A reciprocal insurer or reciprocal insurance exchange is a relatively uncommon form of insurance company that can combine features of both a mutual insurer and stock insurer. In this type of insurer subscribing members exchange contracts of indemnity with each other through an attorney-in-fact with each other. The attorney-in-fact issues policies and administer the operations of the exchange. The initial capital of the reciprocal exchange consists of the premium deposits of the subscribers and the subscribers’ agreement for to pay an additional premium assessment to maintain capital if needed. Some major reciprocal insurers are USAA, Farmers Group and the Erie Insurance Group.
