What type of insurance company is typically not formed primarily for profit?

A mutual insurance company is typically not formed primarily for profit because it is owned by its policyholders. Instead of focusing on generating profits for shareholders, mutual companies aim to provide insurance coverage and financial security to their members. Any excess earnings generated by the company are typically reinvested back into the company or returned to the policyholders in the form of dividends or reduced premiums, aligning its operations more closely with the interests of its clients rather than external investors.

This structure promotes a focus on affordability and service for its members, unlike stock insurance companies, which aim to generate profits for shareholders and may prioritize higher financial returns. Captive insurance companies, typically set up to insure the risks of their parent company, also have profit motives. Health maintenance organizations (HMOs) provide managed care but do operate with a profit motive, albeit with a focus on health services. Overall, the mutual insurance model exemplifies the principle of serving the insured individuals first, making it a distinct category focused on policyholder benefits rather than shareholder profit.