Question

Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposure in the field of insurance or risk management?

A) Captive insurance company
B) Reinsurance company
C) Mutual insurance company
D) Brokers and agents

Answer 1

A captive insurance company is established by a parent company to provide insurance coverage for the risks and losses of the parent company in the field of insurance or risk management.

Step-by-step explanation:

The correct answer is A) Captive insurance company.

A captive insurance company is established by a parent company to provide insurance coverage for the risks and losses of the parent company in the field of insurance or risk management. It is a form of self-insurance where the parent company is essentially insuring itself through its own subsidiary.

For example, if an insurance company specializes in insuring oil rigs, they might create a captive insurance company to provide coverage for the losses and risks associated with insuring oil rigs.