What’s a reciprocal insurance company?

A reciprocal insurance exchange is one way to structure an insurance company. In a reciprocal setup like Kin's, the carrier is owned by policyholders, but managed by a separate entity.

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A reciprocal insurance exchange is simply a type of insurance company. Now take a breath because we are going to step quickly into the weeds.

A reciprocal is one way to structure an insurance carrier (stock insurance and mutual insurance companies are the other types). In the reciprocal setup, the carrier is owned by policyholders but managed by a separate entity. If you want the jargon, that entity is called an “attorney-in-fact” or AIF. The attorney-in-fact runs the day-to-day operations of the carrier, such as issuing policies and handling claims.

The briefest history of reciprocal insurance companies ever

The whole idea behind a reciprocal interinsurance exchange is to allow policyholders to spread risk around. Reciprocals began in 1881 when dry-good merchants in New York finally got fed up with overpaying to insure their buildings. They decided to pool their money together and self-insure each other instead.

That spirit of booting the status quo is alive and well in many reciprocal insurance companies today – including Kin.

Wait, Kin is a reciprocal insurance company?

Yes! Kin is a reciprocal insurance company. That means when you buy a policy from our carrier, you own part of the reciprocal company. It also means as a subscriber (policyholder), you get a say in what we do – our Subscribers’ Advisory Committee ensures it.

Now let’s take a look at what really matters: how a reciprocal carrier benefits you, the customer.

Reciprocal insurance carriers are customer-centric by design

Customers are the very heartbeat of a reciprocal insurance company – without subscribers, it literally would not exist. In addition to owning part of the company (through the purchase of a policy) and getting a say in what the reciprocal does, customers may also:

  • Receive dividends if claims are lower than expected.
  • Enjoy lower premiums as member surplus contributions accrue and offset carrier operating costs.

Specifically with Kin, your premium dollars are kept separate from our company funds, so you know that your money is going toward paying losses, not executive bonuses or stockholder dividends. We aren’t incentivized to raise prices to increase profits, which helps keep homeowners insurance costs low for our customers.


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