Which term refers to insurance held personally without relying on an external insurer?

Self-insurance refers to a risk management strategy in which an individual or organization retains the risk rather than transferring it to an external insurance provider. Instead of paying premiums to an insurance company, the self-insured entity sets aside funds to cover potential losses or liabilities. This approach is often used by businesses that can afford to absorb the risks and is especially common for certain types of risks, such as deductibles on insurance policies or smaller, predictable losses.

By holding the insurance personally, the individual or organization controls how the funds are managed and utilized, allowing for flexibility in risk management strategies. Self-insurance can lead to potential cost savings in the long run, as it eliminates the need to pay premiums to external insurers. In this way, it empowers entities to take ownership of their risk management and develop tailored solutions based on their specific needs and circumstances.