Exhibit 10.7











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                      POLICY PROCESSING AND ADMINISTRATION
                                    AGREEMENT

                                 By and between


       INSPIRE INSURANCE SOLUTIONS, INC., Debtor and Debtor-in-Possession

                                       And

                    ARROWHEAD GENERAL INSURANCE AGENCY, INC.



                            Dated as of May 14, 2002

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                 POLICY PROCESSING AND ADMINISTRATION AGREEMENT

         THIS POLICY PROCESSING AND  ADMINISTRATION  AGREEMENT,  dated as of May
14, 2002 (the  "Signing  Date"),  is by and among INSpire  Insurance  Solutions,
Inc., a Texas corporation, and debtor and debtor-in-possession  ("INSpire"), and
Arrowhead General Insurance Agency, Inc., a Minnesota corporation ("Customer" or
"AGIA").  INSpire and Customer  are  sometimes  collectively  referred to as the
"Parties," and individually referred to as a "Party." This Policy Processing and
Administration  Agreement,  together  with the Schedules  referenced  herein and
attached hereto, are collectively referred to as this "Agreement."

                                    RECITALS

         A.  INSpire   provides   certain  policy   processing,   servicing  and
administration services to Customer pursuant to a Policy Administration Services
Agreement dated as of December 1, 1998, by and between INSpire and Customer (the
"Policy Administration Agreement").

         B. INSpire and Customer  desire to terminate the Policy  Administration
 Agreement and to concurrently enter into various new agreements, including this
 Agreement,  which  will  collectively  establish  a new  business  relationship
 between the Parties.

         C.  INSpire  and  Customer  further  desire by  entering  into this new
 Agreement  to reach a  resolution  of  certain  issues  concerning  the  Policy
 Administration  Agreement including the removal of personal automobile business
 from the  Policy  Administration  Agreement,  the  alleged  non-performance  of
 INSpire  under the  Policy  Administration  Agreement,  and the  resolution  of
 amounts   allegedly  due  and  owing  between  the  Parties  under  the  Policy
 Administration Agreement.

         D. On February  15,  2002,  INSpire  voluntarily  filed a petition  for
 relief under Chapter 11 of the United States  Bankruptcy Code (the  "Bankruptcy
 Code") with the United  States  Bankruptcy  Court for the Northern  District of
 Texas,  Fort Worth Division (the  "Bankruptcy  Court"),  which is  administered
 under Case No. 02-41228-DML (the "Bankruptcy Case").

         E. INSpire and Customer further desire that this Agreement,  as well as
 the other  agreements  referenced in it, shall only be effective and binding on
 them  if (1) all of such  agreements  are  approved  by a  final  order  of the
 Bankruptcy  Court  acceptable  in  form  and  substance  to  Customer,  and (2)
 INSpire's  rejection  of  the  Policy  Administration   Agreement,  the  Claims
 Administration  Services  Agreement  and the  Claims  Management  Agreement  is
 approved  by a final  order  of the  Bankruptcy  Court  acceptable  in form and
 substance to Customer.

                             STATEMENT OF AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the  promises  and  the  mutual
agreements,  covenants,   representations  and  warranties  set  forth  in  this
Agreement and for other good, valid and binding  consideration,  the receipt and
sufficiency  of which are hereby  acknowledged,  the  Parties,  intending  to be
legally bound, hereby agree as follows:

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                                    ARTICLE I
                              SERVICES; TERM; FEES

         Section 1.1  Services.  Effective  on the later of Signing  Date or the
date that this Agreement is approved by final order of the  Bankruptcy  Court as
provided  for herein  (the  "Effective  Date")  and during the Term (as  defined
below),  INSpire  will  provide  the  services  set forth on  Schedule  1.1 (the
"Services"),  to  Customer  upon the  terms  and  conditions  set  forth in this
Agreement.  In addition to the  Services,  INSpire will provide to Customer such
other administration services as Customer may reasonably request in writing from
time to time  during the Term and with  respect to which the  Parties  will have
agreed  regarding  the scope,  nature and pricing of such  services and the time
period during which such services will be provided (the "Additional  Services").
During the Term of this  Agreement,  Customer may assume certain of the Services
from  INSpire  upon terms and  conditions  which are  mutually-agreeable  to the
Parties and, with respect to such transferred services,  the Parties have agreed
that INSpire's costs associated with such services (the "Transferred  Services")
shall be borne by Customer and then offset against the Services Fee as set forth
in  Section  1.4(a).  Such  transfer  shall be  executed  only  through a signed
addendum to this Agreement.

          Section 1.2      Implementation Fee; Term.

                  (a)  Implementation   Fee.  On  the  Effective  Date  of  this
Agreement,  Customer  will  pay to  INSpire  a  one-time  Implementation  Fee of
$350,000.

                  (b) Term.  The term  during  which  INSpire  will  provide the
Services to Customer  will  commence  on the  Effective  Date and will expire on
December  31,  2008 (the  "Expiration  Date"),  unless  extended  or  terminated
pursuant to the terms of this Agreement (the "Term").  The Expiration  Date will
be extended  automatically  for a period of one year unless  either  Party gives
written notice of  non-extension to the other Party at least six months prior to
the then current Expiration Date.

          Section 1.3     Services Fee, Quarterly Minimums and Related Expenses.

                   (a)  Services  Fee.  During  the Term,  Customer  will pay to
INSpire for the  performance of the Services a fee which will be payable monthly
and calculated by multiplying  (i) the amount of Written  Premium  recognized by
Customer that is subject to the Services in the immediately  preceding month, by
(ii) 7.4% until  December  31,  2003,  and then 6.9% from  January 1, 2004 until
December 31, 2008 (the  "Services  Fee").  For the  purposes of this  Agreement,
"Written  Premium" will mean the aggregate amount of personal  property premiums
paid to Customer by insureds  during a  particular  time period for the personal
property products and carriers and in the authorized states included on Schedule
1.1.  The Services Fee will be due and payable in arrears on the last day of the
month  following  the close of the  calendar  month in which the  Services  were
performed.

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                  (b) Quarterly  Minimums.  During each calendar  quarter of the
Term,  the Services Fee payable each month will not be less than an amount equal
to 80% of the  average  monthly  Services  Fee  paid  in the  immediately  prior
calendar quarter (the "Quarterly Minimum").

                  (c) Unanticipated  and Increased  Service Level Changes.  Each
Party agrees to negotiate in good faith for an adjustment to the Services Fee in
the  event  of any  statutory,  regulatory  or  judicial  changes  that  require
additional activities not then provided for pursuant to this Agreement.

                  (d) Taxes.  Customer  will pay all tariffs and taxes,  however
designated or levied,  now existing or imposed in the future that are applicable
to the Services or the Services  Fees.  Such tariffs and taxes include state and
local privilege and excise taxes, sales, use and personal property taxes and any
other  tariff  or tax  based on  Services  performed,  equipment  used,  and the
communication or storage of data.  Notwithstanding the foregoing,  Customer will
not be  responsible  for, and INSpire will pay (i) any franchise or income taxes
based upon the income of INSpire,  (ii) any personal  property or similar  taxes
based upon the personal or real property  owned or leased by INSpire and used in
the performance of the Services,  and (iii) Texas state sales taxes payable as a
result of the  Implementation  Fee and Services  Fees due to INSpire  under this
Agreement;  provided, however, that (1) the maximum annual Texas state sales tax
base (the amount on which Texas  state  sales taxes are  calculated)  payable by
INSpire on the Services Fees will not exceed the product of $5,000,000 of Earned
Income multiplied by the then effective  Services Fee, and (2) Customer will pay
the excess of such maximum amount.

                  (e) Service Level Penalty  Payment.  During the Term,  INSpire
will pay to Customer the penalty  payments set forth in Schedule 1.3(e) attached
to this  Agreement  for  INSpire's  failure to achieve  the  Service  Levels (as
defined below) during the specified time period (the "Service Level Penalties").
Payment of such Service Level  Penalties will not in any way limit,  restrict or
relieve  any Party for any breach of this  Agreement.  Service  Level  Penalties
shall not in the aggregate  exceed 15% of the Services Fee payable in any month.
INSpire will pay the Service Level Penalties to Customer within thirty (30) days
of the  close  of the  time  period  during  which  the  penalty  payments  were
calculated or, alternatively,  Customer may offset, upon thirty (30) days notice
to INSpire,  the Service Level  Penalties  owed by INSpire  against the Services
Fees  payable by Customer to INSpire.  In the event that INSpire  believes  that
Service Level Penalties have been improperly  offset by Customer,  INSpire shall
have  full  recourse  to all  remedies  provided  for  in  Article  VII of  this
Agreement.

                  (f) Penalty  Identification.  Penalties will be identified via
system  reports,  where  available,  or via audit by  Customer.  Audits shall be
conducted  quarterly  or monthly,  at  Customer's  option,  upon 10 days written
notice to INSpire and will consist of a review of a sample size of  transactions
constituting  at least 10% of the universe of  applicable  transactions  for the
specified audit period. Audit results will be considered by Customer and INSpire
to be  applicable to 100% of the universe of  applicable  transactions  for that
specified audit period for the purposes of calculating Penalties only if Service
Levels are not met in more than 95% of the files audited.

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                  (g) Acts Beyond Control. If an event described in Section 8.14
of this Agreement  [Force Majeure  clause] impacts  INSpire's  ability to meet a
Service  Level,  then  INSpire  will not be  penalized  for failing to meet that
Service  Level to the extent that such event has affected  INSpire's  ability to
meet its obligations.

         Section 1.4       Payment.

                  (a)  Interest  on Past  Due  Payments.  Any  sum  due  INSpire
pursuant to this  Agreement that is not paid by the date on which payment is due
shall bear interest from that date until the date such sum is paid at the lesser
of 1.5% per month or the maximum  rate of interest  allowed by  applicable  law.
Customer will also pay INSpire for any reasonable expenses, including attorneys'
fees, incurred by INSpire in the collection of any amounts due and payable under
this Agreement.

                  (b) Electronic  Funds Transfer.  INSpire will provide Customer
bank routing  information.  All payments are to be via Electronic Funds Transfer
(EFT),  unless  otherwise  agreed to in writing by the  parties,  to the account
specified in writing by INSpire.

                  (c) Payment of Undisputed  Amounts. In the event that there is
an amount in dispute,  Customer is still obligated to pay all undisputed amounts
on all invoices.

         Section  1.5  Sublease  of  Premises;   Software   License   Agreement;
Professional  Services  Agreement;   Asset  Purchase  Agreement,   Comprehensive
Preferred Escrow Agreement, and Claims Administration Agreement.

                  (a) Sublease of  Premises.  Concurrent  with the  execution of
this Agreement, and as a condition to it, Customer and INSpire will enter into a
separate  Sublease by which INSpire shall sublease  office  premises  located at
6055 Lusk Boulevard, San Diego, to Customer.

                  (b) Software License Agreement.  Concurrent with the execution
of this  Agreement,  and as a condition  to it,  Customer and INSpire will enter
into separate  Software License  Agreement by which INSpire will license certain
software systems to Customer.

                  (c)  Professional  Services  Agreement.  Concurrent  with  the
execution  of this  Agreement,  and as a condition  to it,  Customer,  Arrowhead
Claims  Management,  Inc.  and  INSpire  will enter into  separate  Professional
Services Agreement by which INSpire will provide certain  professional  services
to Customer.

                  (d) Asset Purchase Agreement. Concurrent with the execution of
this Agreement, and as a condition to it, Customer and INSpire will enter into a
separate Asset  Purchase  Agreement by which INSpire will sell certain assets to
Customer and Customer will purchase such assets from INSpire.

                  (e) Comprehensive Preferred Escrow Agreement.  Concurrent with
the execution of this Agreement,  and as a condition to it, Customer and INSpire
will enter into  separate  Comprehensive  Preferred  Escrow  Agreement  by which

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Inspire  will  maintain  in escrow a copy of the object code and source code for
the latest version of INSpire's  software  incorporated  in the System in use by
Customer.

                  (f)  Claims  Administration  Agreement.  Concurrent  with  the
execution  of  this  Agreement,  and  as a  condition  to it,  Arrowhead  Claims
Management, Inc., INSpire, and INSpire Claims Management, Inc. will enter into a
separate  Claims  Administration  Agreement by which INSpire and INSpire  Claims
Management,   Inc.  will  provide  certain  claims  administration  services  to
Arrowhead Claims Management, Inc.

                                   ARTICLE II
                             PERFORMANCE OF SERVICES

         Section 2.1 Service Levels. Each Party agrees to the service levels set
forth on Schedule  2.1,  which  service  levels will be  reviewed  annually  and
revised as mutually agreed upon by the Parties (the "Service  Levels").  INSpire
will  provide  Services  under this  Agreement  in  accordance  with the Service
Levels.

         Section 2.2 Evaluation and Review Process. Within 30 days after the end
of each  calendar  month during the Term,  INSpire will provide  Customer with a
monthly service report that shows INSpire's  performance as measured against the
Service Levels.

         Section 2.3       Audit: Access to Records, Systems and Facilities.

                 (a) Annual Audit.  Within 90 days after the  completion of each
calendar  year  during  the Term,  INSpire  and  Customer  will cause a mutually
agreed-upon,  nationally-recognized accounting firm or other professional entity
(i) to test the  procedures  and controls used by INSpire in the  performance of
the Services,  and (ii) to opine as to whether such  procedures and controls are
sufficient to meet the Service  Levels.  INSpire and Customer agree to split the
costs and expenses of the third party auditor equally between the parties.

                  (b) Access to Records and  Facilities.  INSpire  will  provide
Customer  and its  reinsurers,  carriers,  prospective  carriers  and the entity
performing the annual audit described above reasonable  access to its facilities
and all books,  records and accounts  necessary to verify  compliance  with this
Agreement.  Such access will be made  available upon prior written notice during
normal  business  hours for the Term of this Agreement and during the periods in
which  INSpire is required to maintain  such  records.  INSpire will provide the
appropriate state insurance departments  reasonable access to its facilities and
all necessary  books,  records and accounts in a form usable by such department.
Customer  remains  responsible for ensuring that all persons given access comply
with the confidentiality provisions of Article III.

                  (c)  Access  to  Systems.   INSpire  will   provide   Customer
reasonable  access to the  computer  systems  used by  INSpire  to  perform  the
Services.  Such access will be made  available  upon prior written notice during
normal  business  hours during the Term.  Customer will be  responsible  for the

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payment or  reimbursement  of any fees or  expenses  associated  with  INSpire's
compliance with this subsection.

         Section 2.4       Ownership of Property

                  (a) Customer's  Property.  Customer will own all right,  title
and interest in and to the content of the policy,  claim,  accounting  and agent
files and computer  images and storage  discs created or developed in connection
with, or as a result of the performance of the Services.

                  (b) INSpire's Property. Subject to the foregoing, INSpire will
own all  right,  title and  interest  in and to any and all  tools,  techniques,
processes,  procedures,  inventions,  software, patents, know how, trade secrets
and other copyrights that it already has or that are first  discovered,  created
or developed by INSpire in  connection  with,  as a result of or incident to the
performance of the Services.

         Section 2.5 Customer's  Performance  Obligations and  Acknowledgements.
INSpire's  performance  of the Services  require the support and  cooperation of
Customer. As such, Customer agrees and acknowledges as follows:

                  (a) Provide  Information and Material.  Customer will provide,
in a timely manner and in a format  reasonably  acceptable to INSpire,  the data
and materials  necessary for INSpire to perform the Services,  including  policy
jackets,  Customer's  banking  institution  account  information,  corporate and
subsidiary logos (if applicable),  style and specifications of printed documents
such as insurance policies.

                  (b)  Acknowledgment of Responsibility.  Customer  acknowledges
that  INSpire  assumes  no  risk  or   responsibility   for  Customer's   claims
administration under this Agreement.

                  (c) Access to Third  Party  Software.  Customer  will  provide
INSpire access to all software necessary for INSpire to perform the Services.

         Section  2.6  Maintenance  of  Documents  and  Files.  During the Term,
INSpire will  maintain (a) records of amounts  billable to and payments  made on
behalf of Customer,  and (b) copies of all  policies,  applications,  documents,
records and correspondence  relating to such policies.  INSpire will not destroy
these  records and  documents  without the written  permission of Customer for a
period of five years from the loss or termination date of the applicable policy,
or the period  specified by the applicable  state or federal statute  regulating
preservation  of records,  whichever is longer.  INSpire may, at its discretion,
use magnetic, optical, and other types of technology to store such data. INSpire
agrees to provide to Customer reasonable supporting  documentation regarding any
disputed invoice or claim amount within 15 days after Customer  provides written
notification  of the dispute to INSpire.  INSpire agrees that it will backup all
Customer data each month for the Term. Customer may obtain a copy of backup data
at any time upon reasonable notice to INSpire.

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         Section 2.7 Ultimate  Discretion.  INSpire acknowledges and agrees that
Customer,  being at risk and having ultimate  responsibility for the policies to
be  administered  by INSpire,  will at all times have ultimate  discretion  with
respect to all matters pertaining to such policies.

         Section 2.8 Mail  Received  After  Closing.  On and after the Effective
Date,  INSpire may receive and open all mail addressed to Customer and deal with
the  contents  thereof in its  discretion  to the extent  that such mail and the
contents  thereof relate to the Services.  INSpire agrees to deliver or to cause
to be delivered to Customer all mail  received by INSpire  which is addressed to
Customer and does not relate to the Services.

         Section 2.9 Insurance.  During the Term,  INSpire will maintain  errors
and omissions insurance under a current and paid up policy,  effective as of the
Effective Date, issued by an insurer  reasonably  acceptable to Customer,  which
insurance  will have a policy limit of no less than  $5,000,000 and a deductible
no greater  than  $250,000.  If INSpire  fails to maintain  coverage or incurs a
lapse in coverage, Customer may purchase tail coverage (at INSpire's expense) in
the amount  set forth  herein.  INSpire  will  provide a copy of said  insurance
policy to Customer and annually  provide to Customer a certificate  of insurance
issued by INSpire's  carrier.  Customer will be named as an  additional  insured
under INSpire's errors and omissions insurance policy.

                                   ARTICLE III
                                 CONFIDENTIALITY

         Section 3.1  Definitions.  For  purposes  of this Article the following
definitions will apply:

                  (a)  "Arrowhead  Group" means  Arrowhead  Management  Company,
Customer and Arrowhead Claims Management,  Inc. and their respective affiliates,
parent  entities,   subsidiaries,   agents,  directors,   officers,   employees,
accountants, attorneys and advisors.

                  (b)  "INSpire   Group"  means   INSpire  and  INSpire   Claims
Management, Inc. and their respective affiliates, parent entities, subsidiaries,
agents, directors, officers, employees, accountants, attorneys and advisors.

                  (c) "Confidential Information" means any information,  oral or
written,  whether  prepared by the  Disclosing  Party,  its  Representatives  or
otherwise,  which  is  furnished  to the  Receiving  Party or on  behalf  of the
Disclosing Party after the date of this Agreement relating to the Services. Such
information  includes,  but is not  limited  to,  financial  information,  trade
secrets,  processes,  inventory,  formulas,  prices,  markets,  employee  lists,
salaries,  reports,  computer  files,  maps,  drawings,  specifications,   title
reports,  customer  information  and  lists,  vendor  sources,  development  and
marketing,  plans, statistical data, forecasts,  marketing strategies,  or other
commercial,  technical,  strategic  or  human  resources  information.  The term
"Confidential Information" does not include: (i) information which is or becomes
generally  available  to the public  other than as a result of any  unauthorized
disclosure or any wrongful acts of the Receiving Party;  (ii) information  which
is   independently   developed  by  the  Receiving  Party  without  the  use  of
Confidential  Information from the Disclosing Party;  (iii) information which is

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rightfully  received from a third party whose  disclosure  would not violate any
confidentiality obligation or breach of any agreement; or (iv) information which
is  approved  for  release  by the  Disclosing  Party in  writing  signed by the
Disclosing Party specifying the information to be released.

                  (d) "Disclosing Party" means Arrowhead Group or INSpire Group,
as the case may be, with  respect to any  Confidential  Information  provided by
such party to the other party.

                  (e) "Receiving  Party" means Arrowhead Group or INSpire Group,
as the case may be, with  respect to any  Confidential  Information  received by
such party from the other party.

                  (f)  "Representative"  means any  employee,  agent,  attorney,
accountant,  financial  advisor or other  person  acting on behalf of a party in
connection with this Agreement.

         Section 3.2       Nondisclosure.  The Parties hereby agree as follows:

                  (a) Use of Information.  All Confidential  Information will be
used  solely  for the  purpose  of  performing  the  Services.  In no event will
Confidential  Information be used by any party or person receiving  Confidential
Information for business or competitive purposes.

                  (b) Confidentiality. All Confidential Information will be kept
strictly  confidential  by the  Receiving  Party and the  Receiving  Party  will
restrict disclosure of Confidential Information to only those employees,  agents
and advisors of the Receiving Party who have a need to know such information for
the purpose of performing the Services.

                  (c)  Disclosure  to  Representatives.  Representatives  of the
Receiving  Party shall be informed by the  Receiving  Party of the  confidential
nature of such information and the covenant of  confidentiality by the Receiving
Party hereunder, and they shall be directed by the Receiving Party to treat such
information  confidentially  Before  any  disclosure  or  dissemination  of  any
Confidential  Information subject to this Agreement is made to any person, other
than an officer or director of the Receiving Party or its counsel or independent
accountant, the Receiving Party shall provide the person to whom such disclosure
is made with a copy of this Agreement.

         Section 3.3 No  Solicitation.  Each Party agrees that without the other
Party's prior written consent, neither such Party nor any of its affiliates will
solicit for employment, employ or otherwise contract for or solicit the services
of any person who is now employed by the other  Party,  for a period of one year
from the Effective Date, provided that this paragraph shall not apply to general
commercially  published  solicitations  for  employment  by a Party or responses
thereto  by  employees  of the  other  Party or to the  hiring of  employees  as
contemplated by the definitive  agreements  pursuant to which this Agreement was
executed.

          Section 3.4 Required  Disclosure.  In the event the Receiving Party or
its Representatives  are requested or required in a judicial,  administrative or
governmental proceeding to disclose any Confidential Information,  the Receiving
Party  shall  cooperate  with the  Disclosing  Party and  provide it with prompt

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notice of any such request so that the Disclosing  Party may seek an appropriate
protective  order  and/or  waive  the  Receiving  Party's  compliance  with  the
provisions of this  Agreement.  If, in the absence of a protective  order or the
receipt of a waiver hereunder,  the Receiving Party or its  Representatives  are
nonetheless, in the opinion of the Receiving Party's attorneys, legally required
to disclose  Confidential  Information  to any tribunal or else stand liable for
contempt  or  suffer  other  penalty,  the  Receiving  Party may  disclose  such
information  to such tribunal  without  liability  hereunder,  provided that the
Receiving Party complies with the notice provisions of this paragraph.

          Section 3.5 Return of Confidential Information. Upon the expiration or
termination of this Agreement,  the Receiving  Party shall promptly,  and in any
event upon request by the Disclosing Party,  deliver to the Disclosing Party all
Confidential  Information,  including  all  written  and  electronically  stored
copies.  Neither the Disclosing  Party nor its  Representatives  will retain any
copies,  extracts  or  other  reproductions,  in  whole  or  in  part,  of  such
Confidential  Information.  At the Disclosing  Party's  request,  all documents,
memoranda,  notes and other such writings prepared by the Receiving Party or its
Representatives  based on the information in the  Confidential  Information,  or
which quote from or summarize any Confidential Information, will be destroyed as
soon as  reasonably  practicable,  and such  destruction  shall be  certified in
writing to the Disclosing Party by an authorized  officer of the Receiving Party
supervising the destruction.

          Section 3.6 Remedies for Breach. The Parties acknowledge that a breach
of the covenant of  confidentiality  contained in this  Agreement  may result in
irreparable and continuing  damage to the Disclosing  Party for which there will
be no adequate remedy at law. In the event of any breach of this Agreement,  the
Receiving  Party agrees that the Disclosing  Party shall be entitled to seek and
obtain specific performance of this Agreement by the Receiving Party, including,
upon  making the  requisite  showing  that it is entitled  thereto,  provisional
injunctive  relief  restraining the Receiving Party from committing such breach,
in addition to such other and further relief,  including  monetary  damages,  as
provided by law.

                                   ARTICLE IV
                       TRADE SECRET AND PROPRIETARY RIGHTS

         Section 4.1 No Rights to Software.  Notwithstanding  any use by INSpire
of  any  proprietary  computer  software  programs  in  the  performance  of the
Services,  neither this Agreement nor the performance of any Services  hereunder
will be  construed  as a grant  of a  license  or any  other  interest  in or to
INSpire's computer software programs. Further, this Agreement grants to Customer
no right to possess or reproduce,  or any other interest in, any of the computer
software  programs used in the performance of all or any part of the Services or
their  specifications  in any tangible or  intangible  medium.  Customer may not
mortgage,  hypothecate,  sell,  assign,  pledge,  lease,  transfer,  license  or
sublicense any computer  software programs used in the performance of all or any
part of the  Services,  nor allow any  person  or  entity to  transmit,  copy or
reproduce any such computer software programs.  In the event Customer comes into
possession of the computer  software  programs used in the performance of all or
any part of the Services,  Customer will  immediately  notify INSpire and return
such computer software programs and all copies of any kind thereof to INSpire.

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         Section 4.2  Nondisclosure.  Other than  Customer's  employees who need
access to  computer  software  programs  for the  performance  of their  duties,
Customer covenants and agrees not to disclose or otherwise make available to any
person any computer software programs used in the performance of all or any part
of the  Services.  Customer  agrees to take all  reasonable  steps  necessary to
obligate each of its  employees  who is given access to such  computer  software
programs to a level of care sufficient to protect the computer software programs
from unauthorized disclosure.

         Section 4.3     Survival.  THE  OBLIGATION  OF THE  PARTIES  UNDER THIS
ARTICLE  AND  ARTICLE  III WILL  CONTINUE  AFTER  THIS  AGREEMENT  EXPIRES OR IS
TERMINATED.

                                    ARTICLE V
                                   TERMINATION

         Section 5.1  Termination of Agreement. This Agreement may be terminated
prior to the  Expiration Date only as follows:

                  (a) by the  non-breaching  Party  upon a breach  by the  other
Party of its duties or obligations under this Agreement; provided, however, that
(i) such  breach  remains  substantially  uncured  within 30 days after  written
notice  specifying such breach is received by the breaching  Party, or (ii) with
respect to a breach  that  cannot be  reasonably  cured  within a 30 day period,
should the defaulting  party fail to proceed within 30 days after written notice
specifying  the breach to commence  curing the default  and  thereafter  fail to
proceed with all reasonable diligence to cure substantially the default;

                  (b) by a Party  in the  event  (i)  the  other  Party  makes a
general  assignment  for the benefit of creditors,  (ii) the other Party files a
voluntary  petition in  bankruptcy or petitions  for  reorganization  or similar
arrangement under the bankruptcy  laws,;  excepting the Bankruptcy Case, (iii) a
petition  in  bankruptcy  is filed  against the other Party by a third party and
such  petition is not dismissed  within  ninety days of its filing date,  (iv) a
receiver or trustee is appointed  for all or any part of the property and assets
of the other  Party,  or (v) the  Bankruptcy  Case is  converted to a case under
Chapter 7 of the Bankruptcy Code;

                  (c) by Customer, upon commission by INSpire of fraud, criminal
conduct or willful  violation of an  insurance  statute or  regulation,  if said
conduct by INSpire has a material adverse effect on Customer's ability to engage
in business.  This paragraph does not apply to conduct by INSpire  employees who
are not acting at the direction of INSpire; or

                  (d) by INSpire  if  Customer's  Written  Premium  falls  below
$20,000,000 on an annual basis.

         Section 5.2  Procedure Upon Expiration or Termination.  Upon expiration
or  termination  of this Agreement:

                                       11
<PAGE>

                  (a) INSpire will  promptly  return to Customer  any  policies,
forms or other  supplies  imprinted  with  Customer's  name,  regardless  of who
incurred  the  cost  for  same as  well as all  files  and  documents  regarding
Customer's policies;

                  (b) INSpire will provide promptly to Customer, without charge,
a  backup  of all  data  files.  Further,  for a  reasonable  fee on a time  and
materials  basis,  INSpire will provide to Customer the  personnel  necessary to
assist with the records  layout and file  structures of the data files such that
these records and data files can be transferred to a new data base designated by
Customer.  In the event that  termination is as a result of a breach by INSpire,
Customer  shall have the right to maintain and process its policies on INSpire's
then current  software systems for a period of up to six months so that Customer
can effect an orderly  transfer  of its  business  to a new  processing  system;
provided that Customer shall pay all third party maintenance,  license and other
fees in order to do so.

                  (c) Such expiration or termination  will not in any way limit,
restrict or relieve any Party of liability for any breach of this Agreement.

                  (d) The automatic stay under the  Bankruptcy  Code will not in
any way limit or restrict  Customer from  exercising its rights or remedies upon
expiration or termination of this Agreement.

                                   ARTICLE VI
                      REMEDIES AND LIMITATION OF LIABILITY

         Section 6.1       Indemnification of the Parties.

                  (a) Each Party (the "Indemnitor") will indemnify,  defend, and
hold  harmless  the  other  Party  (the   "Indemnitee")  from  and  against  any
arbitration award,  claim,  cost,  damage,  demand,  expense,  fine,  liability,
lawsuit,  obligation,  payment,  or  penalty  of any kind or nature  whatsoever,
including any reasonable  attorneys'  fees and expenses (a "Claim")  incurred by
the  Indemnitee  that  arises out of or  directly  relates  to the  Indemnitor's
performance  or breach of this  Agreement.  Upon an  Indemnitee's  request,  the
Indemnitor  will  indemnify the  Indemnitee's  directors,  employees,  officers,
agents,  attorneys,  representatives and shareholders to the same extent as such
Indemnitee.  No such person,  however,  will be a third party beneficiary of the
indemnification  provision  set forth in this  Agreement.  To the extent  that a
Indemnitee  requests the Indemnitor to indemnify  such party's  representatives,
the Indemnitee will cause its representatives to comply with the indemnification
provisions  and  abide  by the  indemnification  limitations  set  forth in this
Agreement.

                  (b) Customer hereby fully and irrevocably waives, releases and
discharges all existing and potential claims, awards, costs, demands,  expenses,
liabilities,  fines,  balances,  payments,  demands  for  payment or rights that
Customer may have against INSpire,  which in any way relate to or arise from the
services rendered by INSpire under the Policy Administration  Agreement,  except
for claims for  indemnification  arising from  INSpire's  negligent  handling of

                                       12
<PAGE>

Customer's  policy  processing  services  prior  to the  Effective  Date of this
Agreement.  INSpire hereby fully and irrevocably waives, releases and discharges
all  existing  and  potential  claims,   awards,   costs,   demands,   expenses,
liabilities,  fines, balances,  payments,  demands for payment or rights INSpire
may have against Customer, which in any way relate to or arise from the services
rendered by INSpire under the Policy  Administration  Agreement,  except for (i)
claims for indemnification arising from Customer's negligent handling of its own
policy processing  services on or after the Effective Date of this Agreement and
(ii) any amounts owed to INSpire pursuant to the Policy Administration Agreement
for services  rendered by INSpire from April 1, 2002 until the  Effective  Date.
INSpire will  indemnify,  defend and hold Customer  harmless from  liability for
negligent  policy  processing  services prior to the Effective Date,  unless the
policy  processing  was in  compliance  with the  direction  of  Customer or the
carrier.  Customer  will  indemnify,   defend  and  hold  INSpire  harmless  for
Customer's  negligent  policy  processing,  unless the policy  processing was in
compliance with the direction of the carrier.

         Section 6.2  Limitations  of Liability.  INSpire will not be liable for
any damages or indemnification  under this Agreement arising out of any handling
of any claims  under  Customer's  policies  where bad faith is alleged (the "Bad
Faith  Claims"),  (a) except to the extent such Bad Faith Claim arises out of or
is  directly  related  to  INSpire's  negligence,  gross  negligence  or willful
misconduct in the performance of the Services;  provided,  however, that INSpire
will have no liability  hereunder in connection with any action,  or any failure
to take an action,  taken at the direction of Customer,  (b) until the amount of
the aggregate of all Bad Faith Claims for damages and  indemnification for which
INSpire  would  otherwise  be  responsible  exceeds  $50,000  in any  particular
calendar year (the  "Deductible")  and then INSpire will only be responsible for
the amount in excess of the Deductible, and (c) to the extent that the aggregate
amount of such Bad Faith Claims exceed $5,000,000 in the aggregate.

         Section   6.3   Limitation   Acknowledgement.   Each  Party   expressly
acknowledges  that the  limitations  set forth in this Article VI represent  the
express agreement of the Parties with respect to the allocation of risks between
the Parties,  including the level of risk to be associated  with the performance
of the  Services as related to the amount of the  payments to be made to INSpire
for such Services, and each party fully understands and irrevocably accepts such
limitations.

         Section  6.4 Notice of Claim.  Any award of damages or  indemnification
pursuant to this Agreement is conditioned  upon the Indemnitor  having  received
full and prompt notice in writing of the Claim and the  Indemnitee  allowing the
Indemnitor to fully direct the defense or  settlement  of such Claim;  provided,
however,  that the failure to receive  prompt notice  relieves the Indemnitor of
its  obligations  under  this  Article  only  if the  Indemnitor  is  materially
prejudiced  by the failure to receive such notice.  The  Indemnitor  will not be
responsible for any settlement or compromise made without its consent.


                                       13
<PAGE>


                                   ARTICLE VII
                       ARBITRATION AND EQUITABLE REMEDIES

         Section 7.1 Settlement Meeting.  The Parties will attempt in good faith
to resolve  promptly through  negotiations any dispute under this Agreement.  If
any such dispute should arise, the Parties will meet at least once to attempt to
resolve the matter (the "Settlement  Meeting").  Any Party may request the other
Parties  to attend a  Settlement  Meeting at a  mutually  agreed  time and place
within ten days after  delivery of a notice of a dispute.  The  occurrence  of a
Settlement  Meeting with  respect to a dispute will be a condition  precedent to
seeking any arbitration or judicial remedy,  provided that if a Party refuses to
attend a Settlement Meeting the other Parties may proceed to seek such remedy.

         Section 7.2 Arbitration Proceedings. If the Parties have not resolved a
monetary  dispute at the  Settlement  Meeting any Party may submit the matter to
arbitration.   A  panel  of  three  arbitrators  will  conduct  the  arbitration
proceedings in accordance with the provisions of the Federal Arbitration Act (99
U.S.C.  Section 1 et seq.) and the Commercial  Arbitration Rules of the American
Arbitration Association (the "Arbitration Rules"). The decision of a majority of
the panel will be the decision of the arbitrators.

                  (a)  Arbitration  Notice.  To  submit a  monetary  dispute  to
arbitration, a Party will furnish the other Parties and the American Arbitration
Association with a notice (the "Arbitration Notice") containing (i) the name and
address of such Party,  (ii) the nature of the  monetary  dispute in  reasonable
detail, (iii) the Party's intent to commence arbitration  proceedings under this
Agreement, and (iv) the other information required under the Federal Arbitration
Act and the Arbitration Rules.

                  (b) Selection of  Arbitrators.  Within ten days after delivery
of the Arbitration  Notice,  each Party will select one arbitrator from the list
of  the  American  Arbitration   Association's   National  Panel  of  Commercial
Arbitrators.  Within  ten days  after  the  selection  of the last of those  two
arbitrators,  those two arbitrators  will select the third  arbitrator from such
list. If the first two arbitrators  cannot select a third arbitrator within such
ten-day  period,  the American  Arbitration  Association  will select such third
arbitrator  from the list.  Each arbitrator will be an individual not subject to
disqualification  under Rule No. 19 of the Arbitration  Rules with experience in
settling complex litigation involving the insurance industry.

                  (c)  Arbitration  Final.  The  arbitration  of the  matters in
controversy and the  determination  of any amount of damages or  indemnification
will be final and binding  upon the Parties to the maximum  extent  permitted by
law,  provided that any Party may seek any equitable  remedy available under Law
as provided in this Agreement. This agreement to arbitrate is irrevocable.

         Section 7.3 Place of Arbitration.  Any arbitration  proceedings will be
conducted at such neutral location outside of the States of California and Texas
as the Parties  may agree.  If a neutral  location  cannot be agreed upon by the
parties,  then the  arbitration  proceedings  will be held in  Albuquerque,  New

                                       14
<PAGE>

Mexico.  The arbitrators  will hold the arbitration  proceedings  within 60 days
after the selection of the third arbitrator.

         Section 7.4 Discovery.  During the period  beginning with the selection
of the third  arbitrator  and  ending  upon the  conclusion  of the  arbitration
proceedings,  the  arbitrators  will have the authority to permit the Parties to
conduct such discovery as the arbitrators consider appropriate.

         Section 7.5 Equitable Remedies.  Notwithstanding  anything else in this
Agreement to the contrary, after the Settlement Meeting a Party will be entitled
to seek any equitable  remedies available under law. Any such equitable remedies
will be in addition to any damages or indemnification rights that such Party may
assert in an arbitration proceeding.

         Section 7.6 Judgments.  Any arbitration award under this Agreement will
be final and binding.  Any court having  jurisdiction may enter judgment on such
arbitration award upon application of a Party.

         Section 7.7 Expenses. If any Party commences arbitration proceedings or
court proceedings  seeking equitable relief with respect to this Agreement,  the
prevailing Party in such arbitration  proceedings or case may receive as part of
any award or judgment  reimbursement of such Party's reasonable  attorneys' fees
and expenses to the extent that the arbitrators or court considers appropriate.

         Section 7.8 Cost of the  Arbitration.  The arbitrators  will assess the
costs of the  arbitration  proceedings,  including their fees, to the Parties in
such proportions as the arbitrators consider reasonable under the circumstances.

         Section 7.9  Exclusivity of Remedies.  To the extent  permitted by law,
the  arbitration  and  judicial  remedies  set forth in this Article will be the
exclusive  remedies  available to the Parties with respect to any dispute  under
this Agreement or claim for damages or indemnification under this Agreement.

                                  ARTICLE VIII
                                  MISCELLANEOUS

         Section 8.1 Amendment. No amendment of this Agreement will be effective
unless in writing signed by the Parties.

         Section 8.2 Counterparts.  This Agreement may be executed in any number
of counterparts,  each of which will be deemed to be an original agreement,  but
all of which will constitute one and the same agreement.

         Section 8.3 Entire  Agreement.  This Agreement  constitutes  the entire
agreement  and  understanding  between  the  Parties  and  supersedes  all prior
agreements  and  understandings,  both  written  and oral,  with  respect to the
subject matter of this Agreement.

                                       15
<PAGE>

         Section 8.4   Expenses. Each Party will bear its own  expenses  with
respect to the  negotiation  and preparation of this Agreement.

         Section 8.5 No Assignment. No Party may assign its benefits or delegate
its duties under this  Agreement  without the prior  consent of the other Party.
Any attempted  assignment or delegation without such prior consent will be void.
Notwithstanding  the  foregoing,  each Party may  assign  its rights  under this
Agreement to a purchaser  of all the assets or equity of such Party  without the
other Party's consent,  and any such purchaser and any subsequent  purchasers of
all of the assets or equity of such Party may similarly assign such rights.

         Section 8.6 No Third Party Beneficiaries.  This Agreement is solely for
the benefit of the Parties and no other Person will have any right, interest, or
claim under this Agreement.

         Section 8.7  Notices.  All  claims,  consents,  designations,  notices,
waivers,  and other  communications in connection with this Agreement will be in
writing.  Such  claims,  consents,  designations,  notices,  waivers,  and other
communications  will be considered received (a) on the day of actual transmittal
when transmitted by facsimile with written confirmation of such transmittal, (b)
on the next business day following  actual  transmittal  when  transmitted  by a
nationally  recognized  overnight  courier,  or (c) on the  third  business  day
following  actual  transmittal  when  transmitted  by  certified  mail,  postage
prepaid,  return receipt requested;  in each case when transmitted to a Party at
its address  set forth  below (or to such other  address to which such Party has
notified the other, Parties in accordance with this Section to send such claims,
consents, designations, notices, waivers, and other communications):

INSpire:                                        Attn: Chief Executive Officer
                                                300 Burnett Street
                                                Fort Worth, Texas 76012
                                                Phone: 817-348-3999
                                                Fax: 817-348-3787

         with a copy to:                        Mr. Steve Leshin
                                                Jenkens & Gilchrist, P.C.
                                                1445 Ross Avenue, Suite 3200
                                                Dallas, Texas 75202
                                                Phone:  214-855-4500
                                                Fax:  214-855-4300

Customer:                                       Attn: Chief Executive Officer
                                                402 West Broadway, Suite 1600
                                                San Diego, California 92101
                                                Phone: 619-677-5213
                                                Fax: 619-677-5298

                                       16
<PAGE>

         Section 8.8 Public  Announcements.  The Parties will agree on the terms
of any press releases or other public  announcements  related to this Agreement,
and will  consult  with each other  before  issuing any press  releases or other
public  announcements  related to this Agreement;  provided,  however,  that any
Party may make a public  disclosure if in the opinion of such Party's counsel it
is  required  by law or the rules of any  applicable  stock  exchange  or dealer
quotation  system to make such  disclosure.  The  Parties  agree,  to the extent
practicable,  to consult with each other regarding any such public  announcement
in advance  thereof.  The Parties may,  however,  include the other Party on any
general  customer  lists or in  presentations  that  include  a list of  current
customers.

         Section  8.9   Representation  by  Legal  Counsel.   Each  Party  is  a
sophisticated  entity that was advised by  experienced  legal  counsel and other
advisors in the negotiation and preparation of this Agreement.

         Section 8.10  Severability.  Any  provision of this  Agreement  that is
prohibited  or  unenforceable  in  any  jurisdiction  will  not  invalidate  the
remaining  provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited or
unenforceable  provision  will be given  effect to the  extent  possible  in the
jurisdiction where such provision is prohibited or unenforceable.

         Section 8.11  Successors.  This Agreement will be binding upon and will
inure  to the  benefit  of each  Party  and its  heirs,  legal  representatives,
permitted  assigns,  and successors,  provided that this Section will not permit
the assignment or other transfer of this Agreement,  whether by operation of law
or otherwise,  if such  assignment of other transfer is not otherwise  permitted
under this Agreement.

         Section  8.12  Time  of the  Essence.  Time  is of the  essence  in the
performance  of this  Agreement  and all dates  and  periods  specified  in this
Agreement.

         Section 8.13 Waiver.  No provision of this Agreement will be considered
waived  unless such  waiver is in writing and signed by the Party that  benefits
from the  enforcement  of such  provision.  No waiver of any  provision  in this
Agreement,  however,  will be  deemed a waiver  of a  subsequent  breach of such
provision  or a waiver  of a similar  provision.  In  addition,  a waiver of any
breach or a failure to enforce any term or condition of this  Agreement will not
in any way affect,  limit, or waive a Party's rights under this Agreement at any
time to enforce strict  compliance  thereafter  with every term and condition of
this Agreement.

         Section 8.14 Force Majeure. The Parties will not be liable or deemed to
be in default for any delay or failure in  performance  under this  Agreement or
interruption of Services  resulting,  directly or indirectly,  from acts of God,
civil or military  authority,  labor disputes,  shortages of suitable materials,
labor or  transportation  or any similar cause beyond the reasonable  control of
the Parties.



                                       17
<PAGE>

         Section 8.15 Attorneys' Fees. In the event of any action,  arbitration,
claim,  proceeding or suit between  Customer and INSpire seeking  enforcement of
any of the terms and conditions of this Agreement,  the prevailing party in such
action,  arbitration,  claim,  proceeding or suit will be awarded its reasonable
costs and expenses, including its court costs and reasonable attorneys' fees.

         Section 8.16  Relationship of the Parties.  The Parties are independent
contractors of one another, and there should be no instance in which they should
be construed as partners or joint venturers.

         Section  8.17  Drafting.  Neither  this  Agreement  nor  any  provision
contained in this  Agreement  will be  interpreted in favor of or against either
Party  because such Party or its legal  counsel  drafted this  Agreement or such
provision.  No prior draft of this Agreement or any provision  contained in this
Agreement will be used when interpreting this Agreement or its provisions.

         Section 8.18  Headings.  Article and section  headings are used in this
Agreement only as a matter of convenience  and will not have any effect upon the
construction or interpretation of this Agreement.

         Section 8.19 Condition of Bankruptcy Court Approval.  This Agreement is
expressly  conditioned upon INSpire  obtaining a final order from the Bankruptcy
Court  in the  Bankruptcy  Case  approving  (a) this  Agreement,  as well as the
Sublease,  the Software License Agreement,  the Professional Services Agreement,
the Asset Purchase Agreement,  the Comprehensive  Preferred Escrow Agreement and
the Claims Administration Agreement concurrently entered into between members of
the INSpire Group and members of the Arrowhead Group,  all without  amendment or
modification,  unless such amendment or  modification  is approved in writing by
all of the Parties, within forty-five (45) days after the date this Agreement is
entered into; and (b) the termination of the Policy Administration Agreement and
the  Claims   Administration   Services  Agreement  and  the  Claims  Management
Agreement.  The  final  order  of the  Bankruptcy  Court  shall be in a form and
substance  acceptable to Customer.  This  Agreement  shall be implemented by the
Parties on a date mutually agreed to by the Parties, but no later than five days
after the Effective  Date. If the final order from the  Bankruptcy  Court is not
obtained  within the time  specified,  this  Agreement  and all of its terms and
provisions are and shall be null and void and of no force or effect whatsoever.

         Section 8.20  Termination of Policy  Administration  Agreement. INSpire
and  Customer  do  hereby  agree to  terminate,  and do  terminate,  the  Policy
Administration Agreement as of the Effective Date.

                           [SIGNATURE PAGE TO FOLLOW]

                                       18
<PAGE>



IN WITNESS  WHEREOF,  the Parties have caused this  Agreement to be executed and
delivered by a duly authorized officer as of the Signing Date.

INSpire:                       INSPIRE INSURANCE SOLUTIONS, INC.,
                               and Debtor and Debtor-in-Possession


                               By:________________________________
                                  Richard Marxen, President & CEO


Customer:                      ARROWHEAD GENERAL INSURANCE AGENCY, INC.


                               By:________________________________
                                  Kieran A. Sweeney, President & CEO








                                       19
<PAGE>


          Schedule 1.1 - Policy Processing and Administration Services

         During the Term,  and in  accordance  with the guidance  and  direction
provided  by  Customer,  the  following  Policy  Processing  and  Administration
Services  will be provided by INSpire to Customer  for the  authorized  Personal
Property  products,  carriers  and  states  identified  in  Paragraph  2 of this
Schedule 1.1:

    1.   Policy Processing and Administration Services:

         (a) INSpire will provide the technical and  administrative  services to
support the acquisition of policies by Customer.

         (b) Expert system rules will be developed  and provided to  incorporate
Customer's desired risk profiles.

         (c)  INSpire  will issue  Customer's  policies,  process  renewals  and
generate   accurate   billing   invoices,   cancellations,    endorsements   and
reinstatements. INSpire will use such non-renewal or cancellation notices as may
be  required  by any policy  wording,  regulatory  authority  or as  directed by
Customer.

         (c) Invoices  will be  processed  for  additional  premiums and renewal
bills.

         (d) Refunds will be processed for return premiums.

         (e) Inquiries from agents,  insureds,  and other relevant third parties
(mortgagees) will be handled on behalf of Customer.

         (f) Data  processing  support  for policy  processing  will be provided
which will include  imaging of  documents,  data entry,  editing,  expert system
underwriting,  electronic  workflow,  rating,  electronic  interfacing  of data,
coding, reporting, accounting; and maintenance of policy records.

         (g) INSpire will  provide the  necessary  services to insure  personnel
assigned to provide  Services to Customer are provided with the necessary space,
furniture,  fixtures,  electronic power,  computer  connections,  telephones and
other required assets to provide the Services.

         (h)  INSpire  will mail all  necessary  policy  documents,  declaration
pages, bills, renewals, reinstatements, additional premium notices, endorsements
and all other required policy related  documentation  and  correspondence to the
correct and relevant parties.

         (i) Premium accounting services will be provided: to manage and account
for premiums  received and  distributed,  to maintain  trust  accounts and other
necessary  accounts;  to pay agent  commissions  in accordance  with  Customer's
reasonable obligations, including but not limited to:

                                       20
<PAGE>

                  (i) Premium  Trust  Account.  Promptly  upon receipt  thereof,
INSpire will deposit all premiums and other funds collected for business written
under this Agreement  into a trust account to be  established  and controlled by
Customer (the "Premium Trust  Account")  INSpire may draw upon the Premium Trust
Account to pay return premiums and refunds due to policyholders.

                  (ii)  Commission  Account.  After Customer has established and
funded a separate bank account which INSpire may draw upon to pay commission due
to agents and producers  (hereinafter  called the "Operating  Account")  INSpire
will reconcile all  disbursements  from the Operating Account each month by type
and amount of disbursement and furnish a copy to Customer.

                  (iii) Reports.  All reports and reconciliations to be provided
to  Customer  under  this  Agreement  (whether  in hard  copy or  maintained  on
computers) will be forwarded within five (5) business days after the end of each
month.  The  reports  will  include,  but not be  limited  to,  information  and
statistical  data  (A)  required  by  Insurance  Services  Office  ("ISO"),  (B)
necessary  for  Customer  to  prepare  any  reports  required  by  the  National
Association of Insurance Commissioners ("NAIC"), or (C) other reports reasonably
requested,  including  policy-year,  accident-year and calendar-year reports, to
monitor and evaluate the subject business (the "Premium Reports").

         (k) INSpire  will  calculate  and pay  commissions  to the  producer on
Customer's behalf, or will invoice and receive the return of commission from the
producer on return premium transactions; INSpire will prepare a magnetic tape of
commission  data  for  Customer  to  prepare  Federal  1099 tax  statements  for
commission  paid to producers.  Federal 1099 tax statements  will be printed and
mailed as reasonably requested by Customer.

         (l)  INSpire  will  provide  data links and policy  systems  access for
Customer.

         Additional  reports or  modifications  to agreed upon  reports  will be
charged to Customer on a time and materials  basis utilizing the appropriate mix
of service  personnel  required  to perform  the  modifications  or produce  new
reports. The hourly rates for such work will be $77 per hour


                                       21
<PAGE>

2. The Personal Property Products, Carriers and States Authorized for Services:


State            Plan #          Product          Carrier
-------------------------------------------------------------------------
AL                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
AZ                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
CA                 14            Motorcycle       Clarendon National
-------------------------------------------------------------------------
CA               15-16           DIC              Clarendon National
-------------------------------------------------------------------------
CA             17-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
CA                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
CA            27-29, 35,36       DP3              Clarendon National
-------------------------------------------------------------------------
CA                 31            HO4              Clarendon National
-------------------------------------------------------------------------
CA                 32            HO6              Clarendon National
-------------------------------------------------------------------------
CA             17-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
CT               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
CT                 31            HO4              Clarendon National
-------------------------------------------------------------------------
CT                 32            HO6              Clarendon National
-------------------------------------------------------------------------
CT               33, 34          Pref HO4/6       Clarendon National
-------------------------------------------------------------------------
DE               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
DE                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
FL                 21            Mobile Home      LION
-------------------------------------------------------------------------
GA               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
LA               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
LA                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
LA                 24            DP1              Clarendon National
-------------------------------------------------------------------------
MD               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
MD                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
ME               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
MS               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
MS                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
NH               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
NJ               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
NM                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
NY             18-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
NY               31,33           HO4              Clarendon National
-------------------------------------------------------------------------
NY               32,34           HO6              Clarendon National
-------------------------------------------------------------------------
OR                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
PA                 14            Motorcycle       Clarendon National
-------------------------------------------------------------------------
PA                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
RI               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
SC               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
SC                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
VA             18-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
VA               31,33           HO4              Clarendon National
-------------------------------------------------------------------------
VA               32,34           HO6              Clarendon National
-------------------------------------------------------------------------
CA               18-20           HO3              Sirius America
-------------------------------------------------------------------------
CA                 50            BOP              HUDSON
-------------------------------------------------------------------------
CA                 55            Umbrella         RLI


                                       22
<PAGE>

Schedule 1.3(e) - Penalty  Provisions and Payments for INSpire's failure to meet
Service Levels

The following  penalties  will apply should  INSpire fail to meet the individual
Service  Levels  set forth in  Schedule  2.1(a)  to the  Policy  Processing  and
Administration  Agreement.  Each  Penalty  numbered  below will  constitute  the
penalty  to  INSpire  for  failing to meet the same  numbered  Service  Level on
Schedule 2.1(a):

1.       $500 per day.

2.       $200 per day.

3.       $100 per day.

4.       $100 per day.

5.       $100 per day.

6.       5% reduction of the Services Fee for the following month.

7.       5% reduction of the Services Fee for the following month.

8.       $2.50 per renewal per day offered late.

9.       $2.50 per inspection reviewed outside of agreed upon service level

10.      $2.50 in each instance collection procedure is not adhered to.

11.      No Penalty. This is a good faith commitment.

12.      $2.50 per endorsement per day late processed.

13.      $2.50 per late mailed billing invoice or premium refund check, plus any
         fines or penalties assessed by regulators resulting from late
         processing.

14.      $50 per late processed cancellation or non-renewal.

15.      $10 per day per estimate delivered late.

16.      $1 per suspense item per day late.

17.      $500 per day late implementation.




                                       23
<PAGE>

Schedule 2.1 - Service Levels for the Policy  Processing and  Administration  of
Personal Property Policies


1.       Call Center  Services - These services will be provided by INSpire from
         8:00 a.m. to 5:30 p.m. on Monday through Friday for California personal
         property  insureds  and from 6:00 a.m. to 5:30 p.m.  on Monday  through
         Friday for insureds located outside of California  utilizing  toll-free
         1-800 inbound telephone  service.  Services will not be provided during
         INSpire's observed holidays. Times stated are Pacific Standard Times.

2.       During the times specified  above,  the INSpire Call Center will answer
         85% of all calls received within 60 seconds or less.

3.       The Call Center will answer 95% of the calls within 120 seconds.

4.       The Call Center will have a call abandonment rate of less than 5%.

5.       All phone  calls  requiring  a call back will be  returned  within  one
         business day.

6.       INSpire will  process all new and renewal  personal  property  policies
         with an Overall Error Rate of 5% or less.  The Overall Error Rates will
         be computed as follows:

         Overall  Error Rate = Errors  Observed  divided  by Number of  Policies
         Audited.

7.       All new personal  property  policies  will be issued  within 8 business
         days upon receipt of the required information  necessary to process the
         policy.

8.       All renewal  policies/offers will be reviewed,  underwritten and mailed
         to the insured in compliance with state specific regulations.

9.       All personal property inspections will be underwritten within 8 days of
         receipt in INSpire's mailroom.

10.      INSpire  will follow an agreed  upon  collection  procedure  to collect
         premiums due from  insureds  and/or  agents when a policy  lapses and a
         balance is due.

11.      INSpire and  Customer  will work  together to find ways to maintain and
         when possible, increase retention levels of the policies processed.

12.      All  endorsements  received  by  INSpire's  mailroom,   online  or  via
         facsimile will be processed within 8 business days.

13.      All regularly scheduled billing invoices and premium refund checks will
         be printed and mailed within two business days.

                                       24
<PAGE>

14.      All cancellations,  including non-renewals,  will be printed and mailed
         within two business  days and will at all times be in  accordance  with
         statutory  requirements.  Installment  notices and renewal  offers that
         provide statutory notice are deemed to fall under this standard.

15.      INSpire  will  provide  high  level cost and time  estimates  of system
         modifications  within  10  working  days of an  inquiry  in  order  for
         Customer to determine the cost/benefit and feasibility of changes.

16.      All suspense  lists will remain  current.  All  suspense  items will be
         followed up and worked on a regular basis as agreed to between  INSpire
         and the Customer.

17.      Procedural  Changes - All procedural changes must be implemented within
         25   business   days  of  Customer   and  INSpire   reaching  a  mutual
         understanding  of all changes  and all  documentation  and  training on
         procedural changes have been provided by Customer.


                                       25