Who constitutes the governing body of policyholders in a mutual insurance company?

In a mutual insurance company, the policyholders constitute the governing body. This is because, in mutual companies, the policyholders are essentially the owners of the company. They hold voting rights and have a say in key decisions, including the election of the board of directors and approval of significant company policies.

Policyholders are not merely customers but also have a vested interest in how the company operates since their premiums contribute to the company’s funds and they share in its profits, typically through dividends or reduced future premiums. This ownership structure contrasts with stock insurance companies, where shareholders, rather than policyholders, possess ownership and governing rights.

In this context, the other options do not reflect the correct structure of governance in a mutual insurance company. The board of directors is responsible for managing the company on behalf of policyholders but is elected by them and does not constitute the governing body itself. Shareholders are associated with stock companies and do not play a role in mutual firms. State regulators oversee compliance and operational protocols but do not govern policyholder interests directly within the mutual insurance structure.