Self insurance can be best described as?

Self-insurance is best described as an alternative to purchasing insurance because it involves the practice of setting aside funds to cover potential losses rather than transferring that risk to an insurer through a traditional insurance policy. In self-insurance, an individual or organization assumes the financial responsibility for certain risks internally, effectively becoming its own insurer. This approach can be more cost-effective for businesses that have a good understanding of their risk profile and the ability to manage those risks without the involvement of an insurance provider.

While purchasing insurance directly from a company, using in-house brokers, or engaging with mutual indemnity associations are all methods of obtaining insurance coverage, they do not capture the essence of self-insurance, which is fundamentally about retaining risk rather than mitigating it through purchases. Thus, the notion of self-insurance as an alternative to purchasing insurance emphasizes its role as a risk management strategy.