Which of the following refers to the practice of distributing insurance contracts among policyholders?

The correct answer is mutualization, which refers to the practice of distributing insurance contracts among policyholders. In a mutual insurance company, policyholders are not just customers; they are also members who share in the ownership and the profits of the company. This structure allows the risk to be spread among a larger group of insured individuals, and any profits are usually returned to policyholders in the form of dividends or cheaper premiums.

This distribution of insurance contracts signifies a model where the policyholders collectively share the risk, rather than the insurance company solely bearing it. The mutualization approach aligns the interests of the policyholders with that of the insurer, as policyholders directly benefit from the company's performance.

Reinsurance, on the other hand, involves an insurance company transferring some of its risk to another insurer. While this is a common practice for insurers to manage risk, it does not involve distributing contracts among policyholders themselves.

Liability coverage is a type of insurance that protects the insured from claims made by third parties for damages or losses. While important in the overall realm of insurance, it does not pertain to the distribution of contracts among policyholders.

Co-insurance is a shared responsibility between the insured and the insurer regarding the cost of a loss, typically expressed