In which type of company do members insure each other and manage losses through an attorney-in-fact?

A reciprocal company operates on a model where members, known as subscribers, agree to insure one another. This unique structure allows members to pool their resources and share the risks associated with insurance coverage. An attorney-in-fact is appointed to manage the affairs of the reciprocal, which includes underwriting insurance policies and handling claims. This arrangement allows for greater flexibility and responsiveness to the members' needs, as the attorney-in-fact acts on behalf of all the members in managing the company.

In contrast, mutual companies are owned by policyholders who may receive dividends but do not typically involve an attorney-in-fact in the same manner as reciprocal companies. Stock companies operate on a for-profit model and issue shares of stock, with shareholders having a financial interest in profits and decision-making, rather than pooling risks among members. Syndicate companies, often related to specific underwriting groups or collective ventures in insurance, also differ fundamentally in their structure and purpose compared to reciprocal companies.

Understanding the dynamics of reciprocal companies is essential as they emphasize mutual aid among members while being managed by an appointed attorney-in-fact, reflecting a collaborative approach to risk management and insurance.