Self-Insurance / Self-Funding: Viability Analysis & Feasibility Studies
CIA works with experienced professionals to determine if self-insurance or self-funding are viable options for your company and unique needs.
Carrying the Risk Yourself
Self-Insurance options by Corporate Insurance Advisors
The concept of Self-Insurance is increasing in popularity among companies throughout the U.S. Generally, the consideration for self-insurance starts when a company begins to examine their loss history. Companies pay for a host of coverages that provide protection against a wide variety of liabilities. However, you may discover that many specific areas for which you pay for insurance represent little or no financial loss for your company. In these instances, it may make good financial sense for a company to carry the risk through a well-thought and carefully executed self-insurance plan.
Today, companies choose to self-insure a variety of risks, including Workers’ Compensation.
Workers’ Compensation is an excellent exposure to self-insure for a variety of reasons:
- The statutory cap on loss wage benefits provides a level of certainty concerning the severity of expected losses.
- Large claim payments are spread out over time, thus giving self-insured employers a cash flow advantage.
- Workers’ Compensation losses are usually high volume and low severity. That means losses are fairly predictable.
Corporate Insurance Advisors will discuss the possibilities and help you determine the viability of initiating a self-insurance plan for your company. We can help determine if self-insurance will provide the kind of cost benefits that make it a reasonable alternative to more conventional insurance plans.
Designed by You…Chosen by You
Risk Retention by Corporate Insurance Advisors
Risk retention—active (the risk has been identified)
Risk retention—passive (didn’t know the risk existed)
These are not just a guess—It requires an analysis to determine the appropriate level.
You know your business…and you should have the opportunity to make specific decisions about protecting it. A self-insured retention allows you to decide the amount of financial risk and type of risks you want to fund. You establish a fund to pay any losses resulting from those risks.
A Law Firm has a $10,000 self-insured retention for each claim, but we could negotiate the maximum out-of-pocket for the firm at 3 times the deductible or $30,000. Any claim over $10K is covered by the insurance company and if the firm has more than 3 large claims, the carrier takes over after the insured spends $30K. There is a difference between deductible (paid by carrier and charged back) and retention (paid by insured before insurance pays).
ABC Bed & Breakfast files several liability claims each year, usually brought by guests who suffered slip and fall accidents. They’re generally small claims-as 99% tend to fall below $5,000. In order to reduce the cost of their liability insurance, ABC Bed & Breakfast has $5,000 deductible in their liability policy. If damages exceed $5,000, the insurance company pays the remaining amount up to policy limits.
Risk Retention is an excellent way to reduce your risk management costs. If you’re confused, let the agents at Corporate Insurance Advisors guide you by explaining your options and doing an analysis.
Self-funded Options for Health Insurance
A popular area of self-funding is health coverage. Employers choose to fund health and/or disability claims from a designated asset account rather than through an insurance company. The company retains the partial risk and responsibility of paying catastrophic claims with no risk being transferred to a health insurance company. While it’s possible to reasonably project future losses with accuracy, no company has a crystal ball…and no company has unlimited assets. A self-funded company could face bankruptcy after incurring numerous high-dollar claims that exceed their ability pay. Stop-loss insurance provides an employer with a source for funding catastrophic losses. Even smaller managed care organizations purchase stop-loss insurance to protect themselves. Also available are Health Saving Arrangements and Health Reimbursement Arrangements.
Talk to the professionals at Corporate Insurance Advisors about the advantages of self-funding and the options available to you.
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There is absolutely no agency which we have found that is better equipped to handle all of our insurance needs. Our needs range from commercial policies to health insurance and CIA has consistently surpassed our expectations. We can say, with utmost confidence, that our account is in the best hands ...
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