What is a key characteristic of a Mutual Insurer?

A mutual insurer is primarily defined by its ownership structure, which is unique compared to other types of insurance companies. In a mutual insurer, the policyholders are essentially the owners of the company. This arrangement means that they have a say in how the company is run, including electing the board of directors and making important decisions regarding the company’s operation and direction. This structure fosters a focus on the needs and interests of the policyholders rather than external shareholders.

The governance by policyholders is not only a defining characteristic but also aligns the insurer’s priorities with those of its members, typically emphasizing customer service and long-term stability over short-term profits. This is in contrast to stock insurers, which are funded by shareholder investments and operate primarily for profit, prioritizing shareholder returns.

The other choices reflect different insurance models or structures that do not apply to mutual insurers, further solidifying the uniqueness of mutuals in the industry context.