Archive for Alternative Risk
Self-Insurance Retention (SIR) Programs
Self-insured retention (SIR) programs allow insureds to retain more control of their assets. While certain programs may have low retention levels, most exceed $100,000. The SIR amount often increases as the program matures due to effective asset planning. The insured is responsible for all claims within the SIR. Most insureds choose a third-party administrator (TPA) to handle those claims. A number of large insurers and brokerage firms provide TPA services for their accounts on either a fee basis or as part of a total risk management services program. Advantages of SIRs include reductions in insurance costs, use of the cash flow until a loss actually occurs, at which time the insured sets up a reserve fund to pay losses instead of the insurer paying, and better control of loss prevention activities. SIR programs are customized for each insured. Coverages that SIR programs often include are workers compensation, auto liability, and commercial general liability.