Anybody have experience with reciprocal insurance exchanges? I got a quote recently for my homeowners insurance through a reciprocal exchange that was several thousand less than the other quotes I received. Definitely enticing, but it also seems like it carries some risk with it. I'm having a hard time figuring out how big that risk really is though.

Sounds like health share programs. Basically spread around the risk across a broad group of people. In for the thread.

Reciprocals allegedly (on paper) do not have a profit motive - that has not always been my experience when I have come across their quotes.

Typically they are managed by a third party attorney-in-fact so your mileage and experience can vary

I'd be asking a lot of questions about the financials before going with one. The last thing you want is to get in trouble with a big claim and find out they're insolvent.

Figure out which insurance commissioner they're registered with. As long as it's not a weird foreign jurisdiction, you are probably fine. Each state has requirements around reserves. The newer, lower cost reciprocals are usually banking on low overhead and/or somehow controlling the risk pool (like USAA used to do) to keep expected claims low and therefore premiums low. They may also be trying to do something exotic with reinsurance that gets them the ability to invest more aggressively, but that's usually regulated. And with higher rates, I don't know how much more expected return they can eke out.

The property reinsurance market dried up this year. Most of the major carriers renewed treaties in January and reinsurer capacity was drastically reduced and the rates skyrocketed.

I'd bet they're pulling another lever if the reciprocal exchange is still offering rates materially lower than the rest of the market.

That makes sense and I agree. I was seeing it a lot with life previously but that was before rates started their climb. Curiously, I saw a number of PE firms try to get into it because the reinsurance was priced based on the lower returns of the insurance co's safer investments.

I've been with Vault for 4 years. They were AWESOME during our Storm Uri claim, and much cheaper than Chubb, NW Private Client, AIG and a couple of other offerings. They've been very responsive. Got into them via Morgan Moudy at Rollo Insurance.