Exhibit 10.12


 


	
   

  	
  

  	
  BRISTOL WEST

  
	
  INSURANCE GROUP

  



 


CALIFORNIA


 


Producer’s
Agreement


 


This agreement made this
                  
day of
                              ,
                     
by and between Bristol West Insurance Services of California, Inc. (“Bristol”)
and
                                                                      
a retail insurance brokerage, (“Producer”).


 


I.                                         PRODUCER’S
AUTHORITY


 


A.                                   Producer is an
independent contractor who will exercise its own judgment in the conduct of its
business.  Producer is not an employee
of Bristol and is free to represent such other companies as Producer shall
consider appropriate.  Producer has
exclusive control of its time and of the conduct of its business and is
responsible for all expenses incurred in the operation of its business.   Producer agrees to be bound by all
underwriting guidelines, rate guides, rules, regulations, commission schedules,
procedures and other written policies or instructions provided to Producer by
Bristol (“Bristol’s Underwriting Guidelines”).


 


B.                                     Producer has no
authority hereunder to bind insurance risks, only to submit applications for
such risks. No coverage shall be in effect on any such application unless
specific binding authority is given Producer by written addendum to this
Agreement.  Any specific binding
authority given to Producer shall be subject to the terms of Bristol’s
Underwriting Guidelines.


 


C.                                     During the term of
this Agreement, Producer is authorized on behalf of Bristol:


 


1.                                       To solicit,
receive and submit applications for classes of insurance that Bristol may make
available subject to Bristol’s Underwriting Guidelines.


 


2.                                       To deliver
policies, certificates, endorsements and binders.


 


3.                                       To collect and
receipt for premiums but Producer may not endorse any check made payable to
Bristol.


 


D.                                    Producer agrees
that all supplies furnished to Producer by Bristol shall remain the property of
Bristol and shall be returned upon request. Producer agrees to promptly install
all update disks supplied by Bristol and that said disks are the property of
Bristol and will be returned upon demand.


 


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E.                                      Producer hereby
grants to Bristol access and review of Producer’s books, records and files
during normal business hours, for the purpose of determining any fact relating
to money due Bristol or any other fact relating to business placed with Bristol
by Producer.


 


F.                                      Producer shall
not publish or distribute any advertisements, circulars or other materials
referring to Bristol or containing Bristol’s name without first securing
written approval from Bristol.


 


II.                                     UNDERWRITING
CONTROL OF THE COMPANY


 


Bristol
reserves the right to refuse any policy at any time or to cancel any policy
subject to the provisions of Section V.


 


III.                                 COMMISSIONS


 


A.                                   Commissions will be
paid as outlined in Addendum #2, attached. 
Commission schedules may be revised by mutual agreement of Producer and
Bristol or by Bristol giving Producer at least 30 days advance notice of the proposed
revisions and the effective date.  
Producer acknowledges such right to amend and waives any longer notice
period that may be available under applicable statutes, rules or regulations.


 


B.                                     Producer agrees
that undistributed commissions in the hands of Bristol at any time may be
offset against any monies due Bristol.


 


C.                                     In the event that
Bristol shall either during the term of this Agreement or after its termination
refund premiums under any policy by reason of cancellation or otherwise, the
Producer shall immediately return to Bristol the commission received on the
premium refund.


 


IV.                                 BILLING
PROCEDURES


 


Producer shall submit promptly to Bristol all
applications for policies and remit the gross premiums (without deduction of
commissions) for or payable on such policies, in accordance with the provisions
of Bristol’s Underwriting Guidelines. 
Producer shall be responsible for remitting all collected premiums to
Bristol.  If Producer fails to remit
premiums or unearned commissions or any other amount due Bristol, Producer agrees
to pay the reasonable costs of collection, including attorney fees.


 


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V.                                     POLICY
CANCELLATIONS


 


Any Policy may
be cancelled by Bristol, subject to any limitation or restrictions contained
within the policy.  A policy may be
cancelled by Bristol in accordance with all statutory and regulatory
provisions.


 


VI.                                 INDEMNIFICATION
OF PRODUCER


 


A.                                   Bristol shall
indemnify and hold Producer harmless:


 


1.               Against
any claims, liabilities or costs of defense which Producer may become obligated
to pay as a result of loss to policyholders caused by an error of Bristol in
the processing of policies under this Agreement unless Producer has caused,
contributed to or compounded such error.


 


2.               Against any and all civil liability for
damages and expenses, including the cost of defense, that Producer may be
obligated to pay as a direct result of the failure of Bristol to comply with
the requirements of the Fair Credit Reporting Act, Federal Truth in Lending Law
and Fair Credit Billing Act, unless such failure to comply has been caused or
contributed to by any act or omission of Producer.


 


B.                                     Bristol’s
obligation to indemnify shall be conditioned upon prompt notification by
Producer to Bristol of any claim made or legal action brought against Producer
which is subject to indemnification as set forth above and Bristol shall have
the right to direct the investigation, settlement and defense of any such claim
or action.  Bristol shall not be obligated
to indemnify Producer to the extent the Producer has valid and collectable
insurance applicable to any damage or liability.


 


VII.                             INDEMNIFICATION
OF BRISTOL


 


Producer agrees to
fully indemnify and hold harmless Bristol, its successors and assigns from any
and all judgments, losses, damages, costs and expenses, including attorney’s
fees which Bristol may at any time sustain because of the failure of Producer
to comply fully with the terms, provisions and obligations of this Agreement,
including, but not limited to the payment to Bristol of all sums of money which
may become due Bristol from Producer thereunder and any agreement to indemnify
Bristol.


 


This Agreement
to indemnify and hold Bristol harmless shall include the reasonable attorney’s
fees and related expenses incurred to prosecute or defend any lawsuit,
administrative proceeding or arbitration; shall extend to any claim or
assertion that Producer breached or waived any provision of any policy,
endorsement or application; and shall include any claims or assertions of bad
faith, breach of covenant of


 


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fair dealing,
unfair claims or insurance practices, deceptive trade practices,
extracontractual or exemplary damages arising wholly, or in part, from the
action or inaction of Producer.


 


VIII.                         TERMINATION
AND AMENDMENT


 


A.                                   The agreement shall
terminate:


 


1.                                       Automatically if
any public authority cancels or declines renewal of Producer’s license or
Certificate of Authority.


 


2.                                       Automatically on
the effective date of sale, transfer, assignment or merger of Producer’s
business provided, however, that Bristol, at its option, may offer a Producer’s
Agreement to any successor who meets the Company’s requirements for
appointment.


 


3.                                       Upon either
party giving at least thirty (30) days advance written notice to the
other.  The Producer acknowledges
Bristol’s right to terminate and waives any longer notice period which may be
available under applicable statues, rules or regulations.


 


4.                                       Immediately upon
either party giving written notice to the other in the event of abandonment,
fraud, insolvency, or gross and willful misconduct on the part of such party.


 


B.                                     If this Agreement
is terminated as provided in Sub-Section A, above;


 


1.                                       The Producer’s
authority to solicit, bind or execute contracts of insurance for new business
will cease at the same time notice of termination of this Agreement is given.


 


2.                                       All provisions
of this agreement shall remain in full force and effect including Section III,
Commissions, except that the Producer agrees that after termination or
cancellation, Bristol will pay a commission equal to the commission rate paid
to active producers of equal size based on written premium volume, net of
cancellations, with Bristol West during the previous twelve (12) months;
However, in no event will Bristol pay a Producer a commission of more than 15%
for new or renewal business.  Producer
agrees that any bonus or commission paid on fees will not be applicable and
Producer will not have any entitlement to any bonus or commission on fees.  These provisions will be in full force and
effect for a period of three (3) years from the date of termination or
cancellation.  After the three (3) years
have passed, California Insurance Code Section 769 shall apply.


 


3.                                       Bristol shall
continue to provide to the policyholders all normal and appropriate services on
all in force insurance contracts without interruption until said contracts may
lawfully be terminated.


 


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C.                                     Bristol may amend
this Agreement, including any addendum attached hereto, upon thirty (30) days
prior written notice to Producer. 
Producer acknowledges such right to amend and waives any longer notice
period which may be available under applicable statutes, rules or regulations.


 


IX.                                GENERAL
PROVISIONS


 


A.                                   Producer agrees to
purchase and maintain a policy of errors and omissions insurance in limits no
less than $500,000 with an insurance carrier which is rated no less than “B” by
A.M. Best.  Producer will provide Bristol
with a copy of the declarations page for said policy, and provide a copy of the
declarations page upon each renewal of said policy.  Producer agrees that failure on the part of Producer to maintain
said errors and omissions policy will be grounds for immediate termination of
this contract.


 


B.                                     Should a conflict
exist as to which producer is authorized to represent an insured with respect
to any insurance policy, Producer shall supply Bristol with a written Agent of
Record Letter from the insured.


 


C.                                     Producer shall
have no authority to admit liability or compromise claims or accept proof of
loss on the part of Bristol in any manner except in accordance with specific
claim settlement authority extended to the Producer in writing.


 


D.                                    Producer agrees to
comply with all laws affecting its operation and to maintain its qualifications
for licensing by appropriate authorities. 
Producer shall provide a copy of its license to Bristol at each renewal.


 


E.                                      If any provision
of this Agreement should be invalid the remainder of this Agreement shall not
be affected.


 


F.                                      If Producer
attempts to assign this Agreement in violation of Section VIII, Producer
remains liable to Bristol for all obligations to Bristol arising before and
after the attempted assignment. 
Moreover, Producer shall remain liable to Bristol for all obligations to
Bristol arising before a permitted assignment,


 


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unless Bristol has
consented, in a written agreement, to the assumption of any obligation of
Producer to Bristol by an assignee.


 


In connection with your
application for a Producer’s Agreement (1) an investigation may be made
including, if applicable, information as to character, occupation, general
reputation, personal habits, health, financial condition, mode of living, and
(2) additional information as to the nature and scope of investigation request
will be furnished you, upon your written request made within a reasonable time
after you receive this notice.


 


In witness whereof, Producer
and Bristol have caused this Agreement to be executed this
             day of
                     ,
20      .


 


 


	
  PRODUCER

  	
   

  	
  BRISTOL WEST
  INSURANCE SERVICES OF

  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
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ADDENDUM #1 – BINDING


 


 


Bristol recognizes current
conditions in the private passenger automobile insurance marketplace such that
the Producer will lose business unless Producer can provide bound coverage to
clients at the point of sale. 
Therefore, with respect to personal automobile insurance only, Bristol
agrees to accept and be bound with respect to business placed with it by
Producer through use of such current, up-to-date electronic rating device as
agreed in writing in advance by the parties (the “Rating Mechanism”).  Producer agrees to abide by all rules and
operating instructions of the Rating Mechanism.  Within 72 hours after binding any private passenger automobile
coverage, Producer shall forward to Bristol the properly completed application
and other required documentation. 
Bristol shall have the right to reject any such application that is
inconsistent with Bristol’s Underwriting Guidelines.  Nothing in this section shall create any agency relationship
whatsoever between Producer and Bristol or between Producer and any insurance
company Bristol represents.


 


 


	
  BRISTOL WEST
  INSURANCES SERVICES OF

  CALIFORNIA, INC.

  	
  PRODUCER

  
	
   

  	
   

  
	
   

  	
   

  
	
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ADDENDUM #2 – COMMISSION AND
BONUS PLAN


 


 


I.                                         Increased
commission on New business will be paid based on the following premium
production and loss ratio schedule:


 


A.           Excess of $5M written during the preceding 12
months will receive 15.5% commission on all new business in the current month.


B.             Excess of $7.5M written during the
preceding 12 months will receive 16% commission on all new business in the
current month.


C.             Excess of $10 M written during the
preceding 12 months will receive 16.5% commission on all new business in the
current month.


D.            Excess of $20M written during the preceding
12 months will receive 17% commission on all new business in the current month.


E.              Excess of $30M written during the
preceding 12 months will receive 17.5% commission on all new business in the
current month.


 


II.                                     All written
business is the total of new and renewal net of cancellations and requires
a loss ratio of 63% or lower during the preceding twelve-month period.


 


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Agency Commission
Schedule & Incentives


 


 


III.                                 Business Covered.  The lines of business covered by this
agreement are: PRIVATE PASSENGER AUTO.


 


IV.                                 Eligibility for
the program for a calendar year is based upon the following:


 


A.           The Agency must produce at least $500,001 in
written premium to qualify for incentives.


B.             The Agency must be an active producer with
the company during the year in which this contract is predicated upon.


C.             The Agency must have written premiums of
at least 90% of the prior year’s premiums with our company.


 


V.                                     Basis.  Company calendar year records will be the
sole basis for determining awards.  The
company will evaluate year-end financials on or before January 31 following the
end of the calendar year covered.


 


VI.                                 Award Determination.  Once the Agency satisfies the eligibility
requirements, the award will be calculated as follows:


 


A.           Determine the total written premium for the
period for the lines of business covered.


B.             Determine growth incentive award subject
to definition stated below in Section VII.


C.             Calculate the loss ratio according to the
definition listed below in Section VII.


D.            Find the percentage from the table below:


 


	
   

  	
   

  	
   

  	
   

  	
  Agency
  Performance Incentive

  	
   

  
	
  Written Premium

  	
   

  	
  Base commissions

  	
   

  	
  Growth

  	
   

  	
  L/R

  	
   

  	
  Total Possible

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 – 150,000

  	
   

  	
  13.0

  	
   

  	
  . 00

  	
   

  	
  .00

  	
   

  	
  .00

  	
   

  
	
  150,001 – 300,000

  	
   

  	
  15.0

  	
   

  	
  .00

  	
   

  	
  .00

  	
   

  	
  .00

  	
   

  
	
  300,001 – 500,000

  	
   

  	
  15.0

  	
   

  	
  .00

  	
   

  	
  .00

  	
   

  	
  .00

  	
   

  
	
  500,001 – 1,000,000

  	
   

  	
  15.0

  	
   

  	
  1.00

  	
   

  	
  1.00

  	
   

  	
  17.00

  	
   

  
	
  1,000,001 – 2,000,000

  	
   

  	
  15.0

  	
   

  	
  1.00

  	
   

  	
  1.00

  	
   

  	
  17.00

  	
   

  
	
  2,000,001 – 5,000,000

  	
   

  	
  15.0

  	
   

  	
  1.00

  	
   

  	
  1.00

  	
   

  	
  17.00

  	
   

  
	
  5,000,001 – 20,000,000

  	
   

  	
  15.0

  	
   

  	
  1.00

  	
   

  	
  1.00

  	
   

  	
  17.00

  	
   

  
	
  20,000,001 +

  	
   

  	
  15.0

  	
   

  	
  1.00

  	
   

  	
  1.00

  	
   

  	
  17.00

  	
   

  



 


VII.                             Prima Business will
be written at a base commission rate of 13%. 
Prima business will be included in the Agency Performance Incentives.


 


VIII.                         Renewals. Renewal
commissions will match the new business commission percentage stated above.


 


IX.                                Definitions of
the terms used in this agreement:


 


Written Premium –
Premiums produced by the Agency for new and renewal business, plus or minus
premium changes from policy changes, cancellations, etc., effective during the
period covered for the lines of business included.  Assigned Fair Plan or other miscellaneous involuntary premiums
are not included.


 


Earned Premium –
Premiums earned, from those written, according to statutory accounting
principles.


 


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Losses – Incurred
losses, less salvage and subrogation recoveries, plus those loss adjustment
expenses directly attributable to the losses.


 


Growth – Current
year-end new business application counts must be a minimum of a 15% increase
over prior year.  Overall book of
business must produce a loss ratio not greater than 65%.


 


Loss Ratio – Losses
divided by earned premium, expressed as a percentage.  The Agency must produce a loss ratio no greater than 55%.


 


X.                                    Payment.
Awards will be available by the end of the financial quarter immediately
following the period covered.


 


XI.                                Renewal or
Termination.  This agreement will
automatically renew as is.  However,
this agreement may be terminated or amended by the Company giving at least 60
days notice.  The agreement also
terminates upon the termination of the Agency-Company relationship and no
payment will be made thereafter


 


 


	
  BRISTOL WEST
  INSURANCES SERVICES OF

  CALIFORNIA, INC.

  	
  PRODUCER

  
	
   

  	
   

  
	
   

  	
   

  
	
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