Why might policyholders of stock insurance companies not be entitled to dividends?

Policyholders of stock insurance companies are not entitled to dividends primarily because they are not shareholders of the company. In stock insurance companies, the ownership is held by shareholders who invest in the company. Dividends are typically distributed to these shareholders as a return on their investment in the company. While policyholders do benefit from the insurance coverage provided, their role does not include ownership of the company; thus, they don’t receive dividends in the same manner that shareholders do.

This distinction is crucial because it emphasizes the difference in financial interests between policyholders and shareholders. Shareholders are typically entitled to profit distributions, while policyholders generally receive benefits outlined in the terms of their insurance contracts, such as claims or other policy advantages, rather than direct payments like dividends.