What do captive insurers primarily do?

What do captive insurers primarily do?

• A. Provide standard insurance products to the public
• B. Insure their own risks through a subsidiary
• C. Facilitate risk retention groups
• D. Engage in speculative risks

Answer: (B)

Captive insurers primarily focus on insuring the risks of their parent company or related entities. This structure allows businesses to tailor the insurance coverage to meet their specific needs while gaining greater control over their risk management strategies. By establishing a captive insurance company, the parent organization can effectively manage and retain its own risks, which often leads to cost savings and increased financial stability. The primary function of captive insurers is different from public insurers, which provide standardized insurance products to a broad audience. Additionally, while captive insurers may have relationships with risk retention groups or engage in risk management practices, their core purpose is not to facilitate these groups but to cater specifically to the insurance needs of their parent companies. Furthermore, engaging in speculative risks lies outside the primary function of captive insurers, as they focus on traditional risk management rather than speculative investments.

Captive insurers primarily focus on insuring the risks of their parent company or related entities. This structure allows businesses to tailor the insurance coverage to meet their specific needs while gaining greater control over their risk management strategies. By establishing a captive insurance company, the parent organization can effectively manage and retain its own risks, which often leads to cost savings and increased financial stability.

The primary function of captive insurers is different from public insurers, which provide standardized insurance products to a broad audience. Additionally, while captive insurers may have relationships with risk retention groups or engage in risk management practices, their core purpose is not to facilitate these groups but to cater specifically to the insurance needs of their parent companies. Furthermore, engaging in speculative risks lies outside the primary function of captive insurers, as they focus on traditional risk management rather than speculative investments.