B. The Contractor shall give immediate written notice to the Contracting Officer of any claim or action filed against the Contractor. which might result in losses subject to indemnification under this Article. Except as otherwise directed by the Contracting Officer, the Contractor shall promptly furnish to the Contracting Officer copies of all pertinent documents served upon or received by the Contractor in connection with such claim or action. The Government may, at its election, direct, control, or assist in the defense of such claim or action. If the settlement or defense of such claim or action is undertaken by the Government, the Contractor shall furnish all reasonable assistance to the Government. Irrespective of whether the Government participates in the defense of a claim or action, no payment by the Contractor in settlement of a claim will be indemnified under this Article unless the Contracting Officer has approved such payment in advance. If any claim or action includes an allegation that the Contractor failed to exercise due care in the manufacture or handling of the vaccine in accordanc with the contract specifications, the Contractor reserves the right to direct and control the defense or settlement of the claim or action with respect to such allegation. C. The provisions of this Article shall not be subject to Article of this contract entitled "Disputes." D. The rights and obligations of the partics under this Article shall survive the termination or expiration of this contract. TO: RE: November 10, 1976 Each Subscribing Insurer - Special Liability Insurance and Claims Administration Procedures Proposed Implementation As you may know, four of the subscribing insurers (or affiliates thereof) are now providing primary coverage and/or certain primary loss adjustment services for the four vaccine manufacturers in connection with their non-Swine Flu general liability or pharmaceutical products liability insurance or self insurance programs. Almost from the outset of the difficulity in placing suitable insurance coverage for the Swine Flu Immunization Program, there was a fairly general request from the subscribing insurers to those four companies to provide loss adjustment services for the Swine Flu Program. Those four companies have agreed to perform such loss adjustment services, each for its own manufacturer, and additionally agreed to form a committee with membership open to others of the subscribing insurers, to provide initial oversight of matters which might involve the vaccine manufacturers' insured liabilities and to plan for the defense and adjustment of any insured claims which might ensue. Representatives of each of the four companies referred to have met and now outline here the elements of their proposal to accomplish those purposes, as well as to provide for liaison with the government offices, the subscribing insurers, and others involved. Those companies (also sometimes called "servicing carriers") and the manufacturers they respectively serve are: 1. National Swine Flu Program Insured Claims Administration Committee This Committee will be composed of (1) a claims officer (and designated alternate) of each of the four companies referred to, and (2) a representative of any other subscribing insurer whose pro rata share of either layer of coverage is at least 5% and which wisnes to participate in the Committee's work. It will be responsible for establishing a central office which will collect information from the Government Claims Office, from the manufacturers, from the subscribing insurers or others which may be necessary, or desirable, in carrying out the Committee's responsibilities for oversight of matters involving potential claims. It has certain responsibilities under the Servicing Carrier Agreements referred to below. 2. The Committee's Administrative and Accounting Office The Committee expects to establish and staff an office which will among other matters serve as focal point for liaison with the Government Claims Office, prepare regular reports to each of the subscribing insurers of the activities of the office, of occurrences which may involve insured liabilities, and the like - all under the supervision of the Committee. The office will also maintain accounts in connection with the functions of the servicing carriers under the agreements referred to below, and bill, collect and disburse funds therefor. 3. Initial Funding of the Committee's Administrative Expenses The Committee proposes to have the amount of $100,000. withheld from the total premiums (net of commission) for the first layer of coverage which would otherwise be paid to the subscribing companies and to have that sum of money paid over to the Committee for deposit in a special account out of which the Committee would pay the expenses it incurs for the office and for other expenses (such as travel, etc.) which are incurred in connection with its functions. In addition, the subscribing insurers which have incurred expenses on behalf of all participants, particularly in connection with policy form preparation, would be reimbursed for their actual expenses in that regard out of the same funds.. These expenses (and the $100,000. initial funding thereof) will be allocated to each of the subscribing insurers for the first layer coverage in direct proportion to dollars of premium payable to each such participant. The Committee through its office will account to each of such insurers for the funds initially set aside for the expenses referred to. Unexpended funds will be returned to them. To the extent that any or all of the four companies also provide administrative or supervisory services of an allocable nature in connection with claims matters which are requested by the manufacturer in connection with its potential liabilities falling within the particular manufacturers' self-insured retention of $2,500,000., those expenses will be for the account of that particular manufacturer in accordance with the understanding between that manufacturer and the insurer providing the services referred to. Other "non-allocable" expenses incurred by any or all of the four companies at the instigation of such company (ies) or the Administrative Committee will be charged to the subscribing insurers in the appropriate layer as set forth in Section 4.5 of the Servicing Carrier Agreements. 5. Claims Services and Expenses for the Subscribing Insurers The Committee also believes that the efficient and economical investigation, adjustment and defense of claims or potential claims arising against each manufacturer would be promoted, if such claims handling is conducted by the Servicing Carrier for such manufacturer on behalf of all. The understanding among the subscribing companies, or some of them, about the conduct of such claims servicing on their behalf has, of course, not been spelled out in any detail. The Committee therefore proposes and now asks that each of the subscribing insurers execute an agreement with each of the four Servicing Carriers. Copies of such servicing carrier agreements are enclosed herewith. We request each such subscribing insurer to review the agreement, have it executed by a duly authorized officer, and return it as indicated below. It should be noted, however, that the Committee does not now plan to pay out of its funds, or otherwise on behalf of the subscribing insurers, any amounts for indemnity or for allocated loss adjustment expenses, i.e., payments which will involve "loss" as the special liability policies define that term. When any such "loss" is payable by the subscribing insurers in either layer of coverage, each such insurer would be billed for its appropriate and proportionate share thereof, or otherwise pay in accordance with the enclosed agreements. As set forth in the enclosed agreements, the subscribing insurers will be charged for the services of a servicing carrier and at the rate of $35. per hour of professional employee's time. This "unallocated loss adjustment expense" will be billed as incurred to the appropriate layer of coverage. 6. Prompt Indication of Any Objections Required Return of Executed Agreements Representation on the Administration Committee A. To the 16 Companies in the First Layer of Coverage It is essential that the Committee proceed with the utmost promptness to carry out its plans for claims administration oversight on behalf of the subscribing companies. Therefore, each of those companies should advise the Committee immediately upon receipt of this communication, if it has any objection to what is proposed, especially to the initial funding to defray the expenses of the Committee and the work already done on your behalf as described above. If the Committee does not receive notice of a significant objection on your part to its plans as described herein by the end of the business day, November 19, 1976, it will proceed as outlined. B. To All Subscribing Companies You will be kept fully informed of the Committee's work on your behalf and notified of the location of this office, as soon as that is established. In any event, as soon as possible, please return executed copies of the four Servicing Carrier Agreements. We need to keep the Committee to a manageable size. Nevertheless, each insurer subscribing to at least five per cent (58) of either layer of coverage is invited to designate one of its officers to be on the Committee. : Pending establishment of the Committee's regular office, please address it in care of: Edward T. Harris, Assistant Vice President Continental Insurance Companies 13th Floor 80 Maiden Lane New York, New York 10038 Mr. Harris will receive, and there should be sent him on the enclosed form: 1. Your objection, if any, to the Committee's proposals; 2. 3. If you accept the invitation to be represented on the The name, address, and telephone number of the person Please enclose with the completed form an executed Servicing |