Which statement describes mutual insurance companies?

Mutual insurance companies are distinct in that they are owned by the policyholders who purchase insurance from them. This ownership structure means that the individuals who buy insurance policies have a stake in the company and may benefit from any surplus or dividends that the company generates. These companies prioritize the interests of their policyholders over those of shareholders, leading to a focus on providing value to their members rather than strictly maximizing profits.

In contrast to mutual insurance companies, stock insurance companies are owned by shareholders, which typically includes individuals and institutional investors, with the primary goal often being profit maximization. Additionally, mutual companies may not operate under a single charter across multiple states; rather, they can be regulated by each state they operate in, which can affect their operational structure and legal requirements. The ownership and operational emphasis on member benefits clearly delineate mutual insurance companies from other types of insurance entities.