What type of insurance company is owned by its policyholders?

A mutual company is an insurance organization that is owned by its policyholders. In this structure, the policyholders are not just customers; they are also members who have a stake in the company. This ownership means that they can share in the company's profits through dividends or reduced premiums, and they often have voting rights to influence the company's decisions.

Mutual companies are distinct from stock companies, which are owned by shareholders who may or may not be policyholders. Instead, the policyholders in a mutual company are inherently invested in the success of the organization since their interests are directly aligned with the financial health of the company.

This model promotes a different philosophy in insurance, focusing on serving the needs of the policyholders rather than maximizing profits for external shareholders. Mutual companies often prioritize customer service, long-term stability, and ethical practices since they are ultimately accountable to their policyholder-owners.

While options like fraternal benefit societies and reciprocal exchanges also have specific ownership structures and community-oriented features, they do not fit the definition of being solely owned by policyholders in the same way that mutual companies are.