Becoming Self-Insured - The Five Stage Process
A feasibility study serves only to identify whether a company is a suitable candidate for self-insurance. To further analyse a change to self-insurance the services of a risk management consultant may be required. A study will need to be made by the consultant, which will involve a cost comparison as well as any operational considerations, and these should include:
As with any self-insured plan administration is key to running a successful plan.
The drafting of the plan of benefits is an important part of a self-insurance plan as it determines what benefits are going to be provided by the plan and to who. It also presents one of the greatest potential pitfalls as the plan is normally designed at a time when the range and types of claims that will presented are unknown.
Stop-Loss insurance, often referred to as specific and aggregate insurance will normally be arranged by an independent broker or Third Party Administrator who should provide alternative quotations which will include different retentions and premiums.
Monitoring a Program is an essential part of managing a self-insured plan.