What’s A Mutual Insurance Company?

The insurance world is made up of two types of insurers – ownership wise.

Stock insurers are owned by stockholders.  They are corporations like Google, Starbucks, and Exxon are corporations.  Shares of the company are bought and sold on stock exchanges.  The company can raise capital by selling more shares.

A mutual insurance company is owned by the policyholders.  Profits are distributed to the “owners” by the payment of dividends.

The owners of a stock insurer are interested in the appreciation of the value of their stock.  They want to make money.

Mutuals usually have a history of like-minded business people who band together to manage some risk.  The original objective was to provide some form of “mutual” aid.

In the current insurance marketplace I do not see that stock insurer or mutual insurer makes much difference to the insurance buyer.  There are some great, old mutual insurers who serve their clients well.  There are also some dubs.

Same with stock companies.

Select your insurer on the basis of the quality of the coverage provided, the relationship your agent has with the insurer, the financial strength of the insurer, and the way the insurer approaches service.