An insurance company whose governing body is elected by its policyholders is a:

C. mutual company is correct. The defining ownership characteristic of a mutual insurer is that it is owned by its members or policyholders rather than outside shareholders. Hawaiʻi law states expressly that a domestic mutual insurer is owned by and operated in the interest of its members . Each member is generally entitled to one vote in elections of directors and on matters presented at corporate meetings, subject to permissible requirements in the insurer's bylaws.

That statutory structure directly matches the question: when policyholders elect the governing body, the insurer is operating as a mutual insurance company .

A stock insurer is different because ownership is represented by shares held by stockholders, and the stockholders elect the board. A reciprocal insurer is an unincorporated arrangement in which subscribers exchange insurance contracts through an attorney-in-fact. A fraternal benefit society is a member-based organization operating under a lodge or fraternal framework and is governed by separate statutory requirements; it is not simply another name for a mutual insurer.

The producer must therefore distinguish insurer classifications by ownership and governance. The current Hawaiʻi state-law examination component includes insurer definitions and classifications among the concepts a candidate is expected to understand.

Reference topics: HRS §431:4-309; Mutual Insurer; Member Rights; Insurer Ownership and Governance.

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