Reciprocal: ALIGNED’s Term of the Day
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One word can have many different meanings. That’s why ALIGNED is committed to helping demystify the often complex terms commonly found in business insurance policies. By helping to bring clarity to insurance terms, we’re working to align our understanding of risks, coverages and policies with the needs of Canadian businesses.
Reciprocal is today’s term of the day.
The International Risk Management Institute (IRMI) provides the following definition for reciprocal: “an unincorporated group of individuals or organizations (subscribers) that agree to pool risks for the purpose of paying the cost of retained losses and purchasing reinsurance.
Also known as inter-insurance exchanges, they are managed by an attorney-in-fact. Subscribers have contingent liability (several and proportionate) for paying the losses of the reciprocal, but if adequate capital exists, non-assessable policies may be issued.” 1
IRMI further defines reciprocal insurance as: “insurance written through a reciprocal exchange.” 2
Related Matters: Wikipedia: Reciprocal inter-insurance exchange
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An ALIGNED advocate can provide expert advice on reciprocal insurance. Talk to one of our advocates today about how we can help you secure the best products, services and insurance solutions for your business.
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