Types of Insurance Organizations
The two most common types of insurance companies are:-
Stock company: - it sells stock to stockholders to raise the money necessary to operate the business. Stockholders are not necessarily insured by the company, and insured ones' do not necessarily own stock in the company. The company is in the business of selling insurance. Profits attributed to the operation of the company are returned as dividends to the stockholders, not the insured ones.
Nothing prohibits stockholders from buying insurance from their own company or insured ones from buying shares of stock issued by their insurer. However, ownership of the company is completely independent from any contractual relationships the company has with policyholders as a provider of insurance.
Mutual insurance Company: - functions differently than a stock company. In a mutual company, there are no stockholders and the policyholders collectively are the owners of the company. As owners, they can vote to elect the management of the company.
Profits are returned to the insured ones in the form of dividends or reductions in future premiums.
Most mutual companies are advance premium companies that charge non-assessable premiums--that is, policy-owners are never required to pay anything in addition to their premiums even if losses for the group exceed the amounts paid in during the policy period. The cost of coverage from an assessment company will vary each policy period and can be small or large depending on the experience of the group.
Both stock and mutual companies are incorporated. Their marketing practices and internal operations are nearly identical. Their structures differ only in the areas of corporate ownership and management control.
Scottish Life Insurance is a stock company.
Lines of Insurance
A way of classifying insurance companies is by the type of insurance policies they write. Insurance coverages are...