Delaware Business Insurance Update From CNC Insurance Associates Inc. " What is The Difference Between Mutual and Stock Insurance Companies" 6-15-16

Occasionally, I get questioned about the difference between mutual insurance companies and stock insurance companies. So I will try to explain the difference so you as a small business owner can decide if it makes a difference in your insurance purchase.
Mutual companies are owned by their policy holders and stock companies are owned by stock holders. Both mutual and stock companies can be very large and write insurance on a national scale, or small and only write in a region.  On closer look, when you buy a policy from a mutual company you are technically one of the owners of that company as long as you purchase insurance from them. Your insurance policy is your "ticket" to ownership. If there is profit at the end of the year and a dividend is declared, the policy holders will reap the benefits and may get some of their premium back. With a stock company, where stock holders actually own stock certificates, the profits are returned to the holders of those stock certificates. Stock holders in an insurance company do not have to be policy holders or customers of insurance.
In today's insurance marketplace mutual companies and stock companies look and act very similar. The real test becomes their financial strength. Rating agencies like AM BEST, and Standard & Poor, rate insurance carriers based on their financial ability to pay claims. A small mutual company with an AM BEST rating of "A+" has the adequate financial backing to write your small business insurance, just like a large stock company with a similar rating.
Some folks think mutual companies are better suited to small business while other feel large stock companies are the future for small business. I say that both will be vital to the insurance needs of business owners like yourself,  now and for tomorrow. Until next time be careful out there and know your risks.


G. Kevin Nemith President CNC Insurance Associates Inc. & The Small Business Insurance Center
Serving DE, MD, PA, VA, & NJ
www.cncinsurance.com
www.bizinsurancetv.org



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