What Does Demutualization Mean?

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What does Demutualization mean? Read on to discover the definition & meaning of the term Demutualization - to help you better understand the language used in insurance policies.

Demutualization

Demutualization

Process in which a mutual insurer changes its legal form to that of a stock insurer. As a stock company, the insurer can more easily raise capital, offer better compensation to its management through stock options, achieve superior operating and financial flexibility, and enjoy positive tax benefits. A major drawback is the high expenses associated with the process due to various legal, accounting, regulatory, and tax hurdles.

We hope the you have a better understanding of the meaning of Demutualization.

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