Insurance that a company provides for itself is referred to as what?

The concept of self-insurance pertains to a situation where a company takes on the risk of potential losses by reserving its own funds to cover those losses, rather than transferring the risk to an insurance provider. This means that instead of purchasing an insurance policy from an external insurer, the company decides to manage its own risk exposure and pay for any claims or losses from its own resources.

Self-insurance can be advantageous for companies that want to save on premium costs, especially if they have the financial capacity to absorb losses without compromising their operations. It's also often used by larger organizations that maintain a significant risk tolerance and can handle fluctuations in loss scenarios.

While captive insurance, reciprocal insurance, and mutual insurance are all related concepts in the realm of risk management, they involve external arrangements or associations wherein risks are pooled or covered through various collaborative means, differing from the self-insurance model where a company solely manages its own risks without relying on external insurers.