What is a surplus contribution?

This is a small fee that goes toward maintaining an insurance company’s ability to pay claims.

If you get a policy from the Kin Interinsurance Network, you’ll notice your policy includes a “surplus contribution.” The surplus contribution is a small fee – 10 percent of your premium – that acts as a claims buffer. It’s purely an extra financial safety net, and we don’t make any money off of or take a percentage of this contribution. When comparing quotes, think of this fee as part of your premium – even with the fee, we’re incredibly affordable.

That’s because a 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.

Plus, the Kin Interinsurance Network is structured as a reciprocal exchange, which means our policyholders actually own the company and Kin manages it for a flat fee (again, we don’t touch the surplus contribution). Because our fee is fixed, we aren’t incentivized to raise rates to increase profits to appease shareholders – our obligation is only to you. 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’s refundable on a prorated basis if the policy is canceled.

What is a policyholder surplus?

A 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 160 years would we expect one event to exceed our program.

What are subscribers?

Policyholder and subscriber are interchangeable terms. But because a reciprocal exchange is a true peer-to-peer insurance company, policyholders are often called subscribers or members. It’s a hat tip to the fact that when you buy a policy from a reciprocal, you are part of the company. You and your fellow subscribers are actually insuring each other, technically speaking.

The Subscribers’ Advisory Committee (SAC) protects your rights as a subscriber – you can expect us to take the required surplus, manage funds based on fiduciary rules, and conform to the subscriber agreement. Plus, the SAC ensures you have an active presence in all that we do. Think of this committee as your sounding board – they listen to your feedback to guide decisions in our resources, our improvements, and our path forward.