Individual enterprises have available to them many smart alternatives and add-ons to commercial insurance.
Individual companies and organizations can enjoy some pretty sweet benefits by insuring themselves — in whole or in part — rather than simply buying insurance from a commercial carrier. The benefits include cost savings, greater control over claims, improved cash flow, customized coverages, and a sharp decrease in bureaucratic headaches.
A smart self-insurance program can also:
- Increase the resources you have available for health, safety, and loss control initiatives
- Protect your business from the volatility of the insurance market
- Allow you to generate investment income, instead of ceding that benefit to a commercial insurance carrier
- Give you direct access to the reinsurance market that commercial insurers use to protect against catastrophic risk
We can lead you step by step through the process of designing, establishing, and managing your own self-insurance program. We’ll start with a feasibility study, to determine whether self-insurance makes sense for you. If it does, we’ll figure out the most desirable contours for your program. This is essential, as there are many types of self-insurance, suited to different companies and different risks. We’ve been doing this a long time, and we know our way around all of them.
We think you’ll agree — much of the beauty of self-insurance is that we can design it precisely to meet your needs. Bless their hearts, but commercial insurance companies just aren’t set up to offer that kind of customization.
To dig deeper into the possibilities of self-insurance, call John Ashton at 602.222.2105, or send him an email at firstname.lastname@example.org.
Doing the math
One of our clients—let’s call them ACME—is a nationwide organization with divisions across the country. During a period of major growth, ACME added a number of new locations in a short amount of time. As each location was onboarded, it was presented with a bill for corporate overhead: various costs associated with being under ACME’s roof. One of those costs was insurance through ACME’s self-insurance program.
Given the nature of their business, many of the local affiliates had a good knowledge of risk management. Looking at ACME’s overhead charge, the affiliates began to ask, “How do we know we’re getting a good deal on insurance through you guys? Maybe we can do better.”
That’s when ACME asked us for help. We developed an insurance cost allocation model—one that accounted for risk exposures, previous losses, commercial insurance and captive premiums, deductibles, and risk management activities, all the way down to the level of individual locations. This meant that the new affiliates were able to see exactly what they were paying for and why, and where they might be able to earn a break on their contribution to corporate.
With this information in hand, the local affiliates were satisfied that they were getting a good deal on insurance, and ACME was able to maintain the integrity of its self-insurance program rather than having each sub-unit seek its own solution.
Making OCIP magic
A few years back we helped a multistate hospital system create an owner controlled insurance program (OCIP). The program provided workers’ compensation and general liability coverage for construction projects with a combined value of $1.5 billion.
The OCIP saved our client an estimated $2 million on the purchase of commercial insurance. It also helped the client achieve fewer uninsured events; greater control over site safety and claims; and opportunities for savings on claims management.
Talking dollars with a doc
One of our school district clients self-insures its healthcare benefits. We help administer the district’s program.
During a standard review, we spotted a claim that processed at $327K for a pretty common procedure. This seemed suspicious to us. Turns out we were right to raise questions: After a little digging, we determined that the normal cost for the procedure was around $44K (still not peanuts, we know).
After getting nowhere with the client’s medical network, we contacted the provider directly. We explained that these were public dollars being spent, and asked that the provider refund the amount of the excess charge.
We got some pushback — even got a call from an attorney. We persisted, though, knowing that our request was eminently reasonable (if unconventional).
After much back and forth, the provider refunded the $283K we had requested, figuring it would be good for business in the long run. Our member was happy, and the provider was still fairly compensated for services rendered.