A captive insurance company primarily underwrites the risks of which party?

A captive insurance company primarily underwrites the risks of the parent owner because it is established and owned by a corporation or individual to insure its own risks. The primary objective of a captive is to provide coverage for the parent organization, allowing for tailored insurance solutions that meet the specific needs of the parent company. This arrangement enables greater control over the insurance process, potentially lower costs, and improved risk management strategies.

While captive insurance might engage in some limited business with affiliates or other parties, its core function is to address the needs of its parent owner. This unique structure allows the parent to retain more of its risk and possibly invest in its own insurance fund, promoting financial stability and potentially leading to cost savings over time.