Captives are mostly utilized for which purpose?

Captives are primarily utilized to self-insure specific risks because they are created by a parent company or group of companies to insure the unique risks of those parent(s). By doing so, they enable organizations to retain risk that they would otherwise transfer to traditional insurers. This structure allows for greater control over insurance coverage, more favorable terms, and potential cost savings for the parent company.

Captives can specifically cater to the needs of the organization they serve, offering tailored products and services that may not be available in the conventional insurance market. This makes them particularly effective for industries or businesses that face specialized risks that might be challenging to insure through standard channels.

While captives can serve various functions, such as providing certain types of insurance coverage, their primary function remains focused on allowing companies to manage and absorb risks without relying solely on traditional insurance providers. The other options point to broader insurance product offerings or market dynamics that are less characteristic of the primary purpose of captives.