Many clients self-insure their smaller property losses. Property self-insurers purchase reinsurance or "excess" insurance to cover  losses that are too large to self-insure without putting their financial health at risk.

 

Self-insuring relatively small losses saves money in the long run just as choosing a higher deductible saves a motorist money when he purchases an auto insurance policy.

 

Actuarial assistance is vital in choosing the "right" amount of self-insurance, given a client's financial position, the cost of excess insurance, and the client's past track record of property losses.

 

Property is actually one of the riskiest coverages that clients self-insure. Most clients have many fewer property losses than workers' compensation or liability losses, especially when one disregards the relatively common small losses of less than $1,000. The relatively low frequency of property losses, combined with the potential for extremely large loss amounts, makes property insurance so risky.