Which statement correctly distinguishes the insurer types recognized in Massachusetts insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Massachusetts law distinguishes stock insurers, whose capital stock is owned by shareholders, from mutual insurers, owned by their policyholders, in the provisions collected for insurer types at M.G.L. c. 175, §§ 19T, 48, and 48A, with the domicile definitions at M.G.L. c. 175, § 1. Ownership is the distinguishing feature, and it matters for surplus distribution and governance. M.G.L. c. 175, § 45 separately bars unauthorized insurers from transacting business without a certificate of authority, and the Massachusetts Division of Insurance supervises every form through its respective statutory framework.
Why the other options are wrong
- A) The ownership labels are reversed; under M.G.L. c. 175, §§ 19T, 48, and 48A, shareholders own stock insurers and policyholders own mutuals.
- C) The domicile definitions are reversed; M.G.L. c. 175, § 1 makes a foreign insurer one organized in another state and an alien insurer one organized in another country.
- D) An unauthorized insurer is one without a certificate of authority, and M.G.L. c. 175, § 45 forbids it from transacting insurance in Massachusetts.
Memory hook
Stock = shareholders, mutual = members; foreign = state, alien = country; unauthorized = no certificate.