Self-insurance means carrying a risk yourself instead of transferring it to an insurer. In Australia it takes several forms: high excesses and retained risk, captives, discretionary mutual funds, and licensed workers' compensation self-insurance. It suits large organisations with predictable losses and strong balance sheets, and it brings the claims work an insurer would otherwise do.
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
- Self-insurance is carrying a risk yourself, in whole or in part, rather than paying an insurer to carry it.
- Workers' compensation self-insurance needs a licence from a state regulator, or from the SRCC under the Comcare scheme.
- According to SIRA, a New South Wales self-insurer must have the resources to meet past and future obligations and hold reinsurance against insolvency.
- According to Safe Work Australia, there were 146,700 serious workers' compensation claims in 2023-24, the volume self-insurers must be ready to manage.
- Self-insurance often does not make sense: it needs scale, a stable loss history and the capability to run claims well.
What is self-insurance?
Self-insurance is carrying a risk yourself rather than transferring it to an insurer. An organisation that self-insures pays its own losses, sets aside money to meet them, and handles the claims. It may do this for one risk or many, in whole or in part, and often with reinsurance above a set level.
The idea covers a wide range. At one end, a business that chooses a large excess is self-insuring the first part of every claim. At the other end, a licensed workers' compensation self-insurer takes on the whole liability. It decides claims and pays compensation, all under a regulator's supervision.
What every form has in common is that the organisation, not an insurer, bears the cost of claims up to some level. As a result, it also takes on the work that goes with them.
What forms does self-insurance take in Australia?
Self-insurance in Australia takes four main forms. They are retained risk through high excesses, captive insurers owned by the organisation, discretionary mutual funds shared with similar organisations, and licensed workers' compensation self-insurance. Each carries a different level of risk, regulation and claims work.
Retained risk. An organisation keeps the first layer of each loss, through a large excess or deductible, and insures above it. It is the simplest form.
Captives. A large group sets up its own insurer to cover the group's risks, often reinsuring part of them. A captive is an insurer in its own right, so it is regulated as one.
Discretionary mutual funds. Members pool money to meet each other's losses, but the fund has discretion over whether to pay a claim. That discretion is what makes it different from insurance. The guide to discretionary mutual funds covers how they work.
Workers' compensation self-insurance. An employer licensed by a regulator manages and pays its own workers' compensation claims instead of holding a policy. It is the most regulated form, covered next.
Who can self-insure workers' compensation?
Only employers licensed by a workers' compensation regulator can self-insure workers' compensation. Each state runs its own licensing, and the Commonwealth's Comcare scheme has its own. Licences generally require scale, financial strength, reinsurance and the capability to manage claims, rehabilitation and return to work.
In New South Wales, according to SIRA, self-insurers are employers approved to manage their own workers' compensation claims instead of obtaining a policy. SIRA issues single and group licences. It expects applicants to have sufficient resources, to be of sufficient size and to hold reinsurance against insolvency. SIRA publishes a list of current licensees, which includes household names such as Aldi Stores and Ausgrid.
Under the Comcare scheme, according to the SRCC, eligible corporations can be licensed in one of three ways. They can self-insure their workers' compensation liabilities, their claims management, or both. Becoming a licensee is a two-step process: the Minister declares a corporation eligible, then it applies to the SRCC. Other states run their own schemes, so check each regulator directly rather than relying on another state's rules.
When does self-insurance make sense?
Self-insurance makes sense when an organisation is large enough for its losses to be predictable. It must also be strong enough to absorb a bad year, and capable of running claims well. It often does not make sense, because those three conditions are harder to meet than the premium savings suggest.
Scale matters because predictability comes from volume. An employer with thousands of staff can forecast its injury claims with some confidence, while a small one cannot. Financial strength matters because a single catastrophic claim, or a run of them, lands on the organisation's own balance sheet.
Capability is the condition most often underestimated. A self-insurer must decide claims fairly, pay them on time, manage recovery and keep records a regulator will audit. 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 a continuous workload, not an occasional task.
What claims work does a self-insurer take on?
A self-insurer takes on the claims administration an insurer would otherwise do. That means receiving and assessing claims, making decisions and paying compensation and suppliers. It also means managing rehabilitation and return to work, and keeping the record. For workers' compensation, that work is supervised and audited by the regulator under the licence.
The work runs on systems as much as people. Every claim needs a clear history of who decided what and when, payments that reconcile, and evidence a regulator can review. Many self-insurers also handle property, motor or liability claims under their own arrangements, which adds another set of processes to run.
Some organisations run that work on a claims platform. For example, ClaimsGateway (claimsgateway.com) handles injury and workers' compensation claims alongside property, motor and liability claims. Its workflows are configured by the organisation itself.
The self-insured claims software list compares that kind of platform with injury specialists.
The ClaimsGateway self-insured page describes the approach.
Frequently asked questions
What does it mean to be self-insured?
Being self-insured means an organisation carries a risk itself instead of paying an insurer to carry it. It pays its own losses, sets money aside to meet them and handles the claims. For workers' compensation in Australia, being self-insured means holding a licence from a regulator to manage and pay your own claims.
Who can self-insure workers' compensation in Australia?
Only employers licensed by a workers' compensation regulator. In New South Wales, SIRA licenses self-insurers that have sufficient resources, size and reinsurance. Under the Comcare scheme, the SRCC licenses corporations the Minister has declared eligible. Each state runs its own scheme, so the exact requirements depend on where the employer operates.
What is the difference between self-insurance and a high excess?
A high excess is a partial form of self-insurance. The organisation carries the first part of each loss, up to the excess, and the insurer pays the rest and usually handles the claim. Full self-insurance goes further, with the organisation carrying the whole liability and running the claims itself, often with reinsurance above it.
Is a discretionary mutual fund self-insurance?
A discretionary mutual fund is a form of shared self-insurance. Members pool money to meet each other's losses, so together they carry the risk rather than an insurer. The fund has discretion over whether to pay a claim, which distinguishes it from insurance, where an insurer is contractually bound to pay valid claims.
Where can I find a list of self-insurers in NSW or Queensland?
In New South Wales, SIRA publishes a list of current licensed self-insurers on its website, including names such as Aldi Stores, Ausgrid and Campbelltown City Council. For Queensland, check the state's workers' compensation regulator directly, since each state licenses self-insurers under its own scheme.
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
- Self-insured or fully insured: what changes in claims handling.
- Workers' compensation claims software: systems for licensed self-insurers.
- Claims software in Australia: the full market, grouped by type of system.
Sources
- SIRA. "Self-insurers." https://www.sira.nsw.gov.au/workers-compensation/self-insurers
- Safety, Rehabilitation and Compensation Commission (SRCC). "About self-insurance." https://www.srcc.gov.au/about-self-insurance
- Safe Work Australia. "Key Work Health and Safety Statistics Australia 2025." https://data.safeworkaustralia.gov.au/insights/key-whs-statistics-australia/latest-release
- ClaimsGateway. Website, checked 16 October 2026. https://claimsgateway.com
