Which type of insurer is required to be nonprofit and sell insurance only to its members?

The correct answer is fraternal insurers. Fraternal organizations are specifically designed to provide insurance benefits to their members, who typically share a common bond or affiliation, such as religious or ethnic ties. These insurers operate on a nonprofit basis, meaning any surplus generated is usually returned to members or invested back into the organization's programs rather than distributed as profits.

Fraternal insurers not only provide insurance but also often engage in social, charitable, and community activities, reinforcing the bonds among their members. Their structure is distinct in that they limit their insurance offerings to their members, thereby ensuring that the benefits of the insurance plan and any community activities are focused on the specific group they serve.

In contrast, other types of insurers like mutual companies provide insurance to a broader public and can generate profits for policyholders, while reciprocal companies are made up of members who agree to insure one another and may operate for profit or nonprofit purposes. Service corporations focus on providing specific services rather than traditional insurance coverage.