The Beginner’s Guide to Self-Insurance

The Beginner’s Guide to Self-Insurance

Self-insurance allows a business to maintain direct control of their insurance programs, creating a fully personalised experience with its own unique challenges and opportunities for reward by increasing the self-retention for each and every claim.

Even though self-insurance programs can help businesses navigate the challenges of purchasing traditional insurance at affordable cost it is not for everyone. Strong internal processes and risk management must be in place to improve claims management, reduce costs, and build a more transparent financial model.

As part of our consultancy we will provide you with:

  • An introduction to the options available to you
  • Define self-insurance for 1st time buyers and the obstacles to overcome
  • Explain the difference between a captive and traditional commercial insurance
  • Review the main pros and cons of self-insurance
  • Provide guidelines to help determine if a self-insurance might be right for your business

Different Types of Self-Insurance

It’s important to know that there’s more than one kind of self-insurance. Let’s take just a minute to define the main types of alternative insurance programs out there.

  • Higher self-retention level (excess): A self-insurance retention (SIR) programme increasing your contribution on excess levels
  • Aggregate excess: A higher excess each claim but with an aggregate limit of your total contribution over an agreed period
  • Single-Parent or Pure Captive: A captive that is owned by and works exclusively for its parent company and its subsidiaries (as for a corporation)
  • Group or Association Captive: A captive insurance program created by multiple small or medium-sized companies pooling their resources and risk to access the advantages of a captive
  • Rental Captive: An existing, independent captive operated by a business entity that other organizations can opt into temporarily
  • Protected Cell Captive: A captive in which each organization’s assets and liabilities are kept separate, allowing access into the captive but minimizing the biggest possible financial gains and losses
  • Agency Captive: A captive managed by a specific agent, who is empowered to reinsure the company by contracting with traditional carriers based on their assessments

Any questions? Please don’t hesitate to contact one of our team.  |  Office: 01245 449 060