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Which of the following types of insurers is owned by stockholders?

A. Stock
B. Fraternal
C. Reciprocal
D. Mutual


Sagot :

Final answer:

Mutual insurance companies are owned by policyholders, not stockholders, and operate on a non-profit basis for the benefit of their members.


Explanation:

Mutual insurance companies are owned by their policyholders, unlike stock insurance companies that are owned by stockholders. In mutual companies, policyholders are considered the owners, and any profits are typically reinvested to benefit the owners in the form of reduced premiums or other benefits.

For example, fraternal benefit societies are a type of mutual insurance company where members share a common bond and act as both policyholders and owners. Another distinction is that mutual insurance companies operate on a non-profit basis, focusing on serving the best interests of their members rather than generating profits for shareholders.

Global examples of well-known mutual insurance firms include names like Northwestern Mutual, Country Financial, and State Farm Insurance Company in the USA, each operating under the mutual ownership structure.


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