Note 8. Related-party Transactions

6 Months Ended

Jun. 30, 2016

Notes

Note 8. Related-party Transactions

8.             Related-Party Transactions

AMIC and its subsidiaries incurred expense of $378,000 and $209,000 for the three months ended June 30, 2016 and 2015, respectively, and $769,000 and $381,000 for the six months ended June 30, 2016 and 2015, respectively, from service agreements with IHC and its subsidiaries which is recorded in Selling, General and Administrative Expenses in the Condensed Consolidated Statements of Income.  These payments reimburse IHC and its subsidiaries, at agreed upon rates including an overhead factor, for certain services provided to AMIC and its subsidiaries, including general management, corporate strategy, accounting, legal, compliance, underwriting, and claims.

Independence American assumes premiums from IHC subsidiaries, and records related insurance income, expenses, assets and liabilities.  Independence American pays administrative fees and commissions to subsidiaries of IHC in connection with fully insured health business written and assumed by Independence American.  The Company also contracts for several types of insurance coverage (e.g. directors and officers and professional liability coverage) jointly with IHC.  The cost of this coverage is split proportionally between the Company and IHC according to the type of risk and the Company’s portion is recorded in Selling, General and Administrative Expenses.