Why are some mutual insurers referred to as "assessment mutuals"?
A)They charge low premiums because the loss exposures of their insureds are thoroughly assessed before a policy is written.
B)They are noted for being very thorough in their assessment of investment opportunities.
C)They are assessed for state premium taxes only if they make a profit.
D)They can assess policyowners if premiums are insufficient to pay losses and expenses.

Question

Quizplus · Accepted Answer

"Assessment mutuals" can assess policyholders if premiums collected are not sufficient to cover losses and expenses. This means that the mutual insurer has the ability to require its policyholders to pay additional premiums to cover any shortfalls, hence the term "assessment."

Why Are Some Mutual Insurers Referred to as "Assessment Mutuals