When might self-insurance be a preferred choice for an individual or organization?

Self-insurance is often a preferred choice for individuals or organizations when they seek to manage and cover their own risks without relying on traditional insurance plans. This approach allows them to set aside funds to cover potential losses or expenses instead of paying premiums to an insurance provider.

Organizations, in particular, may choose self-insurance to gain more control over their financial resources related to risk management. This method can also lead to cost savings in the long run, as it eliminates the need for insurance overhead and can be tailored to specific risk profiles. By assessing their risk tolerance and expected claims, entities can determine how much to set aside for potential expenses, making it a strategic financial decision that aligns with their operational or fiscal objectives.

Self-insurance does not typically involve avoiding risk completely; rather, it is about taking on the responsibility of managing and mitigating that risk directly.