State RegulationsGA specificDifficulty 1/5
Which statement correctly describes a mutual insurer as defined in Georgia insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under O.C.G.A. § 33-14-2, a mutual insurer is one without capital stock, owned by its policyholders, with profits returned as dividends or reductions in future premiums; a stock insurer, by contrast, is owned by shareholders who hold its capital stock. Ownership structure drives governance, because mutual policyholders help elect the board while stock company shareholders vote their shares.
Why the other options are wrong
- A) Shareholder ownership and capital stock describe a stock insurer under O.C.G.A. § 33-14-2, not a mutual.
- C) No Georgia insurer is state-owned; the Insurance Commissioner regulates insurers but does not operate them. O.C.G.A. § 33-14-2 defines mutuals by policyholder ownership.
- D) Directors manage a mutual on the policyholders' behalf, but ownership rests with the policyholders, not the board. O.C.G.A. § 33-14-2.
Memory hook
Mutual means the policyholders own the store — no capital stock on the shelf.