When an organisation is fully insured, the insurer decides and pays claims, and the organisation mostly reports losses and supplies information. When it self-insures, the organisation decides and pays claims itself, or through a TPA, and carries the records, deadlines and regulatory duties an insurer would otherwise carry. The claims work moves in-house.
This article is general information, not legal or compliance advice. Check the current text of the code, standard or legislation, and take advice for your situation.
Key takeaways
- Fully insured organisations hand claims to the insurer; self-insured organisations handle claims themselves or through a third-party administrator.
- According to SIRA, a New South Wales workers' compensation self-insurer must have the resources to meet its obligations and hold reinsurance against insolvency.
- According to Safe Work Australia, there were 146,700 serious workers' compensation claims in Australia in 2023-24, the volume self-insurers must be ready to manage.
- Self-insurance shifts the decision, the payment, the record and often the dispute to the organisation.
- Many organisations sit in between, self-insuring some risks and insuring others above an excess.
What is the short answer?
Under full insurance, the insurer owns the claim: it assesses, decides, pays and handles any dispute. Under self-insurance, the organisation owns the claim and does all of that itself, or through a TPA it appoints. The organisation saves the insurer's margin but takes on the work, the records and the accountability.
The difference is easiest to see in workers' compensation. A fully insured employer reports an injury to its scheme agent or insurer, which manages the claim. A licensed self-insurer manages the claim itself, under the regulator's standards.
For general risks, such as property damage or motor fleet losses, self-insurance needs no licence. An organisation simply carries a high excess, or no policy, and handles those claims. The guide to self-insurance covers when that makes sense.
Who handles the claim in each model?
In a fully insured model, the insurer decides, pays and keeps the claim record, and disputes go to the insurer and then to AFCA. In a self-insured model, the organisation, or its TPA, does each of those things, and disputes go to the organisation and, for workers' compensation, the scheme's dispute process.
- Deciding the claim. Fully insured: The insurer; Self-insured: The organisation or its TPA.
- Paying. Fully insured: The insurer, less any excess; Self-insured: The organisation, often with reinsurance above a retention.
- Keeping the record. Fully insured: The insurer; Self-insured: The organisation.
- Handling disputes. Fully insured: The insurer, then AFCA for eligible complaints; Self-insured: The organisation, then the scheme or a court.
- Carrying regulatory duties. Fully insured: The insurer; Self-insured: The organisation, for licensed self-insurance.
The organisation still has work under full insurance. It reports losses promptly, supplies evidence, cooperates with assessors and, for workers' compensation, supports return to work. However, the insurer runs the claim.
What does a self-insured organisation take on?
A self-insured organisation takes on three kinds of work: administration, compliance and data. It must assess and decide claims, pay them, meet deadlines, follow the rules of any licence, and keep records that auditors, reinsurers and regulators can rely on. That work needs people, processes and systems.
Administration is the daily load. Claims need to be logged, assessed, paid and closed, with suppliers, assessors and claimants kept informed. For injury claims, return to work adds case management.
Compliance is the second load. According to SIRA, a New South Wales self-insurer must have the resources to meet its obligations and hold reinsurance against insolvency. Each state and the Commonwealth's Comcare scheme sets its own licensing standards.
Data is the third. A self-insurer needs reliable figures on open claims, reserves and costs to manage its risk and report to its board. As a result, the record has to be complete from the first notice of an incident.
Volume makes the load real. According to Safe Work Australia, there were 146,700 serious workers' compensation claims across Australia in 2023-24. For a large employer, its share of those claims is continuous work.
What systems does each model need?
A fully insured organisation usually needs an incident register and a way to supply information to its insurer. A self-insured organisation needs a claims system: one that records each claim from first notice, runs the workflow, pays and reconciles, and produces the records its board, auditors and regulator expect.
The step up is significant. An incident register records what happened, while a claims system manages the decision and the money that follow. The self-insured claims software list compares options.
ClaimsGateway (claimsgateway.com) is one example, built for insurers, TPAs and self-insured organisations. The ClaimsGateway self-insured and mutuals page describes its approach. A low-volume organisation with one claims handler may still find a well-kept spreadsheet enough.
Frequently asked questions
What is the difference between self-insured and fully insured?
A fully insured organisation transfers its risk to an insurer, which decides and pays claims. A self-insured organisation keeps the risk and decides and pays claims itself, or through a third-party administrator. Self-insurance saves the insurer's margin but brings the claims work, records and accountability in-house.
Who pays claims when you are self-insured?
The organisation pays claims from its own funds when it self-insures, often with reinsurance or excess insurance to cover losses above a set retention. For licensed workers' compensation self-insurers, regulators require evidence that the organisation can meet its claims obligations, including reinsurance against insolvency.
Do self-insurers need a claims system?
Most do. A self-insurer must decide, pay and record every claim, meet deadlines and satisfy auditors and, for workers' compensation, its regulator. Claims software makes that consistent and auditable. A small organisation self-insuring a few minor property losses may manage with a well-kept register instead.
Is self-insurance cheaper?
It can be over time, for organisations with predictable losses and the capacity to manage claims, because they keep the insurer's margin. However, they also carry volatile losses, administration costs and regulatory costs. Whether it is cheaper depends on loss history, size and how well claims are managed.
Can you be partly self-insured?
Yes, and many organisations are. They may carry a high excess and insure losses above it, self-insure some risks such as fleet damage while insuring others, or self-insure workers' compensation while buying property cover. Each mix changes which claims the organisation handles itself.
About the author
ClaimsGateway builds cloud claims management software for insurers, underwriting agencies, brokers, TPAs and self-insured organisations in Australia and New Zealand. Every regulator figure in this article links to its source, and every vendor fact was checked on the vendor's own site on the date shown.
Related reading
- Captive, self or mutual: three ways to retain risk compared.
- Workers' compensation claims process: an employer's guide.
- Claims software vs outsourcing: running claims in-house or through a TPA.
Sources
- SIRA. "Self-insurers." https://www.sira.nsw.gov.au/workers-compensation/self-insurers
- Safe Work Australia. "Key Work Health and Safety Statistics Australia 2025." https://data.safeworkaustralia.gov.au/insights/key-whs-statistics-australia/latest-release
- Safety, Rehabilitation and Compensation Commission (SRCC). "About self-insurance." https://www.srcc.gov.au/about-self-insurance
- ClaimsGateway. Website, checked 22 October 2026. https://www.claimsgateway.com
