Certified Authority Of Workers Compensation (CAWC) Practice Test

At the heart of this concept is ownership and control by the insureds within a dedicated insurer. A captive is a company created to insure the risks of its parent company or affiliated entities. Because it is owned and often governed by the insureds themselves, the insureds retain control over how the captive is run, what coverages it provides, and how profits or losses are allocated. This closely held structure allows for tailored risk management, potential cost savings, and direct oversight by those who face the risks. A mutual, while owned by policyholders, usually serves a broad membership rather than being tightly held by a single group, so it doesn’t inherently imply the same close control. An insurance exchange is a marketplace for trading risks and does not describe an insurer owned and controlled by insureds. A carrier is a general term for an insurer and doesn’t specify ownership or control dynamics. Therefore, the term that best fits an insurer arrangement where control remains with the insureds and the entity is closely held is captive.