Reciprocal inter-insurance exchange

Reciprocal inter-insurance exchange

A reciprocal inter-insurance exchange, is an insurance company referred to in United States state legislation as either a reciprocal insurance exchange, a reciprocal interinsurance exchange, or perhaps most properly a reciprocal inter-insurance exchange and is managed by an attorney in fact (AIF). Sometimes they are referred to simply as "reciprocals".

A reciprocal interinsurance exchange is unincorporated: each member of the exchange is "individually" and "severally" liable to indemnify all the other members. As to the unincorporated personal liability of each member of a reciprocal inter-insurance exchange, there is an important distinction when compared to a partnership: members of a reciprocal inter-insurance exchange are not "jointly liable" ( [] ), as are partners of a law firm.

Reciprocals are sometimes confused with an incorporated mutual insurance company. Reciprocals have been compared to limited liability company (LLC) and limited partnerships (LP). Both the reciprocal and the LLC are made up of members. Members of a reciprocal are also sometimes referred to as subscribers. Members enter into a direct partnership with most of the features associated with a mutual [agency (law)|agency] . As is also true in the case of the LLC, there is no incorporated limited liability entity owned by shareholders. Share ownership and limited liability evidenced by stock certificates are not issued to each owner. However, legislation has been enacted that limits liability of members to only the assets held by the reciprocal. Therefore, for liability purposes, membership in a reciprocal is similar to ownership of shares of a corporation.

Members of a reciprocal may be either a natural person, an LLC or LP, a partnership, or a corporation. In some states, municipalities form reciprocals to cross-indemnify towns, cities, villages, and counties.

The AIF is a stakeholder and a trustee who holds the deposits made by each member. All property entrusted to the AIF in a reciprocal remains, at all times, the property of the subscribers. In that regard, the AIF is a classic trustee, and the members are the beneficiaries of the trust.

ee also

*Limited liability company
*Limited partnership
*Farmers Insurance Group


*"The Regulation of Reciprocal Insurance Exchanges", by Dennis F. Reinmuth (ISBN 0-256-00676-8)
*"USAA. A Tradition of Service 1922 –1997", by Paul T. Ringenbach (ISBN 0-89865-993-0)
*"USAA: life story of a business cooperative", by Edward Clare Dunn (ISBN 0-07-018280-9)

External links

* [ Texas Insurance Code Subsection on Interinsurance Exchanges]

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Farmers Insurance Group — Type Subsidiary Industry Insurance Founded Los Angeles, California …   Wikipedia

  • Power of attorney — For the television program, see Power of Attorney (TV show). A power of attorney (POA) or letter of attorney is a written authorization to represent or act on another s behalf in private affairs, business, or some other legal matter. The person… …   Wikipedia

  • USAA — Infobox Company company name = United Services Automobile Association company type = Reciprocal company foundation = 1922 location = San Antonio, Texas, USA key people = John H. Moellering, Chairman Josue Robles, Jr, President and Chief Executive …   Wikipedia

  • NIP Group — Inc. is a business insurance and risk management intermediary. Headquartered in Woodbridge, New Jersey, United States, it has 100+ employees and provides insurance services across the United States. The Group provides a wide range of brokerage,… …   Wikipedia

  • Australia–Canada relations — Canadian Australian relations Australia …   Wikipedia

  • Germany — /jerr meuh nee/, n. a republic in central Europe: after World War II divided into four zones, British, French, U.S., and Soviet, and in 1949 into East Germany and West Germany; East and West Germany were reunited in 1990. 84,068,216; 137,852 sq.… …   Universalium

  • List of Statutory Instruments of the United Kingdom, 1994 — This is a complete list of all 1851 Statutory Instruments published in the United Kingdom in the year 1994. NOTOC 1 100* Public Telecommunication System Designation (Vodafone Limited) Order 1994 S.I. 1994/1 * Oxfordshire County Council (Shifford… …   Wikipedia

  • India — /in dee euh/, n. 1. Hindi, Bharat. a republic in S Asia: a union comprising 25 states and 7 union territories; formerly a British colony; gained independence Aug. 15, 1947; became a republic within the Commonwealth of Nations Jan. 26, 1950.… …   Universalium

  • JERUSALEM — The entry is arranged according to the following outline: history name protohistory the bronze age david and first temple period second temple period the roman period byzantine jerusalem arab period crusader period mamluk period …   Encyclopedia of Judaism

  • Mercosur — Mercado Común del Sur Mercado Comum do Sul Ñemby Ñemuha Southern Common Market …   Wikipedia