Which of the following describes a benefit of forming a captive insurer?

Forming a captive insurer does indeed provide specific coverage for unique risks, which makes it an advantageous option for many businesses. Captive insurance is a form of self-insurance where a company creates its own insurance company to provide coverage for its risks. This structure is particularly beneficial for businesses that face unique or specialized risks that are not adequately covered by traditional insurance providers.

By using a captive insurer, companies can tailor their coverage to fit their specific needs, ensuring that they are protected against risks that may be too niche or complex for standard insurance policies. This can lead to better risk management and potentially lower insurance costs over time, as the company has more control over its insurance programs and can directly manage its risk.

Other options, while they may seem plausible in certain contexts, do not accurately capture the primary benefits of forming a captive insurer. For example, ignoring random business risks would be detrimental to a company's financial health, and balancing investments is typically a function of financial strategy rather than insurance structure. Moreover, while a captive can reduce reliance on traditional insurance, it does not eliminate the need for all types of insurance, as companies still may require coverage for risks outside of what the captive is designed to handle.