Captives enable users to take on more risk in a structured way that allows the organization to smoothen market cycles and potentially deliver some profit. (Photo: PopTika/Shutterstock)
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It used to be that a captive — most commonly known as a wholly-owned and controlled entity whose purpose is to (re)insure its parent and subsidiaries — was considered a risk financing solution used mostly by larger companies whose unique risks were difficult or impossible to fully cover by traditional insurance means. Fortune 500 companies and large commercial accounts were dominating the captive space.
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