What defines a Reciprocal Insurer?

A Reciprocal Insurer is specifically defined as an unincorporated group that provides mutual insurance among its members. In this structure, each member of the group agrees to cover the losses of other members. The key characteristic of a reciprocal insurer is that it operates on the basis of mutual exchange, whereby each member effectively shares the risk with every other member, which is not the case for incorporated insurance companies that follow a more traditional structure.

This arrangement allows members to potentially enjoy lower insurance costs as they pool their resources to cover claims. It's important to understand that reciprocal insurers are distinct from incorporated groups, which are formal entities structured under corporate laws and typically have a different approach to managing insurance risks. The other options refer to different types of insurance arrangements or structures that do not align with the specific characteristics of a reciprocal insurer.