Which type of insurance company is owned by its policyholders?

A mutual insurance company is owned by its policyholders, meaning that the individuals or entities who purchase insurance from the company have a stake in its operations and may also benefit from its profitability. In a mutual insurance company, policyholders have the unique right to vote on certain company matters, such as electing the board of directors. This structure aligns the interests of the company with those it insures, as the policyholders directly experience the benefits of any profits made, often in the form of dividends or reduced premiums.

In contrast, stock insurance companies are owned by shareholders who may or may not be policyholders. Their primary goal is to generate profit for their shareholders rather than serving policyholders' interests. Captive insurance companies are formed to insure the risks of their parent company, while risk retention groups are mutual associations formed to provide liability coverage for members with similar risk exposures. These entities do not have the same structure as mutual insurance companies, which is why the ownership by policyholders distinctly identifies mutual insurance companies.