Question

What is the key characteristic of a captive in alternative risk transfer?

a.

It provides coverage for multiple lines of insurance

b.

It is custom-tailored to the unique needs of the client

c.

It aggregates and insures only the risks of its sponsors

d.

It offers coverage triggered by multiple factors

Posted under IC85 Reinsurance Management

Answer: (c).It aggregates and insures only the risks of its sponsors Explanation:A captive in alternative risk transfer is an insurer that is created and wholly owned by its sponsors, typically businesses or organizations. The primary characteristic of a captive is that it aggregates and insures only the risks of its sponsors, allowing them to have more control over their insurance programs. Captives are customized to the specific needs of the sponsoring entity and find legal and regulatory sanction in most countries.

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Q. What is the key characteristic of a captive in alternative risk transfer?
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