General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A mutual insurance company is owned by:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
A mutual insurer is owned by its policyholders, not shareholders. Profits are returned to policyholders as dividends or retained as surplus for the policyholders' benefit. A stock insurer, by contrast, is owned by shareholders who provide capital and expect a return on their investment. This ownership distinction affects how surplus is distributed, who elects the board, and how the company is governed. Mutual companies are organized to serve their members, which is why participating policyholders may receive dividends from surplus.
Why the other options are wrong
- A) Shareholder ownership describes a stock insurance company, not a mutual.
- B) No state owns private insurers; mutuals are owned by their policyholders.
- C) Agents are independent contractors or employees, not owners of the mutual.
Memory hook
Mutual = owned by the people it insures. Stock = owned by shareholders.