The Key Components of a Self-Insurance
Program
The Risk Management (RM) System is the identification of exposures to
liability loss from professional activities, and the control,
prevention, risk transfer, and/or elimination of those risks of
loss.
The Incident Reporting/Claims
Investigation/Claims Management functions
are the most vital components of the self-insurance program.
Prompt reporting of untoward events, early intervention with
the injured party and prompt, accurate investigation of the
event will provide the best opportunity to dispose of the claim
in the most cost effective manner.
Next to the safe practice of
medicine, this claims management function most directly affects
the cost of self-insurance. Since the cost of medical
malpractice claims investigation and defense can run as much as
50 percent or more of the total cost, the controlling of
attorney’s fees and other claims expenses and the prudent
and appropriate settlement of claims is extremely important.
The Self-Insurance Plan Document (SIPD) is equivalent to an insurance policy. It
sets forth what and who is covered and not covered under the
program. It also establishes the limits of liability insured by
the program and can serve as “proof of insurance”
when dealing with the claimant’s attorney or satisfying
hospital requirements.
The Actuarial Study is the recommendation by a professional casualty
actuary of the amount of money to be deposited in the
self-insurance fund which, together with earned investment
income, is sufficient to pay for covered losses and claims
expenses with a conservative additional margin for adverse
experience.
The Fund is
the pool of cash or liquid cash equivalents which is restricted
to the payment of claims and claims expenses.
The Trustee is
the contractually designated individual who will disburse funds
from the fund at the direction of the program manager based on
the covered losses and eligible expenses as defined by the
self-insurance plan document.
The Trust Agreement is the contract between the self-insured entity
and the trustee. The trust agreement specifies all aspects of
the trustee’s role and includes the method and period of
financial reports regarding the fund provided by the trustee.
Commitment by each practitioner, owner,
and employee to risk
management, quality assurance and self-insurance is absolutely
essential to the success of self-insurance. That total and
absolute commitment will give the entity the very best
opportunity to control its claims costs and therefore the
profitability of the business.
Education of all individuals within the
entity as to the existence and
the importance of the self-insurance plan is the key to the
success of the program. The awareness of self-insurance by all
personnel and their importance to the program will, to a great
degree, enhance the viability and success of the program.
The Program Manager manages the self-insurance program and is responsible
for the implementation, coordination, and facilitation of all
previously described components. g