Ace the 2026 Life & Health Insurance Exam – Insure Your Success Today!

A captive insurer is designed specifically to meet the insurance needs of its parent company or group of affiliated companies. This type of insurer is created and owned by the parent organization primarily to insure its own risks. By utilizing a captive, the parent organization can achieve greater control over its insurance costs and coverage, tailor policies to fit specific requirements, and potentially generate profit through underwriting activities. Captive insurers enable businesses to mitigate specific risks while often providing more favorable premiums and better risk management strategies than they might receive through traditional insurance markets.

In contrast, independent insurers operate within the wider market and provide insurance to a diverse group of customers rather than focusing on any single parent's needs. Brokerage insurers typically act as intermediaries, facilitating the purchase of insurance from various insurers, while reinsurers provide insurance to other insurance companies rather than directly to policyholders. Each of these options serves different functions in the insurance landscape, making captive insurers uniquely suited to fulfill the specific demands of their parent organizations.