Captive insurers are primarily established to achieve what purpose?

Captive insurers are primarily established to retain risk within a parent company. This means that the parent organization creates its own insurance subsidiary to cover specific risks that it faces, which can lead to more effective risk management and cost control. By doing so, the parent company can better tailor its insurance coverage to align with its unique risk profile and potentially reduce insurance costs over time. This structure also provides greater control over claims processes, insurance solutions, and self-insurance strategies, ultimately allowing the parent company to retain more of the risk associated with its operations rather than transferring it entirely to a third-party insurer.

The other choices focus on aspects that, while relevant to insurance practices, do not capture the primary purpose of captive insurers. For instance, minimizing claims processing delays pertains more to operational efficiencies within claims management rather than the core function of a captive insurer. Similarly, expanding the market reach of insurance products and increasing competition among insurers relate to broader industry dynamics and marketing strategies rather than the objectives of a captive insurer, which are more centered around internal risk retention and management.