusivity
                  obligations.

         E.       WITHDRAWAL.

         1.       The Company shall at all times have the absolute discretion to
                  withdraw fully or partially from any Designated Market and/or
                  to expand, contract or eliminate medical professional
                  liability products offered or sold.

         2.       The Company shall provide the Agency with a minimum of ninety
                  (90) days prior written notice before withdrawal from any
                  Designated Market.

<PAGE>

Master Agency Agreement                                                  Page 12

         3.       In the event of any withdrawal from a Designated Market,
                  Agency shall be entitled to unpaid commissions for insurance
                  sold prior to the withdrawal and commissions due in the course
                  of running off business in the market or markets from which
                  the Company withdraws.

         4.       In the event of the complete withdrawal of the Company from a
                  Designated Market:

                  (a)      Company will provide Agency with a complete list of
                           the Agency's existing policies, including their
                           expiration dates and shall provide all reasonable
                           additional assistance requested by the Agency to
                           accomplish the orderly transfer of business to
                           another insurance company;

                  (B)      If the withdrawal is from Michigan, the Agency shall
                           be excused from its exclusivity obligations in
                           Section IV.E.

VI.      COMMISSIONS:

         A.       COMMISSION RATES.

         1.       The Company agrees to pay the Agency, and the Agency agrees to
                  accept, commissions based upon premiums actually received by
                  the Company in accordance with the attached Exhibits, as full
                  compensation for all activities rendered by the Agency
                  (including its approved sub-agents) under this Agreement.

         2.       The Company may revise the rates of commissions specified in
                  the Designated Markets other than Michigan by giving not less
                  than ninety (90) days written notice to the Agency, provided
                  that such revision shall not apply to installment or
                  endorsement premiums payable on policies already in force. The
                  Company will not set revised commission rates for the Agency
                  that are lower than the commission rates paid by the Company
                  to like agencies in the relevant geographic market for like
                  coverages. In Michigan, the Company cannot decrease the rates
                  of commissions paid to the Agency unless the prevailing
                  commission rates paid by Competing Insurers decreases below
                  the current rates, in which case the Company can decrease the
                  rates to the prevailing level paid by Competing Insurers.

         3.       The Agency agrees to refund to the Company unearned commission
                  on policy cancellations or reductions at the same rate at
                  which such commissions were originally paid.



<PAGE>
Master Agency Agreement                                                  Page 13




         4.       Following termination of this Agreement, the Company shall
                  have no obligation to pay commissions to the Agency, except
                  for commissions due but unpaid as of the effective date of
                  termination.

         5.       The Parties may agree to apply a rate of commission on any
                  individual policy other than the rate of commission shown in
                  the attached Exhibits. Issuance of the policy by the Company
                  at the revised rate shall be conclusive evidence of the
                  Company's agreement to the revised rate. The Agency's consent
                  to the issuance of the policy at the revised rate of
                  commission shall be conclusive evidence of the Agency's
                  agreement to the revised rate for that policy.

         6.       The Company may, but is not obligated to, provide the Agency
                  annually with a contingent commission agreement, the terms of
                  which may vary on a state-by-state basis for those
                  states/markets which the Company determines are subject to the
                  contingent commission agreement.



         B.       PAYMENT TERMS.

         1.       Commissions on premiums shall be paid to the Agency by the
                  15th of the month after which the initial premium is received
                  and recorded by the Company, subject to offset by the Company
                  of any return commissions due from the Agency.

         2.       Interest shall accrue on any late commission payments at the
                  Late Payment Interest Rate from the original due date until
                  paid.

         3.       Interest shall accrue on any return commission payments not
                  collected by offset by the Company at the Late Payment
                  Interest Rate, from thirty (30) days after the Company demands
                  payment in writing until paid.

         4.       If the Agency does not make a timely accounting or payment of
                  any sums held in trust or otherwise due the Company, the
                  Company reserves the right, upon written notice to the Agency
                  and the Agency's failure to correct the deficiency within ten
                  (10) business days of receipt of such written notice, to set
                  off any amounts due the Company from amounts payable to the
                  Agency and to suspend the Agency's authority to bind any new
                  or renewal business.


         C.       MISCELLANEOUS.

         1.       For purposes of computing commissions--



<PAGE>
Master Agency Agreement                                                  Page 14



                  (a)      "New business" shall mean all new policies or
                           policies where there is a break in continuous
                           coverage by the Company of at least thirty (30) days.
                           All other business pertaining to active policies in
                           force will be treated as renewal business.

                  (b)      "Tail business" shall refer to extended discovery
                           reporting periods (tails) on claims made policies.

                  (c)      The endorsement of additional physicians to an
                           existing policy will yield commissions to the Agency
                           at the renewal rate, not the new business rate.

         2.       The payment of commissions by Company to Agency is contingent
                  upon such payment not being prohibited by law, and the Agency
                  being licensed in the relevant jurisdiction.

VII.     OWNERSHIP OF EXPIRATIONS:

         A. ACKNOWLEDGMENT OF OWNERSHIP OF CERTAIN EXPIRATIONS BY THE AGENCY.
The Parties acknowledge and agree that as of the Effective Date of this
Agreement, the Agency, or a sub-agent where applicable, shall own all
Expirations for medical professional liability business placed with the Company
during the term of this Agreement where the Agency is the agent of record. The
Agency, or a sub-agent where applicable, shall continue to own all expirations
presently owned by the Agency, or a sub-agent where applicable, from Michigan
market sales with original expiration dates from and after July 1, 1991 through
and prior to the Effective Date of this Agreement.


         B. TRANSFER OF CERTAIN EXPIRATIONS. The Company hereby conveys to the
Agency, any and all of its right, title and interest in and to the APA Medical
Professional Liability Book of Business owned by the Agency or its sub-agents,
including the following:

         1.       *

         2.       Expirations retained and owned by the Company from Michigan
                  market sales with original expiration dates prior to July 1,
                  1991, identified on attached Exhibit B ("Pre-1991 Michigan
                  Expirations"); and

         3.       Expirations from Nevada market sales.

         C.       RELEASE REGARDING KENTUCKY AND NEVADA.

         1.       The Company forever waives, releases and discharges the Agency
                  from any legal claims, damages or other compensation payable
                  by the Agency


*Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.


<PAGE>

Master Agency Agreement                                                  Page 15


                  arising from the Agency's prior practice of placing Kentucky
                  medical professional liability coverages with other insurers
                  before the execution of this Agreement.

         2.       The Company forever waives, releases and discharges the Agency
                  from its obligation to repay the Company the outstanding
                  principal balance of $310,000 for costs which the Company
                  advanced the Agency for Nevada market entry. The Agency
                  forever waives, releases and discharges the Company from any
                  legal obligation to purchase medical professional liability
                  expirations per the Nevada Agency Agreement between the Agency
                  and the Company, as amended, or any obligation to pay any exit
                  fee to the Agency upon its withdrawal from Nevada.

         D. OWNERSHIP OF DATA. Notwithstanding any provision of this Agreement
to the contrary, except those contained in Section VII. E, the Company shall
continue to own all non-expiration related data (including, but not limited to,
loss data) and other proprietary information and records of the Company. The
Agency shall own all expiration data concerning its Customers that is in its
files.

         E. RIGHTS OF COMPANY TO PURSUE MICHIGAN MEDICAL PROFESSIONAL LIABILITY
BUSINESS. Notwithstanding any provision of this Agreement to the Contrary, in
the event that the Agency terminates this Agreement without Cause, or the
Company terminates this Agreement with Cause, both as defined in Section VIII of
this Agreement, then the Company shall be permitted to solicit, place, service,
or otherwise pursue all Michigan medical professional liability business for
which the Agency is the Agent of Record and/or owns the Expirations without any
liability whatsoever under any theory to the Agency.

         F.       MISCELLANEOUS.

         1.       The ownership of Expirations by the Agency or its sub-agents
                  shall survive the termination of this Agreement, subject to
                  the provisions of Section VII.E.

         2.       The ownership of Expirations by the Agency shall not affect
                  the Company's right to communicate directly with insureds, and
                  to bill insureds directly for premiums due or to become due,
                  and to collect such premiums directly from insureds.

         3.       In the event the Company purchases the Agency's APA Medical
                  Professional Liability Book of Business pursuant to Section
                  X.B., the Company shall thereafter have the right to make such
                  use as it deems fit of the Agency's records related to the
                  Agency's APA MPL Book of Business, the Expirations, and the
                  Company's own records pertaining to the Expirations.



<PAGE>
Master Agency Agreement                                                  Page 16




VIII. TERMINATION: This Agreement may be terminated, or nonrenewed at the
expiration of one of its terms, only as provided in this Section:

         A.       AUTOMATIC TERMINATION. This Agreement shall terminate
                  automatically by mutual consent on the effective date of the
                  purchase by the Company of the Agency's APA Medical
                  Professional Liability Book of Business, with respect to the
                  Designated Market(s) as to which the purchase applies.

         B.       TERMINATION FOR CAUSE. A Party may terminate or nonrenew this
                  Agreement for "Cause." "Cause" for purposes of this Agreement
                  is limited to any one or more of the following:

         1.       Loss of License. This Agreement shall terminate automatically,
                  with respect to a Designated Market only, upon a Party's loss
                  of any license or certificate of authority necessary to
                  perform its obligations as contemplated under this Agreement;
                  provided that such termination shall occur when such loss of
                  license or certificate is final and appeal rights have been
                  exhausted. If the Party subsequently regains its license in
                  such Designated Market, the Parties may reinstate this
                  Agreement as to such Designated Market if agreed to in
                  writing.

         2.       Immediately upon either Party giving written notice to the
                  other in the event of fraud, bankruptcy, insolvency, or gross
                  and willful misconduct on the part of the other Party.

         3.       Upon the repeated failure of the Agency to provide for premium
                  accounting or payment as required by this Agreement, within
                  fifteen (15) business days following the receipt of written
                  notice from the Company, or upon the repeated failure of the
                  Company to pay any Commissions as required by this Agreement,
                  within fifteen (15) business days following the receipt of
                  written notice from the Agency. Each Party shall provide a
                  written notice of any such failure and permit an opportunity
                  to cure the failure within ten (10) days following the written
                  notice. For purposes of this Agreement, "repeated" shall mean
                  three (3) or more times within any twelve (12) consecutive
                  month period.

         4.       Upon the failure of a Party to cure a material breach of this
                  Agreement within thirty (30) days following the receipt of
                  written notice by the other Party; provided that if another
                  section of this Agreement provides for a notice and cure
                  period other than thirty (30) days which is applicable, the
                  notice and cure period referenced in the other section shall
                  apply. The written notice shall describe in detail the alleged
                  material breach(es).

         5.       Upon the failure of the Agency to comply with the provisions
                  of Section IV.E. three (3) or more times within any twelve
                  (12) consecutive month period.



<PAGE>
Master Agency Agreement                                                  Page 17




         6.       The Agency can terminate for Cause upon expiration of a
                  current five (5) year term, providing that the Agency gives
                  the Company written notice of its intent not to renew the term
                  of the Agreement due to the Company offering the Agency
                  renewal terms and conditions substantially less favorable to
                  the Agency than those in effect immediately prior to renewal.
                  Any such termination is not effective as a termination with
                  Cause unless: the Agency gives the Company at least ninety
                  (90) days written notice before expiration of the then-current
                  term; the notice specifies the terms and conditions which the
                  Agency claims are substantially less favorable to it; and the
                  Company is given a reasonable opportunity to address the
                  issues. If the Agency elects to nonrenew the Agreement even
                  though the Company provides written notice to the Agency that
                  it will renew the agreement on terms and conditions that are
                  substantially as favorable to the Agency as those in effect
                  immediately prior to renewal, then such a nonrenewal shall be
                  a Termination Without Cause.

         C.       TERMINATION WITHOUT CAUSE. Either Party may terminate the
                  Agreement "without cause" upon the expiration of a current
                  term, by either Party giving not less than one hundred twenty
                  (120) days written notice to the other of its intent not to
                  renew the Agreement. Any written notice given by a Party shall
                  clearly identify that it is given pursuant to this provision.



IX. REMEDIES: In addition to any other rights or remedies the Parties may have
in the event of a breach or default by the other Party, the Parties shall have
the rights and remedies set forth below. Except as expressly provided otherwise,
the exercise of a particular remedy, or the specification of a particular remedy
in the event of a certain type of default, shall not be deemed an election of
remedies, and shall not preclude the other Party from exercising any other
rights or remedies available to it.

         A.       TERMINATION OF AGENCY REPRESENTATION. Upon the effective date
                  of termination, the Agency's responsibility for complying with
                  the provisions of this Agreement affecting premium payment or
                  collection and procedures related to policyholder
                  communication and service shall continue until resolved to the
                  Company's reasonable satisfaction. Except as so stated, the
                  Agency's authority under this Agreement shall cease.

         B.       RUN-OFF. As of the effective date of termination, outstanding
                  policies will be permitted to run to expiration subject to the
                  right of the Company to effect selective cancellations at any
                  time.

         C.       RIGHT TO SOLICIT MICHIGAN CUSTOMERS. If the Agreement is
                  terminated by the Company with Cause, or by the Agency without
                  Cause, the Company shall have the rights as set forth in
                  Section VII.E. of this Agreement.



<PAGE>
Master Agency Agreement                                                  Page 18




         D.       RIGHT OF SET-OFF. If the Agency does not make a timely
                  accounting or payment of any sums held in trust or otherwise
                  due the Company, the Company reserves the right, upon written
                  notice to the Agency and the Agency's failure to correct the
                  deficiency within ten (10) business days of receipt of such
                  written notice, to set off any amounts due the Company from
                  amounts payable to the Agency.

X.       ASSIGNMENT, SALE OR TRANSFER OF THE AGENCY'S ASSETS:

         A.       RESTRICTED TRANSACTION. Neither the Agency nor its
                  Shareholders shall undertake a Restricted Transaction except
                  on the terms stated in this Section.

         B.       COMPANY'S RIGHT OF FIRST REFUSAL. Before engaging in a
                  Restricted Transaction, the Agency must first deliver to the
                  Company a bona fide offer (the "Third Party Offer") made by a
                  third party to enter into such transaction, which must include
                  an acknowledgement of the Company's right of refusal under
                  this Section, and must disclose the offered price, the
                  identity of the prospective purchaser(s) and the terms and
                  conditions of the offer. The Company shall have thirty (30)
                  days from the receipt of the copy of the Third Party Offer to
                  exercise its option by written notice to the Agency. The
                  price, terms and conditions of the offer to purchase shall be
                  the same as the terms and conditions of the bona fide offer by
                  the prospective purchaser; provided, however, that if any bona
                  fide offer stipulates consideration that is not practicably
                  obtainable except for the prospective purchaser (such as
                  specific land or stock in a closely held corporation), the
                  Company shall be entitled to deliver as substitute
                  consideration cash in an amount equal to the fair market value
                  of such consideration. Such fair market value shall be
                  determined by agreement between the Agency and the Company or,
                  failing that, by an appraiser selected and jointly paid for
                  equally by the Agency and the Company. If the Company
                  determines not to purchase pursuant to this provision, then
                  the Agency shall be permitted to consummate the Restricted
                  Transaction, so long as it does not violate Section X.C.

         C.       PROHIBITION TO INSURER ACQUIRORS. In no event shall the Agency
                  or its Shareholders, directly or indirectly, agree to a
                  Restricted Transaction with any Competing or Approved
                  Competing Insurer or other insurer which sells medical
                  professional liability insurance in any Designated Market, or
                  in any state in which the Company has applied for licensure to
                  sell medical professional liability insurance. The Agency
                  acknowledges and agrees that a loss arising from a breach of
                  this provision may not be reasonably and equitably compensated
                  by money damages. The Agency agrees that in case of any such
                  breach, the Company shall be excused from the provisions of
                  Section XIII, and entitled to injunctive and other equitable

<PAGE>
Master Agency Agreement                                                  Page 19




                  relief from a court of competent jurisdiction to enforce the
                  terms of this provision, which relief shall be cumulative and
                  in addition to any and all other additional remedies available
                  to the Company at law or in equity. Further, in addition to
                  all available rights and remedies and any relief granted to
                  the Company, the Company shall have the right to solicit the
                  Michigan Customers as provided in Section VII.E.

         D.       COMPANY'S RIGHT TO DIRECT COMMUNICATION WITH THIRD PARTIES.
                  After the Agency delivers to the Company a copy of the Third
                  Party Offer, whether or not the Company exercises its right of
                  refusal under this Section, the Company shall have the right
                  to communicate directly with such third party, without the
                  participation of the Agency, prior to the completion of the
                  transaction, such communication being intended to allow the
                  Company and the third party the opportunity to develop a
                  mutually acceptable contractual relationship.

         E.       SUB-AGENTS. Nothing in this Agreement shall be construed to
                  prohibit the Agency from entering into agreements with one or
                  more sub-agents under which, as between the parties to such
                  agreements, ownership rights with respect to expirations are
                  granted or conveyed to or among such sub-agents.

         F.       PERMITTED TRANSFER. Nothing in this Agreement shall be
                  construed to prohibit a Permitted Transfer.

         G.       AGREEMENTS WITH SHAREHOLDERS AND KEY EMPLOYEES.

         1.       In the event that the Company purchases all or part of the
                  Agency's APA Medical Professional Liability Book of Business
                  pursuant to Section X.B., or engages in a Restricted
                  Transaction with the Agency, under Section X.A., X.B., or
                  X.C., above, in conjunction with such transaction:

                  (a)      The Agency shall assign to the Company, to the extent
                           assignable, any and all covenants-not-to-compete,
                           non-piracy and confidentiality agreements in effect
                           between the Agency and its Shareholders and key
                           employees as of the date of such transaction. In the
                           event that they do not exist or exist but are
                           non-assignable, the Agency will use its reasonable
                           best efforts to cooperate with the Company to obtain
                           agreements from Agency Shareholders as part of the
                           Company's purchase, which will provide protection to
                           the Company for a reasonable period of time in a
                           reasonable geographic area; and

                  (b)      The Company shall be free to solicit any of the
                           Agency's employees, contractors, representatives or
                           agents relative to the

<PAGE>
Master Agency Agreement                                                  Page 20

                           APA Medical Professional Liability Book of Business
                           acquired for the purpose of hiring them.

         2.       The Agency represents and warrants to the Company, to the best
                  of its knowledge and information, that prior to the execution
                  of this Agreement, the Agency has delivered to the Company
                  true and complete copies of any and all such
                  covenants-not-to-compete, non-piracy and confidentiality
                  agreements currently in effect between the Agency and its
                  Shareholders, producers, and key employees.

         3.       During the term of this Agreement, the Agency shall take no
                  action to rescind, repeal or modify such agreements, except
                  that the Agency may enter into modified or successor
                  agreements providing it with no lesser protections. The
                  expiration or termination of such covenants-not-compete,
                  non-piracy and confidentiality agreements in accordance with
                  their terms shall not be a violation of this Agreement.

         4.       On the sale of all or a portion of the Agency (including, but
                  not necessarily limited to, some or all of the Agency's APA
                  Medical Professional Liability Book of Business or medical
                  professional liability expirations owned by Agency pursuant to
                  this Agreement) to the Company pursuant to this Agreement, the
                  Agency and the Company shall enter into mutually acceptable
                  covenant-not-to-compete, non-piracy and confidentiality
                  agreements.

XI.      INDEMNIFICATION:

         A.       INDEMNIFICATION BY THE COMPANY. During and following the
                  termination of this Agreement, the Company will forever
                  defend, indemnify and hold the Agency harmless against any
                  claims, including related legal costs, fines, damages or
                  monetary penalties incurred as a result of any act or omission
                  by the Company in the performance of the Agreement.

         B.       INDEMNIFICATION BY THE AGENCY. During and following the
                  termination of this Agreement, the Agency will forever defend,
                  indemnify and hold the Company harmless against any claims,
                  including related legal costs, fines, damages or monetary
                  penalties incurred as a result any act or omission by the
                  Agency or its sub-agents in the performance of this Agreement.

         C.       NOTICE AND OPPORTUNITY TO DEFEND. In the case of any claim
                  asserted by a third party against a Party entitled to
                  indemnification under this Agreement (the "Indemnified
                  Party"), the Indemnified Party shall give written notice to
                  the Party required to provide indemnification (the
                  "Indemnifying Party") promptly after such Indemnified Party
                  has actual knowledge of any claim as to which indemnity may be
                  sought. The Indemnified Party will permit the Indemnifying
                  Party (at the expense of



<PAGE>
Master Agency Agreement                                                  Page 21



                  such Indemnifying Party) to assume the defense of any claim or
                  any litigation resulting therefrom, provided that:

         1.       The counsel for the Indemnifying Party who will conduct the
                  defense of such claim or litigation must be reasonably
                  satisfactory to the Indemnified Party;

         2.       The Indemnified Party may participate in such defense at such
                  Indemnified Party's expense; and

         3.       The failure by any Indemnified Party to give notice as
                  provided in this Agreement will not relieve the Indemnifying
                  Party of its indemnification obligation under this Agreement
                  except to the extent that such omission prejudices the
                  Indemnifying Party in its defense of the claim.

         The Indemnifying Party and the Indemnified Party will cooperate in the
defense of any claim or litigation and the records of each will be available to
the other with respect to such defense.

         D. SETTLEMENT. Except with the prior written consent of the Indemnified
Party, no Indemnifying Party, in the defense of any such claim or litigation,
may consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by each claimant to such
Indemnified Party a release from all liability with respect to such claim or
litigation, and does not impose any liabilities or obligations on the
Indemnified Party.

         E. INTEREST ON LATE PAYMENT. Any indemnification obligation not paid
when due shall bear interest at the Late Payment Interest Rate.

XII.     DISPUTE RESOLUTION:

         A. BINDING ARBITRATION. In the event of any dispute arising out of this
Agreement, except where a Party seeks equitable relief, the Company and Agency
agree to submit such dispute to arbitration as follows:

         1.       The arbitration shall be conducted by a panel of three
                  arbitrators. Each Party shall appoint one arbitrator within 45
                  days after the initial written notice of any arbitrable
                  dispute by one Party to the other. The third arbitrator shall
                  be selected by the first two arbitrators within 45 days after
                  their appointment. If the two arbitrators cannot agree upon
                  the third, a Judge of the Circuit Court for Ingham County,
                  Michigan shall be requested to appoint the third arbitrator.

         2.       The arbitration panel may allow reasonable discovery subject
                  to its reasonable discretion. The determination of the
                  arbitrators shall be final




<PAGE>
Master Agency Agreement                                                  Page 22


                  and binding upon the Parties, and judgment may be entered on
                  the arbitrators' determination in a court of competent
                  execution.

         3.       The arbitration shall be conducted in Ingham County, Michigan,
                  in accordance with the procedures of the regional office of
                  the American Arbitration Association responsible for Ingham
                  County, Michigan. The Agency and the Company shall each pay
                  the cost of the arbitrator it appointed, and shall each pay
                  one-half of the cost of the third arbitrator. The prevailing
                  Party, as determined by the arbitrators, shall be awarded
                  reasonable attorneys fees and costs payable by the other
                  Party.

         B. LIMITATION ON DAMAGES. Neither the Company nor the Agency shall be
liable for or entitled to punitive or exemplary damages.



XIII.    MISCELLANEOUS:

         A. AMENDMENT. This Agreement may be amended only by the written
agreement of the Parties.

         B. NON-WAIVER. Any failure by either Party to insist upon compliance
with any provisions of this Agreement shall not be construed as or constitute a
waiver of them by such Party.

         C. INTEGRATED AGREEMENT. This Agreement and its Exhibits as modified
from time to time constitute the entire agreement between the Parties pertaining
to its subject matter. Except as set forth in this Agreement, there are no
representations, warranties, guarantees, agreements or understandings, whether
express or implied, written or oral, pertaining to the subject matter of this
Agreement. This Agreement supersedes, replaces and renders null and void, as of
its Effective Date, all previous agreements between Company and the Agency
(including its subsidiaries and affiliates) pertaining to its subject matter, as
well as all term sheets signed or exchanged between the Parties before execution
of this Agreement.

         D. APPLICABLE LAW. This Agreement shall be governed and interpreted by
the laws of the State of Michigan, excluding its conflicts of law principles;
except to the extent that any of its provisions conflict with the specific
statutory obligations of Agency due to Agency's licensure by or activities in
any other state, it shall be deemed amended to conform to the minimal degree
necessary to comply with the relevant statutes or regulations of such other
state. Any other conflicts of this Agreement with the applicable law of Michigan
or with Michigan regulations shall be deemed conformed to those Michigan
standards.



<PAGE>
Master Agency Agreement                                                  Page 23




         E. COUNTERPARTS. This Agreement and any Exhibits, which require
signatures, may be executed in counterparts, which shall together be regarded as
binding upon the Parties.

         F. 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.

         G. ASSIGNMENT. The Company may assign this Agreement to its parent,
affiliate, or subsidiary corporations who are licensed insurers upon written
notice to agency. Agency may not assign this Agreement except as set forth in
Section X of this Agreement.

         H. CONFIDENTIALITY.

         1.       All information concerning a Party (the "Disclosing Party") in
                  the possession of the other Party (the "Recipient Party") from
                  time to time, shall be deemed to be "Confidential
                  Information," except to the extent it is public knowledge at
                  the time of its disclosure or becomes public knowledge through
                  no fault of the Recipient Party, is developed independently by
                  the Recipient Party, or is required by applicable law to be
                  filed or disclosed to the public.

         2.       The Parties agree to use Confidential Information only for the
                  purpose of performing their respective obligations under this
                  Agreement.

         3.       The Parties agree to limit dissemination of Confidential
                  Information to their respective officers, directors,
                  employees, accountants, attorneys, and agents who have a
                  reasonable need to know such information in order to perform
                  this Agreement.

         4.       The Parties agree to take reasonable steps to protect the
                  confidentiality of such information prior to any such
                  disclosure, including obtaining the agreement of any such
                  third party to be bound by the terms of this Agreement.

         5.       Except as required by applicable law or by Section VII.E., the
                  Parties agree to immediately return all Confidential
                  Information to the Disclosing Party, and/or to delete or
                  destroy it, upon request or upon the termination of this
                  Agreement, including any and all documents or other records
                  containing Confidential Information, any and all copies made
                  by the party or its agents, and any and all analyses, studies,
                  or other documents or records prepared by the party or its
                  agents that include or were based upon any Confidential
                  Information.



<PAGE>
Master Agency Agreement                                                  Page 24




         I. EXHIBITS. All referenced exhibits are deemed incorporated by
reference into this Agreement.

         J. NOTICES. All notice requirements and other communications shall be
deemed given when delivered or on the following business day after being sent by
overnight courier with a nationally recognized courier service such as Federal
Express, addressed as follows:


                  Company: American Physicians Assurance Corporation
                           c/o Secretary
                           1301 North Hagadorn Road
                           East Lansing, Michigan 48823

                  With a copy to:   Vice President, Marketing
                           American Physicians Assurance Corporation
                           1301 North Hagadorn Road
                           East Lansing, Michigan 48823

                  Agency:  SCW Agency Group, Inc.
                           c/o President
                           2501 Coolidge Road, Suite 300
                           East Lansing, Michigan 48826-4040

         K. HEADINGS. Any headings or titles used in this Agreement are
non-substantive and appear for reference only.

         L. REPRESENTATIONS AND WARRANTIES OF THE AGENCY. The Agency represents
and warrants to the Company each of the following as of the Effective Date of
this Agreement:

         1.       The Agency is a corporation duly organized, validly existing
                  and in good standing under the laws of the State of Michigan,
                  with full corporate power and authority to conduct its
                  business as it is now being conducted and to perform all of
                  its obligations under this Agreement. As of the execution of
                  this Agreement, the Agency or its subsidiaries are qualified
                  to do business in Michigan, Illinois, Ohio, Indiana,
                  Tennessee, Nevada, Florida, and Kentucky.

         2.       The Agency and its subsidiaries hold all unrestricted licenses
                  or certificates of authority necessary represent the Company
                  as an agent in all jurisdictions in which the Agency or its
                  subsidiaries are qualified to do business as foreign
                  corporations.

         3.       This Agreement constitutes the legal, valid and binding
                  obligation of the Agency and its subsidiaries, enforceable in
                  accordance with its terms.

<PAGE>
Master Agency Agreement                                                  Page 25





                  The Agency and its subsidiaries have the absolute and
                  unrestricted right, power and authority to execute and deliver
                  this Agreement and to perform their obligations under this
                  Agreement, and such action has been duly authorized by all
                  necessary action by the Shareholders and board of directors of
                  the Agency and each subsidiary.

         4.       Neither the execution nor the delivery of this Agreement nor
                  the performance of its terms will breach any obligation or
                  undertaking of the Agency or any subsidiary.

         5.       From and since January 1, 2003 through and as of the execution
                  and delivery of this Agreement, neither the Agency nor its
                  Shareholders have engaged in, agreed to or withdrawn from any
                  Restricted Transaction, nor have the Agency or its
                  Shareholders had any substantive discussions, negotiations,
                  exchange of information or exchange of confidentiality
                  agreements with any third party leading to the development of
                  a potential term sheet relative to any Restricted Transaction.

         6.       From and since January 1, 2003 through and as of the execution
                  and delivery of this Agreement, there has not been any
                  material adverse change in the business, operations,
                  prospects, assets, results of operations or condition
                  (financial or other) of the Agency, and no event has occurred
                  or circumstance exists that may result in such a material
                  adverse change.

         M. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Agency each of the following as of the Effective
Date of this Agreement:

         1.       The Company is an insurance company duly organized, validly
                  existing and in good standing under the laws of the State of
                  Michigan, with full corporate power and authority to conduct
                  its business as it is now being conducted and to perform all
                  of its obligations under this Agreement. As of the execution
                  of this Agreement, the Company is licensed as an insurer and
                  is currently writing insurance business in the states listed
                  in attached Exhibit C, and in no other jurisdictions.

         2.       The Company holds all unrestricted licenses or certificates of
                  authority in all jurisdictions in which it is qualified to do
                  business as a foreign insurance company.

         3.       This Agreement constitutes the legal, valid and binding
                  obligation of the Company, enforceable in accordance with its
                  terms. The Company has the absolute and unrestricted right,
                  power and authority to execute and deliver this Agreement and
                  to perform its obligations under this

<PAGE>
Master Agency Agreement                                                  Page 26




                  Agreement, and such action has been duly authorized by all
                  necessary action of the Company's shareholder and board of
                  directors.

         4.       Neither the execution nor the delivery of this Agreement nor
                  the performance of its terms will breach any obligation or
                  undertaking of the Company.

         5.       From and since January 1, 2003 through and as of the execution
                  and delivery of this Agreement and except for matters
                  disclosed in the Company's filings with state or federal
                  regulatory agencies, press releases, and filings with the SEC,
                  there has not been any material adverse change in the
                  business, operations, prospects, assets, results of operations
                  or condition (financial or other) of the Company, and no event
                  has occurred or circumstance exists that may result in such a
                  material adverse change.


         The Parties have executed this Master Agency Agreement by their duly
authorized representatives.



COMPANY:                                   AGENCY:
AMERICAN PHYSICIANS ASSURANCE              SCW AGENCY GROUP, INC.
CORPORATION

/s/   R. Kevin Clinton                     /s/   Kristina N. Manoogian
-------------------------------------      ------------------------------------

Date:      February 12, 2004               Date:        February 12, 2004
       ------------------------------             -----------------------------



<PAGE>
Master Agency Agreement                                                  Page 27



                                    EXHIBIT A
                           APA/SCW AGENCY GROUP, INC.
                             MASTER AGENCY AGREEMENT


         Designated Market and Commission Rates in effect as of the Effective
Date of this Agreement:
<TABLE>
<CAPTION>
------------------------------------ -----------------------------------------
        Designated Market                        Commission Rates
                                       (percentage of gross written premium)
------------------------------------ -----------------------------------------
<S>                                  <C>
Michigan                                                     New Business:  *
                                                         Renewal Business:  *
                                                            Tail Business:  *
------------------------------------ -----------------------------------------
Illinois                                                     New Business:  *
                                                         Renewal Business:  *
                                                            Tail Business:  *

                                                            Effective 7/1/04:
                                                             New Business:  *
                                                        Renewal Business:   *
                                                           Tail Business:   *
------------------------------------ -----------------------------------------
Kentucky                                                     New Business:  *
                                                         Renewal Business:  *
                                                            Tail Business:  *
------------------------------------ -----------------------------------------
Nevada                                                       New Business:  *
                                                         Renewal Business:  *
                                                            Tail Business:  *
------------------------------------ -----------------------------------------
Florida**                                                  New Business:  N/A
                                                         Renewal Business:  *
                                                            Tail Business:  *
------------------------------------ -----------------------------------------
Indiana/Michigan border area                                 New Business:  *
                                                         Renewal Business:  *
                                                            Tail Business:  *
------------------------------------ -----------------------------------------
</TABLE>

**Endorsement modifications and other special circumstances during run-off
commission to be determined on a case by case basis.

                         CURRENTLY APPROVED SUBAGENTS***

<TABLE>
<CAPTION>
------------------------------------ ----------------------------------------
      Authorized Sub-agent                    Authorized Market
------------------------------------ ----------------------------------------
<S>                                  <C>
*                                    *
------------------------------------ ----------------------------------------
*                                    *
------------------------------------ ----------------------------------------
</TABLE>

*Indicates that material has been omitted and confidential treatment has been
requested therefore.  All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
<PAGE>
Master Agency Agreement                                                  Page 28


-------------------------------- --------------------------------------------
                                 *
*
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------
*                                *
-------------------------------- --------------------------------------------


                    CURRENTLY APPROVED COMPETING INSURERS***



------------------------------ -----------------------------------------------
           Market                         Approved Competing Insurer
------------------------------ -----------------------------------------------
*                              *
------------------------------ -----------------------------------------------
*                              *
------------------------------ -----------------------------------------------

------------------------------ -----------------------------------------------

------------------------------ -----------------------------------------------

*** Subject to annual review and written prior approval by the Company


* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.



<PAGE>
Master Agency Agreement                                                  Page 29



                                    EXHIBIT B
                           APA/SCW AGENCY GROUP, INC.
                             MASTER AGENCY AGREEMENT

                 MICHIGAN MEDICAL PROFESSIONAL EXPIRATIONS WITH
                 ORIGINAL EXPIRATION DATES PRIOR TO JULY 1, 1991
            TRANSFERRED TO THE AGENCY UPON EXECUTION OF THE AGREEMENT



<PAGE>
Master Agency Agreement                                                  Page 30



                                    EXHIBIT C
        JURISDICTIONS IN WHICH AMERICAN PHYSICIANS ASSURANCE CORPORATION
                             IS CONDUCTING BUSINESS


Illinois
Iowa
Kentucky
Michigan
Minnesota
Nevada
New Mexico
Ohio
Tennessee
Virginia
West Virginia
Wisconsin