State RegulationsFL specificDifficulty 1/5
An insurance company is owned by investors who hold shares of the company and may receive a portion of its profits. In Florida insurance terminology, what type of insurer is this?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under the Florida Insurance Code (Chapter 624, Florida Statutes), a stock insurance company is an insurer with capital stock owned by shareholders, who share in the company's profits through dividends on their shares. The stock structure allows the insurer to raise capital by issuing shares, distinguishing it from a mutual company.
Why the other options are wrong
- A) Policyholder ownership is the defining feature of a mutual company, not a stock company.
- B) Government ownership would make it a public entity; stock insurers are privately owned corporations.
- C) The name refers to capital stock ownership, not to the products the company is permitted to sell.
Memory hook
Stock company = shareholders own the stock.