Self-insurance

Self-insurance is a situation in which a person or business that is liable for some risk does not take out any third-party insurance, but rather chooses to bear the risk itself.

In the United States the concept applies especially to self-funded health care and may involve, for example, an employer providing certain benefits – generally health benefits or disability benefits – to employees and funding claims from a specified pool of assets rather than through an insurance company, as the term is traditionally used. In self-funded health care, the employer ultimately retains the full risk of paying claims, in contrast to traditional insurance, where all risk is transferred to the insurer.