Becoming Self-Insured

Prior to taking the decision to self-insure, there are specific areas that need to be addressed in order to ensure that self-insurance is a viable proposition.

Administration is an important issue for self-insurers due to the need to maintain data and to replicate the claims paying function of the insurer. For most self-insurers who are considering whether or not to perform their own administration there are a number of issues to consider including the cost, the availability of expertise and time that would be required to self-administer a plan.

Self-Insurers are normally unable to accept responsibility for all losses as they could face financial ruin from adverse experience. Consequently insurance and reinsurance programs can be purchased with retentions, being the amount that a company keeps for its own account, set according to each company's appetite for risk.