Compensation Glossary

Self-Insured Plans

There are two parts of any insurance policy. (1) Risk assumption. (2) Processing of the claims. In self-insurance, the organization itself, takes on the risk of payment, typically by placing money that would have been paid as premiums into a fund with which claims are paid. Self-insured plans are usually taken on by very large organizations because it would take only one sizeable claim for a small fund to be wiped out.