What is a key characteristic of reciprocal insurers?

Reciprocal insurers are unique in that they operate on a cooperative basis where members provide coverage for one another. This arrangement is defined through individual agreements among the members, rather than through a standard corporate structure. Each member of the reciprocal group contributes to a pool of funds, which is then used to indemnify any member who incurs a loss. The emphasis is on mutual aid and support among members, reflecting the underlying principle of reciprocity in insurance.

This cooperative approach allows reciprocal insurers to customize policies to a greater degree than standard corporate insurers might, as the terms of coverage are specifically tailored to the needs and agreements of the members involved. This characteristic makes them distinct and highlights the community-based nature of their operations, where each member shares the risks and benefits associated with their collective insurance arrangement.