Which type of insurance company issues policies primarily for the benefit of its policyholders?

A mutual company is structured primarily to provide insurance for its policyholders, who are also considered the owners of the company. In this type of organization, any profits generated typically go back to the policyholders in the form of dividends or reduced premiums rather than to shareholders, as seen in stock companies. This mutual ownership structure aligns the interests of the policyholders with the operations of the company, ensuring that decisions made by the management reflect the best interests of those they serve.

On the other hand, a stock company serves shareholders who invest capital in the company and expect a return on their investment, which may not prioritize the interests of policyholders in the same way. Recovery and surplus lines companies operate differently, with focus areas around specialty or excess insurance, rather than being primarily for the benefit of policyholders.