By Scott Bogdan, Producer
Many believe the world of self-insurance is complex and too risky. However, if structured the proper way to meet your individual risk tolerance, self-insuring a workers’ compensation program can be an attractive option for school districts for many reasons.
Yes, there are some critical steps that must be taken to get the program up and running. But, once some of the heavy lifting is done upfront, you can reap the rewards for years to come.
At EHD, we help public schools navigate this transition and have seen the many benefits it can bring. Here are eight of the best reasons why a school district might choose to self-insure:
- Increased Savings: By self-insuring, school districts can potentially reduce the costs associated with purchasing traditional fixed cost insurance premiums.
- Improved Cash Flow: Self-insurance allows school districts to have better control over their cash flow. This is because they can pay claims as they arise over time rather than paying a fixed premium upfront.
- Allowance for Customization: Self-insured programs can be tailored to meet the specific needs and risk profiles of the school district, allowing for more flexibility in the choice of retained risk (SIR’s), claims management and risk control.
- Improved Claims Management: School districts can have direct oversight and control over the claims process, which can lead to more efficient and effective claims handling.
- Incentives for Safety and Increased Employee Morale: Self-insuring can create a stronger incentive for school districts to implement safety and risk management programs to reduce the frequency and severity of claims.
- Access to Data: Self-insured entities have direct access to their claims data, which can be used to identify trends, improve safety programs, and make informed decisions about risk management.
- Potential for Financial Gain: If claims are lower than expected, the school district can retain the savings rather than paying them to an insurance carrier. (Hence keeping the profit that the insurance carrier would have made).
- Long-term Planning: Self-insurance allows school districts to take a long-term view of their workers’ compensation program, aligning it with their overall financial and operational strategies.
Don’t go at it alone
It’s important to note that while self-insurance can offer many benefits, it is not right for every district. School districts considering this option should typically have premiums over $500,000 and should consult with EHD experts to ensure it aligns with their goals and capabilities.
Ready to start reaping the benefits? Reach out to us today to get the process rolling.
