Which characteristic is common to mutual insurance companies?

Mutual insurance companies are unique in that they are owned by their policyholders rather than shareholders. This ownership structure means that the policyholders have a direct stake in the company. As a result, these companies can distribute profits back to their policyholders in the form of dividends. This distribution is based on the financial performance of the company and each policyholder's contributions, giving them a direct financial incentive for their participation in the mutual insurance model.

In a mutual insurance company, the dividends can serve as a significant benefit, encouraging loyalty and promoting the idea that the company exists primarily to serve its members, rather than to maximize the profits of external shareholders. This characteristic reinforces the cooperative nature of mutual insurance and distinguishes it from stock insurance companies, where profit is typically directed to shareholders.