When no tax deductions are allowed if risks are not transferred, whereas premiums paid to insurers are tax deducible, this leads to the formation of:

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Captives are insurance companies created by a parent company to insure its own risks. They allow the parent company to retain risk while still benefiting from tax deductions on premiums paid, as opposed to self-insuring without risk transfer, which doesn't allow for tax deductions.

When No Tax Deductions Are Allowed If Risks Are Not