Proprietary Insurer
The term proprietary insurer may seem like a tongue-twister and a mind-twister in itself. It kind of is. But what is the definition of a proprietary insurer? A proprietary insurer is a for-profit insurance company specializing in insuring high-risk items.
Mutual vs. proprietary companies
People often mistake proprietary and mutual insurance companies. On the one hand, a mutual or joint organization encompasses owners and clients who are virtually the same individuals. In other words, customers can also be the company’s proprietors. We call life assurance companies, insurance societies, or even credit unions a mutual company. Their members enjoy the same amount of voting power, regardless of their investment in the organization.
On the other hand, shareholders own proprietary organizations, such as limited companies and banks. Shareholdings determine the voting rights of a proprietary company.
Premiums and profits
The so-called Deed of Settlement brought mutual companies into existence. They could also register under the Companies Acts. These types of organizations belong to policyholders, who share the revenue and income. At the same time, shareholders at proprietary companies collect their profits in dividends and premiums. In contrast, the policyholder owner at the mutual company may obtain a more significant life assurance and smaller bonuses.
Mutual and proprietary companies can issue dividends. Still, the government considers dividends a profit on the premium at mutual companies. They will not tax policyholders. However, they believe dividends as income subject to tax proprietary insurance companies.
One cannot tell about a company based on their names, whether mutual or proprietary. Organizations originally established as mutual are now registered as proprietary companies in various instances.
Popular Insurance Terms
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Modifications of the single premium deffered annuity, which usually guarantees at a minimum a return of a stipulated amount (usually at least 90% of the single premium accumulated at the ...
Endorsement to an automobile insurance policy that protects an insured in either or both of two circumstances when driving a non owned car: business endorsement if the insured's negligent ...
Same as term Coverage: protection under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and ...
Funds set aside by an insurance company to pay incurred losses which have not yet been paid. ...
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Portion of a property or liability loss retained by a policyholder. Most policyholders do not purchase insurance to cover their entire exposure. Rather, they elect to take a deductible, or ...
Same as term Agreed Amount Clause: in property insurance, a stipulated agreement between the insurance company and the insured that the amount of insurance coverage under the policy is ...
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