Mutual insurance companies are owned by:

Mutual insurance companies are owned by:

• A. Stockholders.
• B. Policyholders.
• C. The general public.
• D. The government.

Answer: (B)

Mutual insurance companies are owned by the people who hold policies with them—the policyowners. Because there are no outside stockholders, ownership and control stay with the policyowners, who often have the right to elect the board of directors. When the company earns profits, those profits typically flow back to policyowners as dividends or premium credits, rather than to stockholders. The general public or the government aren’t owners in this structure, and stock insurers are owned by stockholders, not policyowners. This ownership setup is why policyowners are the owners of a mutual.

Mutual insurance companies are owned by the people who hold policies with them—the policyowners. Because there are no outside stockholders, ownership and control stay with the policyowners, who often have the right to elect the board of directors. When the company earns profits, those profits typically flow back to policyowners as dividends or premium credits, rather than to stockholders. The general public or the government aren’t owners in this structure, and stock insurers are owned by stockholders, not policyowners. This ownership setup is why policyowners are the owners of a mutual.