Book Transfer Procedures: - Travelers



Notes:

• Agent Compensation for book transfers will not be paid as written, will not be calculated on a per policy basis (only as a percentage of written premium), and book transfers need to be effective for a minimum of three months.

• All book transfers must be processed through CIP, including book transfers with a factor of 0%.

• The Hartford Book Transfer Coordinator, M. He or Controller, K. Shaw, will complete Step 10 for Book Transfers by “Announcing the Book Transfer”.

• Please process book transfers, approximately 30 – 60 days prior to the effective date of the book transfer to allow for appropriate review and processing.

• See Book Transfer requirements outlined by PI Legal at the end of this document. Handwritten changes are not permitted on the agreement or its exhibits.

• There will be periodic monitoring of this process to ensure compliance. Information concerning these monitoring controls will be issued in second quarter 2008.

• These procedures will be posted to Field Sales Resource Center by May 31, 2008.

• These procedures replace any previous Personal Insurance Book Transfer procedures

These procedures are written with the understanding that it is Personal Insurance management’s position that these individuals, as designated by their roles, have the appropriate level of knowledge, and/or supervision necessary to perform their responsibilities in the book transfer process. Therefore, it is PI management’s expectations that the individuals specified will exercise their judgment to evaluate information and/or to make decisions regarding their responsibilities for the book transfer process.

Book Transfer Steps:

Step 1 of 10: Identify a potential Book Transfer and gather financial information, such as earned premium, losses, PIF, or other information that is helpful to evaluate the potential business to be transferred.

Book Transfer Business Policy: Pursuant to the Settlement, we have adopted several controls regarding book rolls (transfers).  We define a book roll as:

• A specific agreement or arrangement with a producer that includes consideration in the form of money or anything else of value to the producer

• To transfer 25 or more policies

• From a specified insurer to Travelers

All three conditions must be met for a book roll (transfer) to occur.  Any agent-driven activity that results in new business for Travelers that do not meet these three conditions is not a book transfer.   Please consult with your PI Legal contact if you have any questions about this definition.

Book Transfer Steps (Continued):

Anyone, such as an Administrative Assistant (AA), Sales Specialist (SS), Sales Executive (SE), or a Regional Sales Director (RSD) can start a record in CIP and input the detailed information regarding the book transfer. This individual will select (in record) the SE, the Agency, and fill in the appropriate information about the book transfer. This individual will sign-off on Step #1 which will initiate an email to the Regional Reviewer.

Step 1: Sign-off RSD/SE/SS/AA

Step 2 of 10: The Regional Reviewer/Regional Approver/Controller will review the information about the book to be transferred including any book transfer factors (payment percentage) greater than zero. The Regional Reviewer may utilize a financial model to analyze the book transfer, but this model is not required. The Regional Reviewer is the Regional Finance Officer, the Home Office Regional Finance Officer, or an individual approved by the Regional Vice President or R. LaChance (VP). Note: If the factor (payment percentage) is zero, the RSD/SE/SS/AA can approve the book transfer but the Regional Reviewer must move the book transfer to the next step in the workflow.

The Regional Reviewer can approve a book transfer factor (payment percentage) up to and including 5%. The Regional Reviewer’s review and approval will be evidenced by his/her approval in CIP.

The Regional Approver (Regional Finance Officer, or someone designated by R. LaChance) can approve a book transfer factor (payment percentage) up to and including 10%. The Regional Approver’s review and approval will be evidenced by his/her approval in CIP.

The “Controller” (R. LaChance, VP or an individual he designates) can approve a book transfer factor (payment percentage) greater than 10%. His review and approval will be evidenced by his approval in CIP.

Step 2: Sign-off: Regional Reviewer, Regional Approver, R. LaChance or his designee (as appropriate)

If Business Center participation is requested to provide rate or coverage comparison information or for its participation in processing the book transfer, Steps 3 and 4 are completed. The RSD, SE, SS, AA, Regional Approver or Regional Finance Officer can submit the book transfer to the Business Center. The Business Center’s Book Transfer Coordinator or the Business Center’s Approver will review the book transfer details and if necessary, the Business Center will negotiate the terms of the book transfer details with the RSD, SE, SS, AA, or Regional Reviewer, and the Agent (via the RSD/SE/SS/AA). These negotiations occur in Steps 3 and 4 of the Book Transfer process. If Business Center participation is not required, skip to Step 5.

Step 3 of 10: Business Center Book Transfer Coordinator will enter terms and conditions of the book transfer. This will then be sent to the RSD, SE, SS, AA or Regional Reviewer for approval.

Sign-off Step 3a: Business Center Book Transfer Coordinator or Business Center Approver.

Sign-off Step 3b: RSD/SE/SS/AA or Regional Reviewer

Step 4 of 10: Business Center will approve the final terms and send back to the RSD/SE/SS/AA or Regional Reviewer, who will in the process of creating the book transfer agreement, will enter the terms agreed upon with the Business Center into Exhibit D.

Step 4 Sign-off: Business Center Book Transfer Coordinator or Business Center Approver.

Step 5 of 10: After agreement with the Business Center terms in Steps 3 and 4, or if the Business Center will not be involved, the Book Transfer General Agreement and Exhibits A through E are drafted. A series of questions in CIP are answered to capture the terms of the book transfer, such as duration of contract and payment periods. The completion of these questions can be completed by

Book Transfer Steps (Continued):

the RSD, SE, SS or an AA. These questions as well as other information input into CIP by the roles in each step, e.g. Legal and the Business Center will be included in the General Agreement and Exhibits A through E.

A request for a book transfer code must be made to Agency Administration at this time. The RSD, SE, SS, AA can request the book transfer code. Upon receipt of the book transfer code, the RSD/SE/SS, AA will update the book transfer agreement with the book transfer code.

Step 5 Sign-off: RSD/SE/SS/AA

Step 6 of 10: The Regional Reviewer/Regional Finance Officer/ Home Office Regional Finance Officer will review the agreement and accept it as a Book Transfer. This acceptance/approval is completed by the Regional Reviewer/Regional Finance Officer or Home Office Regional Finance Officer submitting the Book Transfer to Legal for approval.

Step 6 Sign-off: Regional Reviewer/Regional Finance Officer/Home Office Regional Finance Officer

Step 7 of 10: Legal will review the Book Transfer General Agreement and Exhibits A through E which must be included. If Legal requires changes, the Book Transfer General Agreement and Exhibits A through E will go back to the RSD/SE/SS/AA. The RSD, SE, SS, or AA can make the required changes and re-submit it to the Regional Approver/RFO.

If Legal approves, they will signoff on the Book Transfer General Agreement and each of the Exhibits A through E. The Agreement and each of the Exhibits have a version control with date. This version control signifies the version of the default wording for the Book Transfer General Agreement and Exhibits A through E.

Step 7 Sign-off: Legal

Step 8 of 10: The SE will bring the agreement to the Agency Principal for signature. The SE will sign on behalf of the Travelers. It is possible that the Book Transfer Agreement could be brought to the Agency to be signed, by the Regional Reviewer, the Regional Sales Director, or the Regional Vice President. These individuals can also sign the agreement on behalf of the Travelers. The Book Transfer General Agreement must be signed and dated by the Agency and the appropriate Travelers representative. There can not be any handwritten changes on the Book Transfer General Agreement and any of its Exhibits A through E. If the Agency requires changes to be made to the Book Transfer General Agreement and/or any of its Exhibits, which have already been approved by Legal, the Book Transfer General Agreement and its Exhibits A through E must be revised in CIP and processed appropriately, including another review by Legal of any changes. This may mean that some of the steps in CIP may need to be repeated for this book transfer.

Once the Final Book Transfer General Agreement and its Exhibits A through E are signed and dated by Travelers and the Agency Principal. The Signed Book Transfer General Agreement and all of its Exhibits are scanned into CIP by the SE/SS/AA/Regional Reviewer. The “Submit to Home Office for Completion” button is selected as the final step for the Region.

Step 8 Sign-off: RSD/SE/SS/AA/Regional Reviewer

Step 9 of 10: Book Transfer code should have already been requested in Step 5. Therefore, this step will be completed by Home Office, M. He, Hartford Book Transfer Coordinator, or K. Shaw, Controller.

Step 9 Signoff: Hartford Book Transfer Coordinator or Controller

Book Transfer Steps (Continued):

Step 10 of 10: Announce Book Transfer.

The Book Transfer is reviewed by the Hartford Book Transfer Coordinator, M. He. M. He, ensures that the book transfer code has been included in the Agreement, the signed (by both parties) General Agreement and all Exhibits A through E have been completed appropriately and are attached in CIP.

M. He will announce the Book Transfer. K. Shaw, Controller (or someone designated by R. LaChance) can also perform this step.

Step 10 Signoff: Hartford Book Transfer Coordinator, Controller, R. LaChance Designee

Termination of Book Transfer:

If the book transfer is terminated before the Agent signs the agreement, the book transfer workflow should be suspended, by selecting the Suspend Workflow option in CIP.

Reviews every 3 months by PI Retail Finance:

The Hartford Book Transfer Coordinator will review the Aged Report in CIP and send emails via CIP to the appropriate parties to follow up on any book transfer records which have not seen activity in more than 90 days.

Daily/Weekly Reviews by PI Retail Finance:

Daily: While we are waiting for the CIP Database to be updated for the roles that we have outlined in these procedures and while we are waiting for the creation of a CIP Database Administrator Change Report, we will perform a daily manual check on the activity in the CIP Database. This manual check will involve checking the steps taken for each book transfer which has just entered the workflow or is currently in any of the steps in the workflow. The Hartford Book Transfer Coordinator (HBTC) will review each Book Transfer record to ensure that the steps are being performed by the appropriate individuals. The HBTC will compare the individuals to the monthly list of individuals for the Retail Sales Organization provided by PI Finance: Expense (Source of report: Peoplesoft). The HBTC will also utilize names provided by the Business Centers and Legal to ensure that the individuals performing those steps are appropriate.

If the HBTC identifies that a step is performed by an unauthorized individual, the book transfer will be re-set to the previous step (by a CIP database administrator) in the workflow so that it can be moved forward by an appropriate individual. If the Hartford Book Transfer Coordinator, M.He, identifies that the same individual moves the book transfer forward inappropriately on a number of occasions, he or a member of PI Finance Management will contact the individual and his/her RFO. This email will be retained by M. He. In the event that the HBTC is unavailable, the daily check will be performed by another individual in PI Finance, other than the reviewer. If M. He or any individual performing this daily check has a question about a record in CIP he/she will discuss it with K. Shaw or a member of PI Finance management.

Weekly: This daily process will be reviewed by a member of PI Finance Management on a weekly basis. In the event that the HBTC is unavailable, the daily check will be performed by another individual in PI Finance, other than the reviewer.

Book Transfer Requirements

All book transfers must be initiated and completed through the CIP Database.

1) 1 general agreement form, 5 exhibits (labeled A-E), 6 or more pages combined; all 6 or more pages combined constitute the agreement.

2) Main agreement form clauses should not be altered, other than clause B, to identify the beginning and ending dates of the transfer.

3) Main agreement form requires both company and agency signatures. Exceptions are made for two identical agreements signed by each party, such as in the case of faxed agreements.

4) Dates must accompany signatures.

5) Signature dates must precede any contract dates.

6) Exhibit A must show all lines of business to be transferred.

7) Exhibit B must include payment percentages and payment terms (e.g. “Paid Quarterly, “Semi-annually”, etc).

8) Exhibit C cannot be altered in any way.

9) Exhibit D must be filled in with terms and conditions of the transfer.

10) Exhibit E cannot be altered in any way.

11) Legal must approve the entire agreement before it can be presented to the agent. Once Legal has approved, there cannot be any changes to the agreement, unless re-approved by Legal.

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