What is self insured lender?

A self-insured lender is a financial institution that assumes the risk of loss on its own loans instead of transferring that risk to an insurance provider. By self-insuring, the lender sets aside reserves to cover potential loan defaults, which can lead to cost savings on insurance premiums. This approach allows lenders to have more control over their risk management strategies and can enhance their profitability if they effectively manage their loan portfoliOS. However, it also requires a robust assessment of credit risk and financial stability.