What is the primary function of a mutual insurance company?

The primary function of a mutual insurance company is to provide policies that allow policy owners to share in the company's profits. Unlike stock insurance companies, which are owned by shareholders and primarily focus on generating profits for those shareholders, mutual insurance companies are owned by the policyholders themselves. This means that when the company performs well and makes a profit, those profits can be distributed back to the policyholders in the form of dividends or reduced premiums.

This structure aligns the interests of the policyholders with the company's performance, as everyone involved has a vested interest in the company's success. The mutual insurance model often prioritizes providing value to the policyholders rather than maximizing profit, which is characteristic of stock companies.

In this context, shareholders and profit-driven motives do not apply to mutual companies as they center around the welfare of their policyholders. Thus, the mutual insurance model encourages a mutual benefit system where policyholders can directly benefit from the profitability of the company.