Question
Two Moore School graduates decide to start an insurance company, offering traditional homeowners insurance with unemployment benefits if the policyholder becomes involuntarily unemployed. Each of
Two Moore School graduates decide to start an insurance company, offering traditional homeowners insurance with unemployment benefits if the policyholder becomes involuntarily unemployed. Each of these two entrepreneurs agrees to contribute $150,000 in exchange for ownership of the company. The company raises additional capital by selling ownership rights to other investors. To minimize policy marketing costs the company sells insurance directly to the public by selective advertising on websites and television.
a-What type of insurance company is this?
b-What type of marketing system are they using?
Explain how stock and mutual insurers differ with respect to (a) governance and (b) dividend policy.
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