What is a Reciprocal Exchange?
A Homeowners Reciprocal Exchange is a type of insurance setup where homeowners come together to pool their money to protect each other from unexpected damages or losses, like a fire, theft, or a storm.
Imagine a group of homeowners who decide to "team up" to insure their homes. Instead of buying insurance from a big company, they create their own group to share the risks and costs.
Each homeowner in the exchange agrees to cover a portion of the costs when someone in the group has a covered loss. Think of it as "you help me when I need it, and I’ll help you when you need it."
Even though it’s a group of homeowners, professionals (like the Attorney-in-Fact or a Managing General Agent) handle the day-to-day operations, such as collecting premiums, reviewing claims, and making sure the group has enough money to cover losses. In this case, the Professionals have decades of insurance and technology experience.
Because it’s a member-driven system, there’s no need to generate big profits for shareholders like traditional insurance companies. This can make it more affordable.
Any extra money left over after paying claims and expenses might even be returned to the members.
