Simulation Models for Self-Insurance

Actuaries are increasingly utilizing simulation models in a variety of practical applications. Most of these applications have focused on the future operating results and financial condition of an insurance company. These simulation models are also applicable in the risk management field, focusing on the financial consequences of self-insurance. This paper discusses the special considerations and applications of applying simulations to self-insurance. The author also discusses the integration of these results with the long-term and short-term financial plan of the self-insured.