When we first started doing this in 1995, there were almost a hundred self-insured entities in the state of New Hampshire. Right now, there are only about 25 left, and it’s largely because the commercial market for workers’ comp insurance became so competitive that it was actually less expensive for a lot of companies to buy workers’ comp insurance than it was to be insured by themselves.
To that end, we manage about six of those 25 self-insured businesses, and the whole concept behind it is they actually write a check to pay for claims, but they still have to have a lot of other things in place that allow them to be self-insured by the state of New Hampshire. They need to use a licensed third-party administrator, which would be us. They also need to provide surety at the state to make sure that they’re able to pay claims, they need to buy excess insurance so that if they have a catastrophic claim they can be guaranteed to pay for it, and they have to do filings just like all the rest of the self-insurance market.
Self-insurance is a product that a company could benefit from if they currently have more than a half-a-million dollar premium that they’re paying in a commercial insurance market. And, they need to understand that this is a long-term proposition – once you start a self-insured product for your company, you need to own any claim that occurs, so you could effectively end up running that program for ten, fifteen or twenty years beyond the time that you stop doing it. So it requires consideration before a company actually makes the change, but it is worthwhile.