State RegulationsTX specificDifficulty 1/5
Who owns a mutual insurance company?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
TIC 801.001(2) recognizes both mutual companies of any kind and stock companies as insurers under the certificate-of-authority chapter, and that structural difference is what drives ownership: a mutual company has no shareholders and is owned by its policyholders, who are entitled to any divisible surplus, while a stock company is owned by its shareholders, who bear the risk of loss. An agent describing a mutual company should not promise dividends, because they depend on the company's actual experience.
Why the other options are wrong
- A) Ownership by stockholders is the defining feature of a stock company, not a mutual company.
- B) The department regulates insurers but does not own them.
- D) Directors govern the company; they do not own it.
Memory hook
Mutual means the policyholders are the owners.