Understanding a Reciprocal
Sypher is a Reciprocal
Insurance Exchange
Sypher Insurance Exchange is organized as a reciprocal insurer, which means policyholders insure each other and may share in underwriting profits through Subscriber Savings Accounts.
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The Model
How a Reciprocal Exchange Works
STEP 01
You Become a Member
When you purchase a Sypher policy, you become a member and part owner of the Exchange. You sign a Subscriber's Agreement that allows Sypher Risk Management, LLC (Sypher Insurance Exchange’s Attorney In Fact “AIF”) to manage the day-to-day affairs of the Exchange on your behalf.
STEP 02
Members Insure Each Other
As a reciprocal insurer, Exchange members insure one another. Your premiums are pooled with those of all other members to pay claims and run the Exchange. The Exchange is held to the same financial standards required of all Florida admitted carriers and governed by its members, not outside shareholders.
STEP 03
Sypher Risk Management, LLC (the AIF) Runs the Exchange
Sypher Risk Management, LLC serves as the Attorney-in-Fact for the Exchange. Your signatures allow Sypher Risk Management to administer the Exchange, including underwriting, claims, and operations, on behalf of all members.
STEP 04
Share in the Profits
Each member has a Subscriber Savings Account. When the Exchange generates underwriting profits, a portion may be allocated to member SSAs. Details are outlined in your Subscriber's Agreement.
Key Concepts
The Building Blocks of the Exchange
Understanding these terms will help you navigate your membership and your policy.
Subscriber's Agreement
When you join the Exchange, you sign a Subscriber's Agreement. This document allows Sypher Risk Management, LLC to administer the Exchange on your behalf and outlines how your membership works, including your Subscriber Savings Account.
Attorney-in-Fact
Sypher Risk Management, LLC is the Attorney-in-Fact for the Exchange. Your signatures allow Sypher Risk Management to run the day-to-day affairs of the Exchange, including issuing policies, handling claims, and managing operations, on behalf of all members.
Subscriber Savings Account
SSAs are accounts that allow Exchange members to potentially share in underwriting profits. When the Exchange achieves profitability, a portion of those profits may be allocated to your SSA. Details are spelled out in your Subscriber's Agreement.
Subscribers Advisory Committee
The SAC is a committee made up of Exchange members that represents policyholder interests. It provides oversight of the Attorney-in-Fact and helps ensure the Exchange is run for the benefit of its members.
Surplus Contribution
A small contribution collected separately from your premium that helps build the Exchange's financial reserves. This supports the Exchange's ability to pay claims and remain financially strong.
Reinsurance
The Exchange purchases reinsurance to protect against large-scale loss events, including hurricanes. This coverage helps ensure the Exchange can meet its obligations to members even after a major storm.
Regulatory Notice
State Assessments and Member Liability
Sypher Insurance Exchange is an admitted carrier in Florida. As with all admitted Florida insurers, the Exchange is subject to potential assessments from the Florida Insurance Guaranty Association (FIGA), the Florida Hurricane Catastrophe Fund (FHCF), and Citizens Property Insurance Corporation (CPIC). If levied, these assessments may be added to your policy.
As an Exchange subscriber, your liability to the Exchange is limited to the costs of your insurance, including your premium and surplus contribution, for your policy. You cannot be assessed for any premium shortfalls incurred by the Exchange.
If you have questions about your policy or obligations as a member, please contact our Customer Service team or review your Subscriber's Agreement.
As an Exchange subscriber, your liability to the Exchange is limited to the costs of your insurance, including your premium and surplus contribution, for your policy. You cannot be assessed for any premium shortfalls incurred by the Exchange.
If you have questions about your policy or obligations as a member, please contact our Customer Service team or review your Subscriber's Agreement.
Frequently Asked Questions
What People Want to Know
Clear answers to common questions about how Sypher's reciprocal structure works for you.
What is a reciprocal insurer, and how does it work?
Is Sypher Insurance Exchange an admitted carrier in Florida?
Does joining the Exchange change my coverage?
What is the Subscriber's Agreement and why do I sign it?
Who runs Sypher Insurance Exchange?
What is a Subscriber Savings Account (SSA)?
How long will I pay a Subscriber Surplus Contribution?
Am I personally liable for Exchange losses beyond my policy?
How do I purchase a Sypher policy?