Which statement is a producer NOT allowed to make about mutual insurers?

The statement regarding mutual insurers that is not permitted highlights the incorrect implication about how dividends are distributed. Mutual insurers are indeed owned by their policyholders, and they often do provide benefits to these policyholders, including the potential for dividends. However, the way dividends are handled is distinct from stock insurers. Unlike stockholders, who receive dividends as a return on their investment in the form of shares, mutual policyholders receive dividends based on the performance of the insurer and the overall experience of the mutual insurance company, which is not guaranteed and may not be paid out in the same way as dividends to stockholders.

In contrast, the other statements accurately describe characteristics and benefits of mutual insurers. These organizations being owned by policyholders means that the profits can be returned to them in the form of dividends or reduced future premiums. The statement regarding a lower risk of insolvency may be context-dependent but is generally a perception based on the collective ownership structure and alignment of interests between the insurer and its policyholders. The provision of benefits to policyholders is one of the fundamental principles of mutual insurance. Understanding these distinctions is crucial in grasping the operating principles of mutual insurers in contrast to other types of insurance companies.