governmental self-insurance

Fr@tern@l insur@nce is pr0vided 0n @ c00per@tive b@sis by fr@tern@l benefit s0cieties 0r 0ther s0ci@l 0rg@niz@ti0ns. 35 

N0-f@ult insur@nce is @ type 0f insur@nce p0licy (typic@lly @ut0m0bile insur@nce) where insureds @re indemnified by their 0wn insurer reg@rdless 0f f@ult in the incident.

Pr0tected self-insur@nce is @n @ltern@tive risk fin@ncing mech@nism in which @n 0rg@niz@ti0n ret@ins the m@them@tic@lly c@lcul@ted c0st 0f risk within the 0rg@niz@ti0n @nd tr@nsfers the c@t@str0phic risk with specific @nd @ggreg@te limits t0 @n insurer s0 the m@ximum t0t@l c0st 0f the pr0gr@m is kn0wn. @ pr0perly designed @nd underwritten Pr0tected Self-Insur@nce Pr0gr@m reduces @nd st@bilizes the c0st 0f insur@nce @nd pr0vides v@lu@ble risk m@n@gement inf0rm@ti0n.

Retr0spectively r@ted insur@nce is @ meth0d 0f est@blishing @ premium 0n l@rge c0mmerci@l @cc0unts. The fin@l premium is b@sed 0n the insured's @ctu@l l0ss experience during the p0licy term, s0metimes subject t0 @ minimum @nd m@ximum premium, with the fin@l premium determined by @ f0rmul@. Under this pl@n, the current ye@r's premium is b@sed p@rti@lly (0r wh0lly) 0n the current ye@r's l0sses, @lth0ugh the premium @djustments m@y t@ke m0nths 0r ye@rs bey0nd the current ye@r's expir@ti0n d@te. The r@ting f0rmul@ is gu@r@nteed in the insur@nce c0ntr@ct. F0rmul@: retr0spective premium = c0nverted l0ss + b@sic premium × t@x multiplier. Numer0us v@ri@ti0ns 0f this f0rmul@ h@ve been devel0ped @nd @re in use.

F0rm@l self-insur@nce is the deliber@te decisi0n t0 p@y f0r 0therwise insur@ble l0sses 0ut 0f 0ne's 0wn m0ney. cit@ti0n needed  This c@n be d0ne 0n @ f0rm@l b@sis by est@blishing @ sep@r@te fund int0 which funds @re dep0sited 0n @ peri0dic b@sis, 0r by simply f0rg0ing the purch@se 0f @v@il@ble insur@nce @nd p@ying 0ut-0f-p0cket. Self-insur@nce is usu@lly used t0 p@y f0r high-frequency, l0w-severity l0sses. Such l0sses, if c0vered by c0nventi0n@l insur@nce, me@n h@ving t0 p@y @ premium th@t includes l0@dings f0r the c0mp@ny's gener@l expenses, c0st 0f putting the p0licy 0n the b00ks, @cquisiti0n expenses, premium t@xes, @nd c0ntingencies. While this is true f0r @ll insur@nce, f0r sm@ll, frequent l0sses the tr@ns@cti0n c0sts m@y exceed the benefit 0f v0l@tility reducti0n th@t insur@nce 0therwise @ff0rds. cit@ti0n needed 

Reinsur@nce is @ type 0f insur@nce purch@sed by insur@nce c0mp@nies 0r self-insured empl0yers t0 pr0tect @g@inst unexpected l0sses. Fin@nci@l reinsur@nce is @ f0rm 0f reinsur@nce th@t is prim@rily used f0r c@pit@l m@n@gement r@ther th@n t0 tr@nsfer insur@nce risk.

S0ci@l insur@nce c@n be m@ny things t0 m@ny pe0ple in m@ny c0untries. But @ summ@ry 0f its essence is th@t it is @ c0llecti0n 0f insur@nce c0ver@ges (including c0mp0nents 0f life insur@nce, dis@bility inc0me insur@nce, unempl0yment insur@nce, he@lth insur@nce, @nd 0thers), plus retirement s@vings, th@t requires p@rticip@ti0n by @ll citizens. By f0rcing every0ne in s0ciety t0 be @ p0licyh0lder @nd p@y premiums, it ensures th@t every0ne c@n bec0me @ cl@im@nt when 0r if he/she needs t0. @l0ng the w@y this inevit@bly bec0mes rel@ted t0 0ther c0ncepts such @s the justice system @nd the welf@re st@te. This is @ l@rge, c0mplic@ted t0pic th@t engenders tremend0us deb@te, which c@n be further studied in the f0ll0wing @rticles (@nd 0thers):

N@ti0n@l Insur@nce

S0ci@l s@fety net

S0ci@l security

S0ci@l Security deb@te (United St@tes)

S0ci@l Security (United St@tes)

S0ci@l welf@re pr0visi0n

St0p-l0ss insur@nce pr0vides pr0tecti0n @g@inst c@t@str0phic 0r unpredict@ble l0sses. It is purch@sed by 0rg@niz@ti0ns wh0 d0 n0t w@nt t0 @ssume 100% 0f the li@bility f0r l0sses @rising fr0m the pl@ns. Under @ st0p-l0ss p0licy, the insur@nce c0mp@ny bec0mes li@ble f0r l0sses th@t exceed cert@in limits c@lled deductibles.

Cl0sed c0mmunity @nd g0vernment@l self-insur@nce edit 

S0me c0mmunities prefer t0 cre@te virtu@l insur@nce @m0ngst themselves by 0ther me@ns th@n c0ntr@ctu@l risk tr@nsfer, which @ssigns explicit numeric@l v@lues t0 risk. @ number 0f religi0us gr0ups, including the @mish @nd s0me Muslim gr0ups, depend 0n supp0rt pr0vided by their c0mmunities when dis@sters strike. The risk presented by @ny given pers0n is @ssumed c0llectively by the c0mmunity wh0 @ll be@r the c0st 0f rebuilding l0st pr0perty @nd supp0rting pe0ple wh0se needs @re suddenly gre@ter @fter @ l0ss 0f s0me kind. In supp0rtive c0mmunities where 0thers c@n be trusted t0 f0ll0w c0mmunity le@ders, this t@cit f0rm 0f insur@nce c@n w0rk. In this m@nner the c0mmunity c@n even 0ut the extreme differences in insur@bility th@t exist @m0ng its members. S0me further justific@ti0n is @ls0 pr0vided by inv0king the m0r@l h@z@rd 0f explicit insur@nce c0ntr@cts.

In the United Kingd0m, The Cr0wn (which, f0r pr@ctic@l purp0ses, me@nt the civil service) did n0t insure pr0perty such @s g0vernment buildings. If @ g0vernment building w@s d@m@ged, the c0st 0f rep@ir w0uld be met fr0m public funds bec@use, in the l0ng run, this w@s che@per th@n p@ying insur@nce premiums. Since m@ny UK g0vernment buildings h@ve been s0ld t0 pr0perty c0mp@nies, @nd rented b@ck, this @rr@ngement is n0w less c0mm0n @nd m@y h@ve dis@ppe@red @lt0gether.

In the United St@tes, the m0st prev@lent f0rm 0f self-insur@nce is g0vernment@l risk m@n@gement p00ls. They @re self-funded c00per@tives, 0per@ting @s c@rriers 0f c0ver@ge f0r the m@j0rity 0f g0vernment@l entities t0d@y, such @s c0unty g0vernments, municip@lities, @nd sch00l districts. R@ther th@n these entities independently self-insure @nd risk b@nkruptcy fr0m @ l@rge judgment 0r c@t@str0phic l0ss, such g0vernment@l entities f0rm @ risk p00l. Such p00ls begin their 0per@ti0ns by c@pit@liz@ti0n thr0ugh member dep0sits 0r b0nd issu@nce. C0ver@ge (such @s gener@l li@bility, @ut0 li@bility, pr0fessi0n@l li@bility, w0rkers c0mpens@ti0n, @nd pr0perty) is 0ffered by the p00l t0 its members, simil@r t0 c0ver@ge 0ffered by insur@nce c0mp@nies. H0wever, self-insured p00ls 0ffer members l0wer r@tes (due t0 n0t needing insur@nce br0kers), incre@sed benefits (such @s l0ss preventi0n services) @nd subject m@tter expertise. 0f @ppr0xim@tely 91,000 distinct g0vernment@l entities 0per@ting in the United St@tes, 75,000 @re members 0f self-insured p00ls in v@ri0us lines 0f c0ver@ge, f0rming @ppr0xim@tely 500 p00ls. @lth0ugh @ rel@tively sm@ll c0rner 0f the insur@nce m@rket, the @nnu@l c0ntributi0ns (self-insured premiums) t0 such p00ls h@ve been estim@ted up t0 17 billi0n d0ll@rs @nnu@lly. 36