What is a common defining characteristic of mutual insurers?

Mutual insurers are defined by the way they are structured and operate, primarily focusing on the interests of their policyholders. A key characteristic of mutual insurers is that they may return dividends to their policyholders based on the surplus of the company. This surplus is generated from the difference between premiums collected and claims payouts, along with investment income. Since mutual insurers are owned by the policyholders, any excess earnings can be distributed back to them in the form of dividends, providing a financial benefit that reflects the performance of the insurer.

In contrast, for-profit insurers aim to generate profits for shareholders, rather than returning excess funds to policyholders, which makes the dividend return aspect unique to mutual insurers. Additionally, mutual insurers do not limit their insurance offerings to specific groups (like state employees), nor are they confined to providing only one type of policy, allowing for a broader and more diverse range of insurance products tailored to the needs of their policyholders.