Which type of insurance company is owned by stockholders?

The correct answer is stock companies. These types of insurance companies are characterized by their ownership structure, which is based on stockholder investment. Stockholders purchase shares in the company, and in return, they are entitled to dividends and a say in the company’s operations through voting rights. The primary goal of these companies is to generate profits for their shareholders, which can influence decision-making processes regarding risk management, policy offerings, and overall business strategies.

In contrast, mutual companies are owned by policyholders rather than stockholders, meaning that profits are often reinvested into the company or distributed back to policyholders in the form of dividends. Fraternal benefit societies operate on a non-profit basis, providing insurance and benefits primarily to members of a specific organization or group, with decisions often reflecting the interests of the group rather than profit motives. Non-profit organizations generally do not operate to generate profit for shareholders or owners and serve public or charitable purposes. Each of these alternatives highlights different ownership models and operational aims compared to stock companies.