Which of the following describes a self-insurer?

A self-insurer is a business that self-funds certain risks, which means that instead of paying premiums to an insurance company, the business retains the financial responsibility for specific losses. This approach allows companies to manage their risk in a way that may be more cost-effective for them, particularly if they have a good understanding of their loss exposures and sufficient financial resources to cover potential claims.

This method of risk management can be particularly beneficial for businesses with a stable loss history, as they can save money on premiums while still having the capability to handle potential losses internally. By self-funding, companies can have more control over their claims process and may be able to invest the savings from traditional insurance premiums into other aspects of their business.

In contrast, options such as having no insurance or forming collective insurance groups refer to different forms of risk management that do not align with the concept of a self-insurer, which involves actively managing and funding risks internally. A government entity providing insurance also falls outside the definition, as self-insurers are typically private companies leveraging their capital resources to cover potential losses.