Subscriber Savings Account FAQs
The difference between an insurer’s total admitted assets and total liabilities as found on its balance sheet. Essentially, policyholder surplus is an insurer’s net worth. In a year when PURE’s policyholder surplus exceeds that of the prior year, the difference (policyholder surplus growth) may be allocated to Subscriber Savings Accounts.
SSAs are notional accounts that remain on PURE’s balance sheet (supporting PURE’s overall claims-paying ability) in the name of each qualifying PURE member, into which PURE may allocate surplus. Surplus allocated to these accounts remains on PURE’s balance sheet and is available as part of its overall claims-paying ability. In broader terms, SSAs are an important component of PURE’s long-term capital management strategy and help us keep the cost of insurance low.
SSAs create a long-term advantage to PURE and enable us to grow our surplus in a highly efficient manner, because any profits that are allocated into these accounts are not taxable. Holding these funds on the balance sheet of PURE reinforces the motivation of PURE Risk Management (PURE’s Attorney-in-Fact) to deliver world-class service, as SSA monies can be returned to members if and when they cancel all of their PURE policies. SSAs are a tangible demonstration of the alignment of interests between PURE and its membership, as they allow members to share in PURE’s successful results.
Each member active in the year surplus growth resulted in an allocation is eligible to receive a portion of it. That portion is related to the member’s pro-rata percentage of earned premium paid that year.
Here’s how earned premium works: A member paying $10,000 per year in annual premiums whose policies were active throughout the given year would have $10,000 of “earned” premium. A member paying the same $10,000 who only joined PURE on July 1st would be credited with $5,000 of “earned” premium for that calendar year. This second member would receive an allocation equal to half of the first member’s allocation. We opted not to make allocations where the earned premium proportion would have resulted in an account of less than $10.
For members who may have joined late in 2012, we opted not to make allocations where the earned premium proportion would have resulted in an account of less than $10.
Yes. PURE allocated $1,000,000 for 2010 and $1,500,000 for 2012 into SSAs.
- When PURE realizes surplus growth in a given year, subject to the approval of the Florida Office of Insurance Regulation, PURE intends to allocate all or part of that surplus growth into SSAs. For 2013, a portion of PURE’s surplus growth was used to pay down obligations of a surplus note.
Can I make deposits into or withdrawals from a Subscriber Savings Account just like a regular bank account?
No; your SSA is not an account that you can withdraw from or deposit into, nor can you take out a loan against it. Your SSA is a notional account kept in PURE’s accounting records, not a personal bank account.
SSAs should create a long-term tax advantage for PURE because any profits that are allocated into these accounts are not taxable. This will allow PURE to grow its surplus in a highly efficient manner for the benefit of the membership. For members, SSA allocations are not considered income and should not be taxable, so long as the premiums originally paid for insurance were not treated as a tax deduction. We recommend that you consult your tax advisor or estate planner with any tax questions.
Each year, PURE will distribute annual SSA statements to active members. We encourage you to contact Member Services at (888) 813-PURE (7873) or your agent at any time to receive the most up-to-date status of your balance.
Beginning in the spring of 2014, members will be able to access their SSA balance, policy and billing details, and valuable claims information in a secure member portal accessible at pureinsurance.com.
- SSA balances do not earn interest, but grow with each additional allocation. In any year when PURE’s statutory surplus grows, PURE intends to make an allocation to SSAs. Allocations are subject to approval by the Florida Office of Insurance Regulation.
Members who terminate their membership with PURE are eligible to collect the balance of their SSA. Distributions will be made within six months of the date the member’s last policy was effective, assuming policies have been paid in full. In the event of a member’s death, the SSA will be transferred to the surviving spouse. If there is no surviving spouse, payment will be made to the deceased member’s estate.
Members should not expect to receive a distribution from their SSA in the near future. Our primary responsibility is to act as stewards of our members’ capital, to grow surplus responsibly for the membership, and to do this in such a way that keeps the cost of capital low. As such, we do not have plans to make distributions at this time. Utilizing SSAs helps PURE deliver stable, highly competitive premiums.
I understand that my SSA balance may be used by PURE to pay claims in the event of a major catastrophe. Is there any risk of further assessment?
- No, there is no risk of assessment from PURE. While it is true that a member’s SSA balance remains available to PURE to pay claims in the event of a catastrophe or other significant loss, PURE only issues non-assessable policies. A member’s liability to PURE is limited to the cost of his/her policies.