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

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.
C) 2 and 3.
A) 1 and 4.
B) 1 and 2.

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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Janna
3 months ago
I feel option A is too restrictive. Captives have more flexibility.
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Rasheeda
3 months ago
I lean towards B. Captives accessing reinsurance is key.
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Santos
3 months ago
No, that's a misconception. Captives can definitely offer more cover.
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Whitley
4 months ago
But isn't it true that a captive can act as a reinsurer?
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Rima
4 months ago
Agreed, captives can access reinsurance markets.
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Timothy
4 months ago
I think option C makes the most sense.
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Linwood
5 months ago
I thought captives had to be in the same country as their parent too!
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Davida
5 months ago
Statement 1 is definitely incorrect.
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Jovita
5 months ago
I disagree, a captive can act as a reinsurer in some cases.
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Evette
5 months ago
Captives can definitely access reinsurance markets!
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Amalia
5 months 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
5 months 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
6 months ago
The answer is C. 2 and 3 are correct statements about captive insurance companies.
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Delsie
6 months 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
6 months 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
6 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
6 months ago
I think I remember that captives can access reinsurance markets, so maybe statement 2 is correct.
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Bulah
6 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
7 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
7 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
7 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
7 months ago
Surprised to see people think captives can't offer more cover than the market.
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Leoma
7 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
8 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
8 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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Joye
2 months ago
Exactly! Captives have unique advantages over regular insurers.
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Melvin
2 months ago
True, but that doesn't mean they can't access the market.
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Tesha
3 months ago
But what about option A? It says captives can't be reinsurers.
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Tamesha
3 months ago
I agree, C makes sense. They can offer more coverage too.
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Stefania
3 months ago
I think option C is correct. Captives can access reinsurance.
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