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American Family Insurance Co. is turning to its estimated 3.7 million policyholders to approve a plan allowing the company to change its structure, which could open doors for expansion and new product offerings.

American Family on Tuesday began mailing proxy informational packets to its policyholders across 19 states. Proxy voting closes on Dec. 2 but policyholders also can cast votes during a special policyholder meeting at the company’s Madison headquarters on Dec. 7.

The company recognizes not all policyholders will vote, but at least 75 percent of ballots cast must approve the plan before it can more forward. Results of the vote will be released after the Dec. 7 meeting, said Ken Muth, a company spokesman.

The plan has been approved by the company’s board of directors. Besides approval from policyholders, the Wisconsin Office of the Commissioner of Insurance also must approve it.

The OCI has scheduled a public hearing on American Family’s plan for Nov. 16.

If approved, current American Family policyholders won’t notice any change, Muth said. Premium pricing also would remain unaffected.

American Family wants to create a mutual holding company, which would be the parent company of American Family Mutual Insurance Co. The switch, the company says, would give it more flexibility to offer more insurance products.

Long term, the new structure would make it easier for American Family to expand into other states, said Peter Carstensen, a professor of law at UW-Madison.

The company now operates in 19 states: Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Nevada, North Dakota, Ohio, Oregon, South Dakota, Utah, Washington and Wisconsin.

“Their proposal really would give them more flexibility,” Carstensen said. “If they wanted to expand to a new region or state like New York, this would give them the flexibility to do that.”

Granting management the authority to add new product lines is the risk for policyholders, who also are the company’s owners.

“It raises the question, whether management is well situated to make those kinds of decisions,” Carstensen said. “They are playing with policyholders’ money.”

Rules already in place protect policyholders and their policies, he said.

“State insurance commissioners around the country keep watch over the insurance industry and their finances,” Carstensen said. “They are the first line of defense for (policyholders).”

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Larry Avila is a business reporter for the Wisconsin State Journal.