Which company structure typically aligns policyownership with company decisions?

A mutual company is a type of insurance company that is owned by its policyholders. In this structure, policyownership aligns closely with company decisions because the policyholders have a direct stake in the company's financial performance and governance. They are able to vote on important issues, including the election of the board of directors and major policy changes. This democratic approach fosters a sense of ownership among policyholders and ensures that their interests are prioritized in company operations.

In contrast, a stock company is owned by shareholders who may not necessarily be policyholders, leading to potential conflicts of interest between the owners and those insured. A captive company is an insurer established to cover the risks of its parent organization, and decisions are generally made solely from the perspective of that organization, limiting broader policyholder influence. A fraternal benefit society operates on a different model, focusing on social and mutual aid rather than aligning decision-making directly with policyholders in the same way a mutual company does.