How does a Reciprocal Insurer operate?

A Reciprocal Insurer operates through an attorney-in-fact who manages and conducts the business on behalf of the subscribers. This arrangement is based on reciprocity, where each member of the group agrees to insure one another against losses. The attorney-in-fact is responsible for the operational, financial, and contractual obligations of the reciprocal, including issues like underwriting and claims management. This structure allows members to pool their resources for mutual benefit and risk-sharing. The unique characteristic of a reciprocal insurer lies in its reliance on this management by an attorney-in-fact rather than the typical corporate structure seen in other insurance entities, emphasizing the cooperative nature of its operation.