What are mutual insurance companies primarily characterized by?

Mutual insurance companies are primarily characterized by profit-sharing with policyholders. In a mutual insurance company, policyholders are not only customers but also owners of the company. This structure allows them to benefit directly from the company's profitability. When the company earns profits, these can be distributed back to the policyholders in the form of dividends, thus providing a financial returns benefit that is typically not available in shareholder-owned companies.

This model differentiates mutual insurance companies from stock insurance companies, which are owned by shareholders and primarily focus on generating profit for those shareholders. Consequently, while policyholders in mutual companies can receive dividends, those in stock companies do not. The mutual structure fosters a sense of community among policyholders, as they are collectively vested in the company’s success and financial health.

The focus on profit-sharing is a key descriptor of mutual insurance companies and outlines their unique approach in the insurance market.