Florida Certified Insurance Representative (CIR) Practice Exam

The primary purpose of a captive insurance company is to provide insurance exclusively for its parent company or the affiliated group of companies. This structure allows the parent company to have more control over its insurance costs and risk management process. Since a captive is formed by a business or group of businesses primarily for their own use, it can tailor its policies to match the specific needs of the parent company, which often leads to cost savings and better protection.

Captives can also provide unique coverage options that may not be available in the conventional insurance market, thus addressing gaps in traditional insurance solutions. By concentrating on the risks faced by the parent company, a captive can be more responsive and flexible in its insurance offerings, adjusting policy terms and coverages as business needs evolve.

In contrast, other options suggest roles that do not align with the primary function of a captive insurance company – such as providing insurance to multiple unrelated businesses, acting as a provider of low-cost policies to the public, or serving purely as a reinsurance provider, which is not its main intent.