A self-insured person or company is one who sets aside money to cover expenses that may affect a home, vehicle or life instead of reaching out to an insurance company to purchase a traditional policy. The legal and financial ramifications of choosing to be self insured vary depending on the type of policy being purchased. For example, many states require that drivers carry auto insurance while a mortgage lender typically requires homeowners to carry homeowner’s insurance.
The prevailing reason for businesses to choose self-insurance over traditional insurance is cost savings. Employers that self-insure set up a trust or other similar account and set aside funds to cover claims. They then manage those claims through a third party administrator (TPA). The TPA takes on the risk of paying for any losses and negotiates with insurers to pay for medical expenses.
In addition, the TPA may provide other services to help control the costs of a plan. These include claims management, network management and overall administration. Some TPAs also offer administrative support to workers’ compensation claims.
An employer must meet specific application, security deposit and reporting requirements to obtain a permit to self-insure. The SIAB will review the application and make a determination on whether or not an assessment is required. Click here to view the list of private, self-insured employers approved to participate in the Illinois workers’ compensation self-insurance program. самоосигуряващо се лице или фирма