A reciprocal inter-insurance exchange, is a special unincorporated form of insurance company. A reciprocal inter-insurance exchange is not a "mutual insurance company", which are generally "incorporated".
McCarran-Ferguson Act, 15 U.S.C. 20 mandates that US Insurance companies may only be regulated by the individual states. Thus, there is a considerable variation in how these unincorporated insurance companies are referred to in individual state regulation. In some states it seems that this special unincorporated form of insurance company is subsumed into the regulations governing "captive insurers".
An unincorporated reciprocal inter-insurance exchange may be operated directly by its policyholders. In theory, a small group of individuals could band together to "cross insure" each other on an informal basis. A group of 20 stock-car racers, for example, could agree to cross-indemnify each other for damage to each of the 20 cars owned by the individual racing members: at the end of each race, the racers would have agreed to pass the hat to fund the repairs of the car(s) damaged in that race. Such an arrangement might be unlawful under some state insurance codes.
Read more about Reciprocal Inter-insurance Exchange: Reciprocal V LLC, LP and GP, See Also
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