What primary role does a captive insurance company serve?

A captive insurance company primarily serves to ensure the risks of its parent companies. This specialized type of insurance vehicle is created and owned by a business to provide insurance coverage specifically for its own risks. The key benefit of a captive is that it allows the parent company to tailor insurance coverage to meet its unique risk profile while also potentially reducing overall insurance costs. By directly insuring its own risks, the parent company gains more control over its insurance arrangements, including claims processes and underwriting standards.

The other options do not correctly describe the primary role of a captive insurance company. Providing broad coverage for personal lines may be associated with traditional insurance companies focused on individual policies, which is not the function of a captive. Issuing claims for third-party liability also falls outside the typical scope of a captive, as those companies usually do not operate like standard insurers that manage claims from external clients. Lastly, selling affordable insurance packages to the public aligns more with retail insurance companies rather than captives, which are designed to cater to the specific needs of the parent organization.