Which of the following statements about the use of a captive insurance company by a parent firm is true?
A)The captive may not write outside,non-parent company,business.
B)Captives are not permitted to use reinsurance,so any business insured by the captive stays with the captive.
C)The captive may be used to insure loss exposures that the parent firm finds it difficult to insure with private insurers.
D)Business placed with the captive is always considered retained risk and is never considered transferred risk.

Question

Quizplus · Accepted Answer

Captive insurance companies are created by parent firms to insure their own risks. They are often used when traditional insurers are unwilling or unable to provide coverage for certain risks. Captives can write both parent and non-parent company business, but typically focus on the parent company's risks. Captives can also use reinsurance to help manage their own risk, and business placed with the captive is considered transferred risk.

Which of the Following Statements About the Use of a Captive