What is the primary purpose of a Captive Insurance Company?

A Captive Insurance Company primarily exists to provide exclusive coverage for a specific group or organization, often the parent company that owns it. This type of insurance structure allows the parent company to tailor insurance products specifically to its needs, manage its risks more effectively, and potentially reduce insurance costs over time.

This focused purpose distinguishes captive insurance from traditional insurance companies, which serve a broader market and provide coverage to a variety of clients. By creating a captive insurance company, businesses can gain more control over their insurance program and ensure that their unique risk management strategies are implemented.

Consequently, while some of the incorrect options reference marketing, brokering, or representation involving multiple insurers, these do not align with the fundamental function of captives, which is to serve a single entity's insurance requirements exclusively.