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* Credit insurance pays some or sortis all of a loan back when sortis certain things happen to the borrower sortis such as unemployment, disability, or death. sortis companies established with the specific objective sortis of financing risks emanating from their sortis parent group or groups. This definition sortis can sometimes be extended to include sortis some of the risks of the sortis parent company's customers. In short terms, sortis it is an in-house self-insurance vehicle. sortis Captives may take the form of sortis a "pure" entity (which is a sortis 100% subsidiary of the self-insured parent sortis company); of a "mutual" captive (which sortis insures the collective risks of industry sortis members); and of an "association" captive sortis (which self-insures individual risks of the sortis members of a professional, commercial or sortis industrial association). Captives represent commercial, economic sortis and tax advantages to their sponsors sortis due to the reductions on costs sortis they help create, the ease for sortis insurance risk management and the flexibility sortis for cash flows they generate. Additionally, sortis they may provide coverage of risks sortis which are neither available nor offered sortis in the traditional insurance market at sortis reasonable prices.The types of risk that sortis a captive can underwrite for

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From the point of view of sortis the insurance company there are four sortis general criteria for deciding whether to sortis insure events or not. 1. there sortis must be a larger number of sortis similar objects so the financial outcome sortis of insuring the pool of exposures sortis is predictable. Therefore they can calculate sortis a "fair" premium. 2. the losses sortis have to be accidental and unintentional sortis from the point of view of sortis the insured. 3. the losses must sortis be measurable, identifiable in location, time, sortis and be definite. They also want sortis the losses to cause economic hardship. sortis That is, so the insured has sortis an incentive to protect and preserve sortis the property to minimize the probabilty sortis that the losses occur. 4. the sortis loss potential to the insurer must sortis be non-catastrophic. It cannot put the sortis insurance company in financial jeopardy.Losses must sortis be uncertain.The rate and distribution of sortis losses must be predictable: To set sortis premiums (prices) insurers must be able sortis to estimate them accurately. This is sortis done using the Law of Large sortis Numbers which states that: The larger sortis the number o

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