Today, two centuries later, one-third of America's insurance policies are with mutual insurers. Unlike most insurance companies owned by shareholders of stock, mutual insurance companies are owned and controlled by their policyholders. Also, unlike stock companies, mutual insurance companies are not supposed to focus on profits. This surplus money belongs to policyholders. Surplus money accumulates until it is either paid to policyholders directly or in the form of lower insurance premiums.
Insurance companies owned by stockholders, on the other hand, try to maximize profits.
The stock companies' profits become dividends. The stock company pays dividends only to the stockholders. Policyholders get none of it. Copyright 1997, by James S. Nickelsporn, P.C. , All Rights Reserved.