State RegulationsGA specificDifficulty 1/5
Which statement correctly describes the ownership structure of a mutual insurance company under Georgia insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under O.C.G.A. § 33-14-2, a mutual insurer is one owned by its policyholders — the insureds are the members of the company. This contrasts with a stock insurer, which is owned by shareholders who hold capital stock and may earn dividends as investors without necessarily being insured.
Why the other options are wrong
- A) Shareholder ownership describes a STOCK insurer under O.C.G.A. § 33-14-2; a mutual company issues no capital stock and is owned by its policyholders.
- B) Mutual insurers are private companies, not state-operated entities; ownership by policyholders is the defining feature under O.C.G.A. § 33-14-2.
- C) The board governs on behalf of the members, but ownership rests with the policyholders themselves under O.C.G.A. § 33-14-2; directors do not own the company.
Memory hook
Mutual means the insureds own it — no stock, just members.