State RegulationsGA specificDifficulty 2/5
A Georgia life insurer is organized so that its policyholders own the company and may receive policy dividends representing their share of the company's surplus. This company is best described as a:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under O.C.G.A. § 33-14-2, a mutual insurer is owned by its policyholders, so participation in the company's surplus through policy dividends is a natural feature of the structure. Ownership and customer status are combined in the same people, which is the defining contrast with a stock company owned by shareholders.
Why the other options are wrong
- A) A stock insurer is owned by shareholders who need not hold policies.
- B) A fraternal benefit society operates through a lodge system for its members and is a distinct organizational form.
- D) A reciprocal exchange is an unincorporated arrangement of individuals exchanging contracts through an attorney-in-fact.
Memory hook
Mutual means the customers own the house.