Am I Big Enough To Self-Insure?

Written by on 4/4/2016 3:14 AM in , . It has 0 Comments.


Workman's comp insurance is well suited for self-insurance, though this may not be the right move for every organization. Careful consideration must be given to determine whether self-insurance is a good fit for you. Decisions should not be made by a single individual, risk manager or owner. A host of factors must be considered, without which, the chances of success are minute…

  • Financial condition.
    Does your organization have the financial resources to fund startup costs as well as upkeep and future claims? A strong cash flow and substantial cash reserves are essential to handle the large fluctuations associated with self-insurance. Checking your state’s minimum net worth requirements for self-insurance first may prevent wasted energy.
  • Management commitment.
    Are managers prepared to handle the long-term commitment necessary, trading known risk for unknown risk? Are managers willing/prepared to be proactive and hands-on in claim prevention? Will the decision be amicable to customers, business partners, and stockholders?
  • Cost and availability of internal and external support systems.
    What can your organization handle in-house? Responsibilities that must be outsourced to the expert or informed can quickly add up to big money. Can you identify and economically utilize internal resources for these services?
    • Pricing negotiations with medical service providers
    • Cost projections for current – and future - claims
    • Medical and legal claims evaluation and processing
    • Development and implementation of safety and loss control programs
  • Characteristics of exposure.
    The state(s) in which you operate can play a key role in your decision. State requirements vary, and multi-state organizations can incur significant administrative costs.

Exploring alternatives to workman's comp insurance? There’s more than one way to save. Consult the experts at Minnesota Comp Advisor today.

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