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GAQM ISO-31000-CLA Exam - Topic 1 Question 21 Discussion

Actual exam question for GAQM's ISO-31000-CLA exam
Question #: 21
Topic #: 1
[All ISO-31000-CLA Questions]

Which of the following statements about captive insurance companies are correct?

1. A captive cannot act as a reinsurer.

2. A captive can access reinsurance markets.

3. A captive can sometimes offer greater cover than is available in the insurance market.

4. A captive must be located in the same country as its parent company.

Show Suggested Answer Hide Answer
Suggested Answer: C

According to3, a captive insurance company is ''a wholly owned subsidiary insurer that provides risk mitigation services for its parent company or related entities''.It can act as a reinsurer by accepting risks from other insurers or captives1.It can also access reinsurance markets to transfer some of its own risks1.It can sometimes offer greater cover than is available in the insurance market by tailoring its policies to suit its parent's needs3.It does not have to be located in the same country as its parent company; in fact, many captives are domiciled offshore for tax or regulatory reasons4.


by Han at Nov 22, 2025, 12:25 PM

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Linwood
10 hours ago
I thought captives had to be in the same country as their parent too!
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Davida
6 days ago
Statement 1 is definitely incorrect.
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Jovita
11 days ago
I disagree, a captive can act as a reinsurer in some cases.
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Evette
16 days ago
Captives can definitely access reinsurance markets!
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Amalia
21 days ago
C is the way to go. Who would've thought captives could be so versatile? I guess they're not just for the big guys anymore.
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Lindsey
26 days ago
I'm going with C. A captive can access reinsurance and sometimes provide better coverage than the regular insurance market.
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Verda
1 month ago
The answer is C. 2 and 3 are correct statements about captive insurance companies.
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Delsie
1 month ago
Hmm, I'm not sure about 1 and 4. Captives can act as reinsurers, and they don't have to be located in the same country as the parent company.
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Brittney
1 month ago
I recall a practice question where we discussed how captives can sometimes provide better coverage than traditional insurers, so statement 3 might be true.
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Billye
2 months ago
I'm not entirely sure, but I feel like captives can act as reinsurers in some cases, which makes me question statement 1.
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Adelle
2 months ago
I think I remember that captives can access reinsurance markets, so maybe statement 2 is correct.
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Bulah
2 months ago
I've got a good strategy here. I'll eliminate the options that don't seem right, then focus on the remaining choices and try to apply my knowledge of captive insurance companies.
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Nguyet
2 months ago
I'm a bit confused on the difference between a captive acting as a reinsurer versus accessing reinsurance markets. I'll have to review that part again.
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Vallie
2 months ago
I think 2 and 3 are correct. A captive can definitely access reinsurance markets and sometimes offer better coverage.
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Rebbecca
2 months ago
Okay, let's see. I know captives can access reinsurance, so that rules out option A. And captives can sometimes offer better coverage than the regular market, so I think C is the right answer.
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Caren
3 months ago
Surprised to see people think captives can't offer more cover than the market.
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Leoma
3 months ago
Statement 4 seems off to me; I thought captives could be set up in different jurisdictions from their parent companies.
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Latricia
3 months ago
Hmm, this seems tricky. I'm not sure about the reinsurance part - I'll have to think that through carefully.
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Lemuel
3 months ago
I'm pretty confident I can handle this one. The key is to focus on the differences between captive insurance companies and regular insurance companies.
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