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A mutual insurer is defined as an insurance company that is owned by its policyholders. In this model, the policyholders have a direct stake in the insurer's operations and financial performance, often impacting decision-making processes such as dividend distributions or profit-sharing. The primary purpose of a mutual insurance company is to provide insurance coverage efficiently for its members rather than to generate profits for shareholders, which is typically the case with stock insurers.

Policyholders of a mutual insurer benefit from potential dividends and typically participate in electing the board of directors, further reflecting their ownership stake. This structure contrasts sharply with stock insurers, which are focused on maximizing shareholder value. Although reciprocal and fraternal insurers also have unique organizational structures revolving around group members, they do not embody the same policyholder ownership characteristic inherent to mutual insurers.