Forums » Life Insurance

Insurance part 2 : Types of companies

    • 144 posts
    February 26, 2014 8:58 PM IST


    Stock Insurance Companies                                     

    1)      Most of the life and health insurance companies are established and organized as Stock companies.


    2)      A Stock insurance company which is  an insurance company  owned by the people and organizations that purchase the shares of the company’s stock.


    3)      The investors who purchase stock – ownership shares – in the corporation are known as Stock Holders.


    4)     A portion of the company’s operating profits may be distributed to these stockholders in the form of Stockholder dividends.


     Mutual Insurance Companies



    1)      Life and health insurance companies can also be organized as mutual companies.


    2)      A  Mutual insurance company is an insurance company that is owned by its policy owners, and a portion of the company’s operating profits are from time to time distributed to these policy owners in the form of policy dividends.


    3)      The process of converting a stock company to a mutual company is called mutualization.


    4)     The process of converting a mutual company to a stock company is called demutualization. It helps to increase the operating funds of the company.



    Organizational Operations:


    • The home office or head office is the headquarters of any insurance company and is often located in the state or province in which the company was incorporated to do business. The home office is usually the location of all the company’s executive offices.


    • A regional office is generally charged with many of the same functions and operations as the home office but is geographically closer to the market it serves and generally reports to the home office.


    • A field office is an insurance company’s local sales office. The home office and regional office typically provide support services to the field office. Some field offices are classified as branch offices while others as agency offices.



    Insurance Companies as Financial Intermediaries


    • Insurance companies are financial intermediaries that function in the economy as part of the financial services industry.


    • A financial intermediary is an organization that helps to channel funds through an economy by accepting the surplus money of savers and supplying that money to borrowers who pay to use the money.


    • The financial services industry is made up of various kinds of financial intermediaries that help consumers and business organizations save, borrow, invest, and otherwise manage money.

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