Risk[y] Business: Transitioning to a Stand-Alone Self-Insurance Program

In today’s modern society, all actions are measured against risk. Regardless of the category of risk that is being evaluated and the correlated potential negative outcome, it is almost impossible to simply avoid understanding risk and continue to thrive. With special focus on the application of risk in the context of local government in Florida— specifically municipalities—the Authors highlight why it is necessary to understand risk and reasonably mitigate risk through the process known as “risk management.” Particularly, the Authors explore and analyze the “self-insured” approach to risk management by a municipality.

In order to reach a conclusion, the Authors first survey an overview of the types of risk most often facing municipalities and the implication of sovereign immunity in Florida when evaluating those risks. The Authors then provide a more in-depth discussion of the differences between fully insured and self-insured risk management programs, which proceeds to an examination of the several factors most often utilized in deciding whether a municipality chooses a self-insured risk management program. In addition, the Authors use a case study of the City of Palm Bay, Florida, which adopted the self-insured risk management program, to demonstrate how it can be implemented. The Authors conclude by providing guidance on what local governments should consider when deciding to implement the selfinsured risk management program.