Types of Insurance Organizations

The type of insurance a company sells, does not define the type of company it is. Various types of insurance companies can sell car insurance, for example. The same goes for life insurance, home insurance and all the others. What defines the type of insurance company is not its product, but the way in which the organization is set up.

A stock insurance company is not unlike any other stock company. The only difference is the fact that their business is insurance. Stock companies are owned by a group of stockholders, who each own various amounts of the company in the form of shares, according to the Financial Web website. The stockholders provide the capital for the insurer and they get to share the profits of the insurance company as a result. These types of insurance organizations are common in the life insurance field, as well as in property and liability insurance.

Mutual insurance organizations are actually owned by the policyholders themselves, according to AllBusiness.com. When someone signs up and pays a premium, they become a part owner in the business. Since the policyholders are the owners, this type of insurance organization is without stockholders. The policyholders elect a board of directors to make decisions about the company and they, in turn, appoint the executives that actually run the company on a day-to-day basis. When the mutual insurance company’s funds are not used up by claims or administrative or operational costs, the mutual insurance company returns this money to the policyholders in the form of dividends. This type of organization is also common in the life insurance and property insurance fields.

Service insurance organizations only exist in the form of health insurance, according to the Financial Web website. They are not technically insurers, but are instead prepaid medical expense dealers. The “insured” pay a premium and in return the service organization pays a maximum specified amount to cover hospital or other medical expenses. They rarely pay cash benefits to subscribers of their various plans.

The United States government is an insurance organization that provides life and health insurance to its employees and other citizens through a number of programs. These government programs also include Medicaid, the Social Security Medicare program, disability insurance and death benefits. The government also provides war risk insurance, national flood insurance, federal crop insurance also insures mortgages, according to the Financial Web website.