What is a Reciprocal?
A Reciprocal is an unincorporated group of individuals, corporations or entities that exchange contracts of insurance through common Attorney-in-Fact. The purpose is to spread the risks of loss among all of the members. Contracts can only be entered into with the Subscribers to the Reciprocal. The Attorney-in-Fact handles the Reciprocal’s daily insurance operations including managing finances, making underwriting decisions and claims administration.
A “Reciprocal Insurance Exchange” is recognized in the Insurance Act of Alberta (the Act) as “a group of Subscribers exchanging Reciprocal contracts of indemnity or inter-insurance with each other through a principal attorney.” The Superintendent of Insurance for the Province regulates Reciprocals to ensure that certain reserve requirements are met as stated in the Act. The Government issues an operating license to a Reciprocal annually.
Why was EIR formed?
EIR was formed in 1988 after an extensive feasibility study was conducted by 50 Calgary companies that were discontented with paying high commercial rates for general liability insurance coverage.
What is the financial responsibility of an EIR Subscriber?
A premium is charged to each Subscriber for the purchase of various contracts of insurance. A Subscriber’s liability to EIR is limited to the premium paid by the Subscriber.
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