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
Single policy on the insured's property for: two or more different kinds of property in the same location; same kind of property in two or more locations; two or more different kinds of ...
Actual morbidity experience of an insured group as compared to the expected morbidity for that group. ...
Contractual agreement between two parties in which they agree to exchange a stream of interest payments on either a fixed rate for a floating rate or a floating rate for a fixed rate. The ...
In a mercantile open-stock burglary insurance policy, the dollar amount of coverage as required by the COINSURANCE clause. This dollar amount is the MAXIMUM PROBABLE LOSS (MPL) of ...
Intentional damage or destruction of another person or business's property. Insurance can be purchased by the owner of the property to protect against this exposure. ...
In many property insurance policies, a requirement that the insured carry insurance as a percentage of the total monetary value of the insured property. If this percentage is not carried, ...
Syndicate or association of insurance companies or reinsurance companies organized to underwrite a particular risk, usually with high limits of exposure. Each member shares in premiums, ...
Legislation that changed the tax treatment concerning child-care expenses so that an employee who has incurred child-care expenses greater than $4800 and who is participating in a ...
Contract that gives the insurance company the right, not the obligation, to buy a stipulated stock or bond at a specified price (strike price) at or before the date of expiration of the ...
Have a question or comment?
We're here to help.