What type of insurance company is owned by its policyholders?

A mutual insurance company is one that is owned by its policyholders. This ownership structure means that the policyholders have a direct stake in the company and its operations. They are entitled to vote on certain company decisions, and they may receive dividends or reductions in premiums based on the company's performance, which are provided to them as a return on their investment in the mutual company.

In a mutual insurance company, the primary goal is to provide services and benefits to its members rather than to create profit for shareholders, which is the case in stock insurance companies. This fundamental difference highlights the unique relationship between a mutual company and its policyholders, emphasizing member benefits over shareholder profits.

While fraternal insurers also operate for the benefit of their members, they typically focus on specific groups or organizations and may not function as broadly as traditional mutual insurance companies. Alien insurers refer to insurance companies that are incorporated in a country other than the one in which they are doing business, and they do not have a direct connection to policyholder ownership.