What characterizes a mutual insurance company?

A mutual insurance company is characterized by its ownership structure, which fundamentally distinguishes it from other types of insurance companies. In a mutual insurance company, the business is owned by its policyholders. This means that those who purchase insurance policies also have a stake in the company, often having the right to vote on important company matters and to share in the company's surplus through dividends or policyholder credits.

This ownership structure aligns the interests of the policyholders and the company, as the goal is to provide insurance protection and benefits rather than maximizing profits for external stockholders. Consequently, the mutual insurance model promotes a closer relationship between the company and its policyholders.

The other options do not accurately describe the nature of mutual insurance companies. For instance, stockholders typically own proprietary companies, while state regulation is a common aspect of all insurance companies, ensuring compliance with laws designed to protect consumers. Lastly, mutual insurance companies can offer a range of insurance products, including property, casualty, and life insurance, rather than focusing solely on life insurance.