What type of insurer can members participate in dividends?

Dividends are typically associated with mutual companies, which are owned by the policyholders. In a mutual insurance company, the premiums paid by policyholders are used to cover claims and expenses, and any surplus can be returned to the members in the form of dividends. This distribution reflects the company’s profitability and is a way to reward policyholders for their participation and loyalty.

In contrast, stock companies are owned by shareholders who may receive dividends based on their investment in the company rather than the policyholder experience. Fraternal societies are non-profit organizations that provide insurance benefits only to their members but do not typically function under the same principles of profitability as mutual companies. Local insurers could refer to a variety of entities and do not specifically denote a structure that is focused on dividends for members.

The correct answer highlights the unique structure of mutual companies where policyholders not only participate in ownership but also benefit financially through dividends.