Reciprocal insurance exchanges have been increasingly popular in recent years, with third-party investor interest in the fee-for-service businesses that manage RIEs and waning property insurance capacity in catastrophe-prone regions supporting the resurgence.
Third-party investors “are not exposed to the insurers’ underwriting and investment performance but rather derive steady fee income from operating the attorney-in-
fact” of a reciprocal exchange, observes Rick Cheney, senior analyst at ALIRT and author of the late-October report, “Overview of Reciprocal Insurance Exchanges and Recent Market Trends.”
ALIRT’s new report explains that RIEs are unincorporated insurance entities owned by policyho
lders, or “subscribers.” Distinct from stock or mutual insurers, RIE policyholders share directly in profits and losses and appoint an “attorney-in-fact” (AIF) to manage operations.
Read more about RIE structures: Unique Structure of Reciprocal Insurance Exchanges Offers Release Valve on Pressurized Markets and A Look at Reciprocal Insurers From 30,000 Feet
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AIFs can be owned by managing general agents and underwriters, public or private organizations, individuals, the reciprocal itself or other insurance companies, Cheney’s report explains.
This model allows capital flexibility but can also create risk misalignment between policyholders and investors. Since an RIE is owned by the policyholders, “this ‘walls off'” the investors who own the attorney-in-fact, Cheney wrote in the report, also noting that third-party investors are increasingly also deriving fee income from the RIE’s distribution source—usually an MGA or MGU.
The ALIRT report, which flags property capacity shortages—in U.S. southern coastal states, in particular—as a factor driving a surge in RIE startups, provides an in-depth assessment of the structural evolution, financial performance and outlook of RIEs in the U.S. property/casualty insurance market.
According to the research report, 72 companies were operating as pure RIEs as of year-end 2024. Between 2017 and 2025, 36 new RIEs were formed by ALIRT’s count.
Focusing on the most recent cohort, 18 of the 36 newest exchanges were formed in just the last 21 months—from early 2024 through the first nine months of 2025—with most of these specializing in homeowners coverage in hurricane-prone regions such as Florida, Texas and Louisiana.
“Reciprocal insurance exchanges are once again stepping in to fill coverage gaps, this time in high-risk property markets,” Cheney said in a media statement announcing the publication of the report. “Their growth underscores both the innovation and the financial vulnerabilities that come with insuring catastrophe-exposed regions.”