State RegulationsGA specificDifficulty 1/5
A Georgia insurer has no capital stock, is owned by its policyholders, and issues participating policies that share in dividends. Under O.C.G.A. § 33-14-2, this company is a:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under O.C.G.A. § 33-14-2, a mutual insurer is owned by its policyholders rather than by shareholders and may issue participating policies that return dividends to those owners. A stock insurer instead has capital stock held by shareholders, so the ownership structure, not the products sold, is the deciding feature between the two forms.
Why the other options are wrong
- B) A stock insurer is owned by shareholders who hold its capital stock.
- C) A fraternal benefit society operates on a lodge or membership basis for benevolent purposes.
- D) A reciprocal exchange is an unincorporated group of subscribers exchanging contracts through an attorney-in-fact.
Memory hook
No stock, policyholders own it — that's mutual.