But many in the industry say they're seeing steady growth in the rate of medium-sized and smaller-sized businesses that self-insure
One of the most dramatic ways for a company to adapt to the cost and scarcity of catastrophic risk insurance is to simply rely on its equity base to self-insure
If your company has the reserves needed to self-insure
against the indemnity payout on a large jury verdict, plus defense costs, then self-insurance can save you considerable sums.
An entity doesn't just announce, "Well, I've decided to self-insure
, and that's that.
Even if some people have sufficient assets to self-insure
and others have little income and few assets but are adequately protected by Medicaid, the reality is the great majority of Americans fall between these two extremes.
The option to self-insure
has traditionally been open only to large employers with the critical mass and cash position to pay claims on a transactional basis," Daurelle said.
Among them, 85 percent are considering self-insurance or currently self-insure
for workers' compensation.
It also investigated whether companies at greater risk of default were more likely to self-insure
health benefits, placing higher healthcare risks on employees.
Furthermore, the decision to self-insure
should consider how the traditional capital markets price such risks.
Smaller employers generating less than $1 million in workers' comp premiums in open-rating states are better off joining pools that buy insurance rather than self-insure
, Stewart said.
Analysts at EBRIlooked for evidence that small employers were more likely to self-insure
in states with large numbers of mandates, but it found no clear correlation between the number of mandates a state imposes and the percentage of employers that self-insure
, Fronstin said.
Employers that self-insure
against health risks often buy stop-loss insurance -- insurance for group health plans -- to protect themselves against catastrophic losses.
Chances are that a small employer that wants to self-insure
will also have trouble getting reasonably detailed claims data from its current carrier, Fleet said.