A reciprocal insurance exchange is one of the ways insurance organizations can be structured and capitalized. In a traditional “stock” insurance company, capital is provided by shareholders, who invest for profit. A reciprocal has no shareholders. Instead, the insurer is owned and financed by its policyholders, also known as members.
As a member, a portion of your annual payments are set aside as capital or “surplus” for the insurer. Apart from this, AMIE’s start-up capital was provided as debt in the form of surplus notes issued to third parties. The reciprocal structure is common and some well-known companies that you have likely heard about, like USAA and Farmers, have organized themselves as reciprocals.
Advantages of A Reciprocal
There are several benefits to organizing as a reciprocal that AMIE wanted to take advantage of and pass on to members:
A reciprocal insurance exchange is managed by an entity known as an Attorney in Fact (AIF). In the case of AMIE, its Attorney in Fact is American Mobile Risk Management, LLC or “AMRM.” AMIE has engaged AMRM to manage its operations and provide exceptional service and claims experience for AMIE’s members. AMRM is made up of industry veterans who have many years of experience in providing personal insurance to manufactured homeowners.
AMRM is majority owned by K2 Insurance Services, LLC – an insurance services holding company with over a $1b in premiums written annually. K2’s support further strengthens AMIE’s ability to deliver capital and expertise to its members.
Policyholder and subscriber are interchangeable terms. A reciprocal exchange is a true peer-to-peer insurance company and policyholders are often called subscribers or members. When you buy a policy from a reciprocal, you are part of the company. Technically speaking, you and your fellow subscribers are actually insuring each other.
Simply put, the Subscriber Agreement/Power of Attorney document is an agreement to become a member, and owner, of AMIE – becoming part of a family of manufactured home owners with similar interests.
Not to get too technical, executing the document affirms the homeowner’s agreement to a number of important things that will ensure AMIE’s success and your ability to become a member.
These things include:
In order to become a member/owner of the exchange, Florida statute requires that the Subscriber Agreement be executed by every member at the time their policy is purchased. Unfortunately, AMIE is not able to accept new members without an executed agreement.
AMIE has formed an advisory committee that operates to supervise the activities of AMRM and ensure that Members’ voices are heard. This committee is known as a Subscribers’ Advisory Committee (SAC), which is elected annually by Members and is required to supervise the finances and operations of AMIE. The details of how this works are laid out in the Subscriber’s Agreement and Power of Attorney and the Powers of the Subscribers’ Advisory Committee, which are available to all members.
The Subscribers’ Advisory Committee (SAC) protects your rights as a subscriber – ensuring that you have an active voice in all that we do. The committee is designed to be your sounding board – they listen to your feedback to help guide decisions with AMIE’s resources, making improvements, and creating a path forward.
When you get a policy from the American Mobile Insurance Exchange (AMIE), you will notice your policy includes a member surplus contribution. The surplus contribution is a small fee – 5 percent of your premium – that acts as a claims buffer, an extra financial safety net. When comparing quotes, think of this fee as part of your premium.
A member surplus contribution actually saves you money over time. The more reserves we have to pay claims and cover operating costs, the lower we can keep our prices.
AMIE is structured as a reciprocal exchange, which means the policyholders actually own the company and AMRM manages it for a flat fee. Because our fee is fixed, we aren’t incentivized to raise rates to increase profits to appease outside shareholders – our obligation is only to our members. When you buy a policy, our “subscriber agreement” explains this relationship and the surplus contribution.
Florida regulators approved the surplus contribution, and while you can’t opt out of it, it is refundable on a prorated basis if the policy is canceled.
Policyholder surplus is an insurance company’s admitted assets minus what it owes in claims. This is a strong indication of an insurer’s financial strength and capacity to write new policies.
A greater policyholder surplus means a company is financially sound – it has more assets than losses and can easily pay claims. And surplus funds can be used for exactly that: paying for claims that exceed what reinsurance will cover (and it covers a lot). In fact, our reinsurance program is so strong that the probability of surpassing these reserves is incredibly rare. Only once in every 130 years would we expect one event to exceed our program.
Financial Strength of the Reciprocal
AMIE is an “admitted” insurance entity regulated by the Florida Office of Insurance Regulation (FL OIR). As such it is subject to the same laws, regulations and capital requirements as every other Florida domestic insurance company. Additionally, AMIE is rated A by Demotech, a leading insurance company rating agency. AMIE also takes a conservative approach to buying reinsurance to ensure it remains financially strong. AMIE’s reinsurance program is comprised of financially secure, highly rated global reinsurance companies rated A- or better by A.M. Best.
We invite you to find an agent to get an immediate quote on your mobile home. Or, you can contact us by completing the form on the top of this page and you will hear from on of our knowledgeable, professional agents very soon!
Mail address:
PO Box 13609
St Petersburg, FL 33733
Overnight Mail:
EIS Lockbox/Cust Svc
FL-Orlando-7146
Lockbox Department
Attn: American Mobile, 919781
7699 Golf Channel Drive
Orlando, FL 32819