Which of the Below Is TRUE of a Mutual Insurance

question 46

Multiple Choice

Which of the below is TRUE of a mutual insurance company?

• A) Mutual insurance companies have stock and external owners.
• B) While stock insurance companies have two constituencies, their stockholders and their policyholders, mutual insurance companies only have one, since their policyholders and their owners are the same.
• C) The owners, and not the policyholders, care primarily or even solely about the performance on their insurance policies, notably the company's ability to pay on the policy.
• D) Traditionally the smallest insurers have been mutual, but recently there have been many demutualizations, that is, conversions by mutual companies to stock companies.

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Definitions:

Punitive Damages

Monetary compensation awarded to an injured party that exceeds simple compensation and is intended to punish the wrongdoer.

Malice

The intention or desire to do harm or evil, often used in legal contexts concerning wrongful acts.

Reckless Indifference

denotes a disregard or lack of concern for the consequences of one's actions, particularly where such actions pose a risk to others.

Tangible Employment Action

A significant change in employment status or benefits, such as occurs when an employee is fired, refused a promotion, or reassigned to a lesser position.