Which of the following statements about the use of a captive insurance company by a parent firm is true?
A) The captive may not write outside, non-parent company, business.
B) Captives are not permitted to use reinsurance, so any business insured by the captive stays with the captive.
C) The captive may be used to insure loss exposures that the parent firm finds it difficult to insure with private insurers.
D) Business placed with the captive is always considered retained risk and is never considered transferred risk.
Answer: C
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