Group self-insurers offer lower rates and premiums

How can group self-insurers offer lower rates and premiums?

• Group self-insurers avoid paying the insurance industry’s cost of capital and profit margin.

  The profit & contingency loads the insurance industry is currently charging are very high because these margins have been increased to offset poor investment yields on held funds. We estimate that business owners today are paying between 15% and 20% of premium in profit and contingency loads for policies of $250,000 or less.

• Investment income generated from funds held for long-term claims payments benefits the participating members of group self-insurance funds instead of the stockholders of an insurance company.

  According to the A.M. Best Study previously referenced, the five year average investment yield for group self-insurers equaled 4.9% of written premium from 1999 through 2003.