What is a captive insurer primarily used for?

A captive insurer is primarily used to insure the loss exposures of its parent company or group of companies. This type of insurance arrangement allows a business to manage its own risks more effectively by obtaining coverage tailored to its specific needs. Captive insurers can help companies save costs on premiums that might otherwise be higher through traditional insurance providers and provide coverage that might be difficult to find in the conventional insurance market.

By retaining some risk, the parent firm can benefit from greater control over the claims process and the ability to access the reinsurance market. This structure often leads to better understanding and management of the risks faced by the parent firm since it is directly involved in the insurance process designed with its specific risks in mind.

The other choices involve broader or different concepts. For example, insuring the public's loss exposures relates more to standard insurance companies that serve the general public, whereas the role of a captive insurer is confined to supporting its parent organization. Likewise, general insurance coverage and operating as a non-profit organization do not accurately define the primary function of captives, which focuses on fulfilling the risk management needs of their respective parent firms.