what is a mutual insurance company 
a mutual insurance company is an insurance company that is owned by policyholders the sole purpose of a mutual insurance company is to provide insurance coverage for its members and policyholders and its members are given the right to select management mutual insurance companies make investments in portfolios like a regular mutual fund with any profits returned to members as dividends or a reduction in premiums federal law rather than state law determines whether an insurer can be classified as a mutual insurance company understanding a mutual insurance companythe goal of a mutual insurance company is to provide its members with insurance coverage at or near cost when a mutual insurance company has profits those profits are distributed to members via a dividend payment or a reduction in premiums mutual insurance companies are not traded on stock exchanges therefore their investment strategy avoids the pressure of having to reach short term profit targets and can operate as best suited to its members with the goal of long term benefits as a result they invest in safer low yield assets however because they are not publicly traded it can be more difficult for policyholders to determine how financially solvent a mutual insurance company is or how it calculates dividends it sends back to its members large companies can form a mutual insurance company as a form of self insurance either by combining divisions with separate budgets or by teaming up with other similar companies for example a group of physicians may decide that they can get better insurance coverage and lower premiums by pooling funds to cover their similar risk types 