Definition

A method where insurers share risk by purchasing insurance from other companies. It helps protect them from large or unexpected losses.

What to consider

  • Ensure you have sufficient reserves to cover potential losses.
  • Assess the risks carefully before self-insuring.
  • Review legal and regulatory requirements for self-insurance.

Real world scenarios

  • A large corporation sets aside funds to cover its own losses instead of purchasing full insurance coverage.
  • A business owner opts for self-insurance for minor property damages.
  • An organization maintains a reserve to self-insure against predictable employee health expenses.

Related terms

Insurance & Financial Protection