What is a reciprocal insurer?

A reciprocal insurer is defined as an unincorporated organization of subscribers who agree to insure one another. This type of insurance arrangement operates through an attorney-in-fact, who manages the operations of the insurer and handles the claims on behalf of the subscribers. The key characteristic of a reciprocal insurer is that it does not carry the traditional corporate structure; rather, it consists of a pool of subscribers who contribute to and share in the insurance risks associated with each other.

In this setup, the subscribers are both the policyholders and the beneficiaries of the insurance coverage provided, which differentiates it from other types of insurers. The attorney-in-fact is empowered to manage the affairs of the organization, making it efficient in handling claims and other administrative tasks on behalf of the subscribers.

Other options, while they describe different forms of insurance companies, do not align with the definition of a reciprocal insurer. A publicly-traded insurance company operates with stockholders and is focused on profit, distinctly different from the self-insuring model based on mutual aid. A company owned by policyholders implies a mutual insurance company, which is legally structured and distinct from the unincorporated nature of a reciprocal. Lastly, a non-profit mutual aid organization indicates a communal approach to risk, but