What distinguishes a mutual insurance company?

A mutual insurance company is distinguished by its ownership structure, which is based on policyholders rather than shareholders. In a mutual company, the policyholders are essentially the owners of the company. This means they have a direct stake in the company's financial performance and may benefit from any surplus generated by the company in the form of dividends or reduced premiums. This structure aligns the interests of the company with those of its policyholders, promoting a focus on serving the needs of clients rather than maximizing shareholder profits.

The other options reflect characteristics of stock insurance companies, which are owned by shareholders who are primarily interested in financial returns. Shareholders in a stock company may receive dividends, but the primary goal of such companies is often to operate profitably for these shareholders. In contrast, mutual insurance companies prioritize the welfare of their members and do not operate with the same profit-driven objectives as stock companies.