Which type of insurer is described as not-for-profit and provides benefits back to policyholders?

• A. Commercial insurer
• B. Mutual insurer
• C. Non-commercial insurer
• D. Public insurer

Answer: (C)

The type of insurer that is not-for-profit and provides benefits back to policyholders is known as a mutual insurer. A mutual insurer operates on a cooperative basis, meaning that it is owned by its policyholders. The primary objective of a mutual insurer is to provide insurance coverage to its members rather than to generate profit for shareholders. Any surplus or profits generated by a mutual insurer are typically returned to policyholders in the form of dividends or reduced future premiums.

In contrast, a commercial insurer operates to make a profit and typically focuses on shareholder value. The terms non-commercial and public insurer do not specifically represent a well-defined category in the insurance industry, which makes mutual the most accurate descriptor for a not-for-profit entity returning benefits to policyholders. Understanding the structure and purpose of these different types of insurers is essential in recognizing how they operate in the insurance market.