What is the main feature of mutual companies compared to traditional insurance companies?

The primary distinguishing characteristic of mutual companies compared to traditional insurance companies is ownership by policyholders. In mutual insurance companies, the policyholders are also the owners of the company. This structure allows policyholders to have a vested interest in the company's performance and governance, as they typically have the right to vote on key matters such as the board of directors or changes in company policies.

This ownership model aligns the interests of the policyholders and the company, as profits can often be returned to the policyholders in the form of dividends or reduced future premiums, enhancing customer loyalty and satisfaction. Additionally, because the focus is on policyholder benefits rather than shareholder profits, mutual companies often engage in more consumer-friendly practices.

In contrast, traditional insurance companies are typically structured as for-profit entities owned by shareholders, meaning that their primary obligation is to generate profit for those shareholders, which can sometimes lead to decisions that prioritize corporate profits over policyholder benefits.