In terms of ownership, how does a stock insurer differ from a mutual insurer?

A stock insurer differs from a mutual insurer primarily in terms of ownership structure. A stock insurer is owned by shareholders who invest capital into the company in exchange for ownership stakes. These shareholders can be individuals or entities who may not hold any insurance policies with the company. The primary goal of a stock insurer is to generate profits for its shareholders, which can lead to fluctuations in focus on policyholder benefits depending on financial performance and shareholder expectations.

In contrast, a mutual insurer is owned by its policyholders. This means that the insured individuals have a direct ownership interest in the company, and any profits made are typically returned to policyholders in the form of dividends or reduced premiums.

The other options suggest characteristics that apply more accurately to mutual insurers or do not reflect the operational model of stock insurers. Nonprofit status, for instance, is more aligned with mutual insurers, while capital stock is fundamental to the operation of a stock insurer. Thus, the defining characteristic of ownership being in the hands of shareholders distinctly identifies a stock insurer.