A Mutual Insurance Company is defined as what?

A Mutual Insurance Company is defined as what?

• A. An insurance company owned by stockholders.
• B. Insurance company owned by government.
• C. A nonprofit organization.
• D. Insurance company owned by policyholders (members).

Answer: (D)

A mutual insurance company is owned by the people it insures—the policyholders. Without stockholders, profits stay with the insureds, often as premium credits or dividends, and the policyholders elect the board that runs the company. This ownership structure distinguishes mutuals from stock insurers (owned by investors who hold shares), government-owned insurers, or nonprofit organizations (which don’t have owners who receive profits). So the defining idea is that control and benefits come from the policyholders themselves.

A mutual insurance company is owned by the people it insures—the policyholders. Without stockholders, profits stay with the insureds, often as premium credits or dividends, and the policyholders elect the board that runs the company. This ownership structure distinguishes mutuals from stock insurers (owned by investors who hold shares), government-owned insurers, or nonprofit organizations (which don’t have owners who receive profits). So the defining idea is that control and benefits come from the policyholders themselves.