What type of insurer is organized and owned by a corporation or firm to serve that firm's insurance needs?

The correct answer highlights the structure and purpose of a captive insurer. A captive is an insurance company that is formed and owned by a business or organization specifically to manage and cover the risks of that parent company. Captives are created to provide tailored coverage that may not be readily available in the commercial insurance market, allowing the owning entity to gain more control over its insurance costs, risks, and claims.

Captives can be particularly beneficial for businesses with unique risk profiles or those looking to manage their risk more effectively without relying on traditional insurers. This specialized structure can also offer potential tax advantages and improve risk management strategies by allowing the company to directly assume its own risk rather than transferring it entirely to a third-party insurer.

Other options do not align with this definition. For example, a wholesaler operates as an intermediary between agents and insurers and doesn't specifically serve the needs of a single firm. A risk retention group is a group of businesses that come together to pool their risks and purchase liability insurance collectively, while a purchasing group is a coalition of businesses that band together to obtain insurance at reduced rates, focusing more on collective bargaining than serving the specific needs of one organization.