Self-insured companies are large businesses and councils that provide their own Workers’ Compensation insurance. However, eligibility is subject to strict obligations and is overseen by the relevant state regulator. This ensures the company meets certain requirements and follows all regulations in order to qualify for self-insurance.
What is a self-insured company?
When organisations become self-insured, they are responsible for the costs and risks of their own worker's compensation claims.
Similar to WorkCover, self-insurance:
- Provides incentives to improve injury prevention and rehabilitation performance
- Makes sure that workers are treated fairly
- Contributes to ongoing improvement in health, safety and return to work performance.
Is self-insurance right for your business? The primary advantage of becoming a self-insured company instead of traditional insurance is greater control over finances. In a conventional or underwritten policy, employers pay premiums before any claims are made. In a self-insurance company, no money is paid until a claim occurs. Occasionally claim cases may take a long period to settle, allowing businesses to save their money until the claim is actually payable.
There is a human benefit too — because the case management team has a much deeper understanding of the workplace, they are better placed to ensure appropriate support, assistance and services are provided to the injured worker.
It's much more complicated and regulated though, which is why it's worthwhile understanding your obligations to see if you are eligible.
What are the required obligations?
Eligibility is decided by the regulator who has a strict criteria list, however, obligations vary between state jurisdictions. Organisations must go through a formal application process and be deemed 'fit and proper in order to receive approval. It's important to review considerations in-depth to ensure you are eligible.
Factors that consistently come under scrutiny include:
- size of the organisation
- history of occupational health and safety (OHS) performance
- workplace rehabilitation policy and procedure
- resources to administer claims
- financial strength and viability
- safety of working conditions
- compliance with relevant legislation
Additional requirements that may apply:
- pass a third-party work health and safety audit
- have re-insurance cover
- employ the necessary minimum number of workers
- pay annual levies
Initial approval to self-insure is given for a limited period of time and may be extended by the regulator at their discretion. Again, all of these guidelines and safety management requirements vary between each jurisdiction.
Partner with a claims expert for a tailored solution
The requirements for being a self-insured company are strict, both around prudential and legal requirements to be awarded a licence, and the ability to administer claims. Without the proper approach, the financial benefits can quickly dissolve.
Partnering with a Third Party Administrator (TPA) such as Gallagher Bassett can mitigate that risk. We unlock advantages such as:
- Fast and focused claims management
- Lower overheads and reduced cost
- Immediate access to highly-trained specialist claims administrators
- Improved control over claims outcomes
- Safeguarding customer relationships and protecting brand reputation.
GB is a self-insurance specialist that can help you realise the financial benefits available. Unlock the advantages of self-insurance with our tailored solutions today.