What is a reciprocal insurer?

A reciprocal insurer is correctly identified as an unincorporated association of individuals who cooperate to provide insurance coverage for one another. In this arrangement, policyholders, often referred to as "subscribers," share the risks and benefits of the insurance process. Each member contributes to a common fund, which is used to pay for claims made by any of the participants. This mutual cooperative concept is fundamental to the nature of reciprocal insurance.

Unlike corporations that have shareholders and are run for profit, reciprocal insurers operate on a non-profit basis, wherein the primary goal is the mutual benefit of all participating members. Additionally, reciprocal insurance differs from government-run entities, which are typically funded by public resources to provide services rather than mutual aid among individuals. Furthermore, while partnerships of multiple insurance firms exist, they do not accurately define the structure and operational method of reciprocal insurers, which specifically emphasizes the association of individuals for mutual coverage without a formal corporate structure.