AM Best released its market segment report on Jan. 26, documenting the growth of reciprocal insurance exchanges in U.S. homeowners markets exposed to catastrophes. The report found that 36 new reciprocal insurance exchanges have formed since 2017, with 18 established in the last 21 months as traditional carriers reduce their presence in high-risk areas and policyholder-owned models expand.
The increase in reciprocal formations is significant for homeowners seeking coverage options as legacy insurers exit or raise rates in regions affected by repeated weather events and claims surges. Reciprocal insurance exchanges represent a unique structure where subscribers co-own the risk pool and control rates and strategy, according to the January 2026 edition of Best’s Review. This model has emerged as a response to changes in market participation by traditional insurers.
Florida and Louisiana have seen the highest concentration of new reciprocals, with Florida accounting for 14 formations. These states have experienced multiple major weather events and high claims volumes, prompting legacy carriers to limit exposure or leave these markets entirely. Reciprocals have stepped in to provide coverage options for homeowners, supporting continued market participation through member ownership that removes external profit pressures, according to AM Best.
Direct premium volume for this new group of reciprocals grew by 83% from 2022 through 2024. In these exchanges, policyholders act as both insured and insurer, eliminating the shareholder profit layer and reducing overhead costs. This approach aligns incentives so premiums remain lower for members while maintaining financial strength. Kin Insurance operates under this model in 13 states, according to the company.
AM Best is a credit rating agency and information provider focused on the global insurance industry. It delivers financial strength ratings and market segment reports that track emerging structures and trends in property and casualty lines. Its analysis aims to help industry participants and regulators understand shifts in capacity and risk management.
