Arizona Life and Health Practice Exam

Who owns a stock insurance company?

1. The policyholders

2. The government

3. Shareholders

4. The state regulators

The correct answer is: Shareholders

A stock insurance company is owned by shareholders who have purchased stock in the company. These shareholders have an investment interest in the company's operations and financial performance, and they are entitled to a portion of the company's profits in the form of dividends. The management of the company is responsible for making decisions that will benefit the shareholders, which can include determining how to allocate resources and distribute profits. In contrast, mutual insurance companies are owned by their policyholders, which distinguishes them from stock companies. State regulators do play a significant role in overseeing insurance companies to ensure they operate fairly and maintain sufficient reserves, but they do not own any insurance companies. The government has regulatory authority over these companies, but again, it does not constitute ownership. Understanding the ownership structure of stock insurance companies is vital since it influences how these companies operate and serve their policyholders.