Andrew Verstein has written a really interesting article about reciprocal insurance exchanges (I know, who would think there was anything interesting to say about them, but he pulled it off). He's given a summary on the Oxford corporate law blog:
The viability of reciprocal insurance problematizes the entity-essentialism now dominant in the corporate law community and elsewhere. Without any entity, reciprocals were somehow able to secure or foreswear the supposedly essential functions that entities provide. It turns out that creative applications of contract law, agency law, and insurance law sometimes suffice to support broad coordination. How? An enterprise’s many patrons can appoint a common person (the ‘attorney-in-fact’) to act as their agent – authorizing the agent to quickly sign multifarious contracts in their names. Liability can be limited and prioritized within those contracts. These limitations are binding on third parties because insurance regulation puts potential creditors on constructive notice of these agreements. Entity-like functions follow, but sans entity.
My article ‘Enterprise Without Entities’ therefore questions the unique importance of entities, but it does not necessarily undermine all arguments of entity theorists. To the contrary, the fact that reciprocals seek and find many of the core functions provided by entities underscores the importance of those functions. Reciprocals have used agency law to overcome transaction costs, and they have alloyed contract law and insurance regulation to structure a pattern of creditors’ rights. Entity essentialism is therefore honored in the breach.
Go read the whole thing.