General Insurance PrinciplesQuestion 138 of 158
Which statement about stock and mutual insurers is CORRECT?
a.A stock insurer is owned by its policyholders and pays them guaranteed dividends
b.A mutual insurer is owned by its policyholders, who may receive non-guaranteed dividends
c.Only mutual insurers can be admitted in California
d.A stock insurer is required by law to be a non-admitted carrier
Explanation
A mutual insurer is owned by its policyholders; any return of surplus to them is a policyholder dividend, which is NEVER guaranteed. A stock insurer is owned by shareholders and pays shareholder dividends. Both stock and mutual carriers may be admitted in California.
Law Reference: Cal. Ins. Code §1100; §4010Practice all 158 questions free — no signup required.
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