Still, Lawhorn says, "I think self-insurance is the one thing that's helping us, by allowing us to be more strategic with plan design and the cost-sharing structure."
Occasionally, insurers will offer great deals to entice companies they deem as good risks back into their pools, says Thompson, something that can make switching an attractive option in the short term. Over the long run, though, self-funding will beat any deal insurers can offer, he says. "The question is, can the company absorb the risk in the short run?" says Thompson.
Which companies should not consider self-insurance? Those in industries where cash flows are scarce or unpredictable, for starters. Companies with big changes in the works, such as a major layoff or acquisition, should also refrain, since reshaping the employee group can change the cost dynamics.
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