Another is self-insurance. Small districts may combine resources in insurance pools to self-insure on a group basis. Two types of self-insurance must be distinguished. In the first type, also called self-funding, funds are set aside in anticipation of future losses and regular payments are made to increase this reserve. A catastrophic loss could devastate an unfunded district.
Districts typically combine transfer and retention.
Insurance policies with deductibles are a nearly universal example. Many districts self-insure one or two areas of risk and purchase insurance for the rest. Risk-management begins at the top. Risk-management operations should be consolidated and overall responsibility given to one administrator. Splitting activities among several departments results in inefficiency and duplication of effort.