Which characteristic is specific to a Reciprocal?

The characteristic that defines a Reciprocal is that insureds are also the insurers. A Reciprocal is a type of insurance arrangement where a group of individuals or entities (the subscribers) agree to share risks and pool their resources for mutual benefit. In this structure, each member contributes to a common fund and, in turn, shares the losses among themselves, making each person an insurer in their own right.

This cooperative aspect sets Reciprocals apart from traditional insurance companies, which are typically owned by stockholders who are not involved in the insurance operations. The profit motive in a Reciprocal is more focused on mutual benefit rather than generating high profits for stockholders, and Reciprocals may also choose to focus on specific types of insurance products rather than multiple business lines. Thus, the defining feature is the dual role that insured individuals play as members and as contributors to the risk pool, emphasizing collaboration and shared responsibility.