What is a reciprocal insurer?

A reciprocal insurer is characterized by its unique structure of risk distribution among its members. In a reciprocal insurance arrangement, individuals or entities come together to provide mutual protection to one another. Each member, often referred to as a "subscriber," agrees to share the risks associated with losses incurred by any member of the group. This collaborative approach allows members to pool their resources and cover each other's losses, making it a crucial concept in the realm of mutual insurance.

This structure differentiates reciprocal insurers from other types of insurance companies, which may be focused on specific markets, such as government-backed insurance or insurers that specialize in commercial or personal auto policies. Thus, the defining feature of a reciprocal insurer lies in its risk-sharing model among members who collectively maintain the insurance coverage and support each other in times of need.