The US reciprocal insurance exchange market has experienced significant growth in recent years, driven by property insurance affordability and availability challenges in catastrophe-exposed regions, according to a new report from ALIRT Insurance Research, a US-based insurance financial research and analysis firm.
ALIRT estimates that 84 active “pure” reciprocal insurance exchanges operated in the US at the end of 2025, collectively writing approximately USD $55 billion in direct premiums. This represented nearly 5% of the country’s property and casualty insurance market.
Although the sector remains dominated by a small number of established insurers, ALIRT identified an increase in newly formed exchanges targeting underserved property insurance markets.
According to the report, 44 reciprocal exchanges were established between 2017 and 2026, including 15 during 2025 and the first nine months of 2026.
Many of these newer exchanges focus on homeowners’ insurance in Gulf Coast states, particularly Florida, Texas and Louisiana, where catastrophe losses, reinsurance costs and reduced insurance availability have created opportunities for alternative insurance arrangements.
Reciprocal insurance exchanges allow policyholders, known as subscribers, to share insurance risks. The model can offer advantages, including potentially lower costs and greater insurance availability in underserved markets. However, it also carries risks, including possible additional financial obligations for subscribers and exposure to substantial catastrophe-related losses.
ALIRT’s research highlights some of these financial challenges, finding considerable variation in performance across the sector. Although most exchanges maintain adequate capitalisation, several have recently experienced financial difficulties, while many newer operators rely heavily on surplus note financing and policyholder surplus contributions to support growth.
Despite these challenges, ALIRT expects reciprocal exchanges to play a growing role in addressing insurance capacity shortages in regions exposed to natural catastrophes.
The research identified improving regulatory conditions in Florida and Louisiana, alongside moderating reinsurance market pressures, as factors that could support continued expansion.
ALIRT also noted that the reciprocal model is gaining traction beyond property insurance, with new exchanges established to provide personal motor and commercial liability cover.
However, the company highlighted differences between established reciprocal insurers and newer entrants. While many long-standing exchanges have demonstrated conservative management and strong capitalisation, the financial performance of newer operators remains less established.
According to ALIRT, the long-term success of these newer exchanges will depend on their ability to manage catastrophe exposure, maintain underwriting discipline and adapt to changing reinsurance market conditions.
