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 Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

, 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 Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any o ...

providing certain benefits – generally health benefits or

disability benefits Disability benefits are funds provided from public or private sources to a person who is ill or who has a disability. United Kingdom In the United Kingdom disability benefits are covered by Department for Work and Pensions. There are numerous be ...

– 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.

See also