Instead of purchasing traditional insurance policies, thousands of private businesses and public entities choose to join together as groups and self-insure their workers’ compensation liabilities. There are several advantages to this approach.
“Self-insurance remains a very popular and positive mechanism to protect businesses and public entities around the country against the risk of loss,” said Brad Ogle, Vice President – Associations. “It provides the opportunity for improved cash flow, expertise in claim handling, and reduced losses through better risk control targeted specifically to the operations of each member in the group.”
Local communities around the country are always searching for ways to spur economic development, a cornerstone of sustainable progress. Self-insurance and self-insured groups (SIGs) provide an often-overlooked opportunity to boost local economies.
Keeping Insurance Dollars at Home
The self-insurance industry is a local economic engine driving business development in almost every community in the nation.
Aside from lowering costs for workers’ compensation, the self-insurance group industry has another very positive story to tell. Self-insured groups create and support many local jobs in areas such as insurance administration, underwriting, actuarial support, loss control, safety supervision, third-party claims administration, claims management, accounting, and technical and legal support. Statutes and regulations require almost all of these services be performed within the group’s state of domicile.
Group member premiums or contributions are generally kept by the group in local banks and not sent to an out-of-state home office like most traditional primary insurance premium transactions.
When self-insured groups turn a profit, dividends or surplus funds are returned to respective members and reinvested in the local community as opposed to a traditional insurance company, where profits are returned to corporate shareholders or held internally so traditional insurance companies can expand their operations around the globe.
Communities Have to Work Together
The self-insurance industry and insurance regulators need to continue to work together to ensure self-insurance remains a strong and viable option well into the future.
Regulators need the help and support of self-insurance industry experts and industry associations when overseeing this market segment. All stakeholders should work closely together and toward positive goals to build a better industry and, in turn, a stronger local economy.