Protected Self insurance is similar to both Insurance and Self-Insurance in concept. It involves the reservation of an on-balance sheet predetermined amount of money and the purchase of a tailored Stop-Loss insurance policy from an insurer.

Protected Self-Insurance is possible for any insurable risk that is predictable and measurable enough to be able to be quantified by making use of actuarial, insurance information and the law of large numbers.

Retaining the predetermined funds on-balance sheet and paying all forcasted cost up to the aggregate from this fund the overall process will produce cost-savings through the elimination of the carrying-costs that commercial insurers are obliged to pass on to their insurance consumers.

Many organisations are now using Protected Self-Insurance with considerable success.

Protected Self-Insurance is less readily available for individuals because individuals rarely gain sufficient cost-savings on small premiums to justify specialised Protected Self-Insurance programs.