Establishing reserves for future losses instead of purchasing insurance.
Some large industrial concerns prefer to set aside their own funds to cover any future losses, rather than insure with an outside insurer. It is a step which should never be taken without the benefit of professional advice first. Whilst day-to-day losses might not prove too much of a financial burden to a really large company, a truly catastrophic event, such as an earthquake, could put it out of business for lack of insurance.
Manner in which an employer provides workers' compensation insurance coverage for its employees by insuring itself rather than by purchasing workers' compensation insurance coverage from a private insurance carrier.
When an organization's own resources (internal) are used to fund losses. A nonprofit may self-insure risks through a formally structured risk-financing program, such as a captive insurer, or by setting aside funds to pay for losses. A nonprofit can also be self-insured on an informal basis when it has made no arrangements to finance losses and must use operating funds when losses occur.
Practice of an individual, group of individuals, employer or organization assuming complete responsibility for the losses that might be insured against such as healthcare expenses. In effect, self insured groups have no real insurance against potential losses and instead maintain a fund out of which is paid the contingent liability subject to self-insurance.
Alternative to purchasing insurance where a company or individual assumes the risk of paying for its losses and sets aside the necessary funds to pay for such losses.
The amassing of funds by an individual or organization to meet his or its insurance needs and to absorb fluctuations in the amount of loss, the losses being charged against the funds accumulated.
The concept of assuming a financial risk oneself, instead of paying an insurance company to take it on. Every policyholder is a self-insurer in terms of paying a deductible and co-payments. Large firms often self-insure frequent, small losses such as damage to their fleet of vehicles or minor workplace injuries. However, to protect injured employees state laws set out requirements for the assumption of workers compensation programs. Self-insurance also refers to employers who assume all or part of the responsibility for paying the health insurance claims of their employees. Firms that self insure for health claims are exempt from state insurance laws mandating the illnesses that group health insurers must cover.
Assuming risk for oneself without the benefit of an insurance company taking it for you.
A practice by which an organization assumes complete financial responsibility for medical and/or behavior health treatment costs for its defined group members. Insurance protection against excessive loss can be purchased.
The process of assuming the financial risk of loss instead of transferring the risk to an insurer through an insurance policy. Standard & Poor. An independent organization that monitors the financial solvency of insurance companies.
Protecting one's self or company by putting aside money to pay for otherwise insurable and predictable losses. To purchase insurance for these types of losses would cost more because in addition to the premium charged, Insurers charge for their overhead, selling, general and administrative charges plus any premium taxes.
Self insurance is a risk management method whereby an eligible risk is retained, but a calculated amount of money is set aside to compensate for the potential future loss. The amount is calculated using actuarial and insurance information and the law of large numbers so that the amount set aside (similar to an insurance premium) is enough to cover the future uncertain loss. Self insurance is similar to insurance in concept, but involves either the payment of a self-insurance premium to a captive insurance company, cell captive or rent-a-captive insurer, or making an on-balance sheet provision and not paying a premium to an insurer at all.
