Important Change to Lapse Policy Procedures for

Motorcycle & Snowmobile Business

Dear Agent:

Controlling losses continues to be a top priority for us all.  And, it has become evident that the loss ratio is significantly higher on policies where the customer has made a payment after the policy has cancelled and we’ve automatically created a lapse policy.

Therefore, the companies of American Modern Insurance Group felt that it was necessary to make the following changes to following changes to our procedures for motorcycle and snowmobile lapse policy reinstatements.  These changes are consistent with our other Casualty products (with the exception of Watercraft) and went into effect on December 23, 2004:

Ø       We will continue to automatically reinstate a cancelled policy when:

§         we receive payment within 7 days of the date of policy cancellation, and

§         the policy meets our reinstatement criteria (no more than one NSF, claim criteria, etc)

Ø       Payments received on cancelled policies which are 9 or more days past the policy cancellation date will be returned to the customer; we will not longer lapse these policies automatically.

This is a change from our current practice of accepting payments between 8-30 days late and creating a new “lapse” policy automatically.  We realize this change may adversely impact some of your late-paying customers, but it’s a change we feel is necessary as we continue to find ways to manage our losses.

How Can I Avoid Having My Customers’ Policies Cancel?

Ø       The new At Risk Report, available on modernLINK, can let you know a customer is late on a payment.  Then, just call the customer and get a check or a credit card, and apply the payment via modernLINK.  The payment is posted that same day, and you’ve avoided the cancellation.  It may take a little time and effort, but certainly not as much as writing a new business policy!

Ø       In second quarter 2005, we’ll begin offering our EZPay payment option on motorcycle business.  This monthly, automatic deduction from your customer’s bank account ensures no late payments, so every time you set up a customer on EZPay, you’ll have less to worry about.

Important Additional Information:

Ø       Be advised that Saturday and Sunday count as a “day”; therefore, if the customer’s policy cancelled last Wednesday, the following Tuesday is the latest day we will accept a payment and automatically reinstate the policy.

Ø       Payments received over the weekend are processed on the following Monday.

Ø       Reinstatement of coverage depends on policy criteria; receipt of payment does not guarantee continued protection.

Ø       You can always reapply for coverage using our traditional new business procedures; you will be requited to submit a new application, all applicable selection/rejection forms, and required proof of discounts documentation.

The companies of American Modern Insurance Group appreciate your business.  If you have any questions about this change in procedure, please call AMIG Customer Care Services at 1-800-543-2644.

Sincerely,

Steve Mackie

Motorcycle Product Manager