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🏢 '''Self-insurance''' is a [[Definition:Risk management | risk management]] strategy in which an organization deliberately retains certain insurable exposures on its own balance sheet rather than transferring them to an [[Definition:Insurance carrier | insurance carrier]], setting aside dedicated funds or reserves to pay for [[Definition:Claims | claims]] as they occur. While sometimes confused with simply going uninsured, true self-insurance is a planned, financially disciplined approach — often formalized through a [[Definition:Captive insurance company | captive insurance company]], a qualified self-insured trust, or a funded retention program — and it is widely used for [[Definition:Workers' compensation insurance | workers' compensation]], general [[Definition:Liability insurance | liability]], auto liability, and property exposures.

⚙️ Organizations that self-insure typically purchase [[Definition:Excess insurance | excess]] or [[Definition:Umbrella insurance | umbrella]] [[Definition:Insurance policy | policies]] above a stated [[Definition:Self-insured retention (SIR) | self-insured retention (SIR)]] to cap their maximum exposure. Day-to-day [[Definition:Claims administration | claims handling]] may be managed in-house or outsourced to a [[Definition:Third-party administrator (TPA) | third-party administrator]]. Regulatory requirements vary by jurisdiction and by line of business: many states require self-insured employers to demonstrate financial capacity — through surety bonds, letters of credit, or actuarial certifications of reserve adequacy — before granting approval to self-insure statutory coverages like workers' compensation. [[Definition:Actuarial analysis | Actuarial analysis]] plays a central role in determining the appropriate funding level, selecting optimal retention points, and ensuring that the organization's reserves are sufficient to meet both known and [[Definition:Incurred but not reported (IBNR) | incurred but not reported (IBNR)]] obligations.

📉 For insurers and [[Definition:Broker | brokers]], the prevalence of self-insurance reshapes market dynamics in meaningful ways. Large accounts that self-insure their working layers purchase only excess coverage, which changes the [[Definition:Premium | premium]] volume available to carriers and shifts [[Definition:Underwriting | underwriting]] focus toward higher-attachment, lower-frequency exposures. [[Definition:Captive insurance company | Captive]] formations — a formalized extension of self-insurance — have grown into a significant segment of the global insurance market, creating both competition for traditional carriers and partnership opportunities for fronting companies and reinsurers. For risk managers, the decision to self-insure hinges on balancing cost savings and control against the volatility of retained losses, making it one of the most consequential choices in any corporate insurance program.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Self-insured retention (SIR)]]
* [[Definition:Captive insurance company]]
* [[Definition:Excess insurance]]
* [[Definition:Workers' compensation insurance]]
* [[Definition:Risk retention]]
* [[Definition:Self-funded insurance]]
{{Div col end}}

Definition:Self-insurance - Revision history

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