International Journal of Sub-Saharan African Research (IJSSAR)

Background: The common type of risk management is the transfer of risk from the risk owner to an insurance company or any entity with higher capacity to absorb such risk. With time, starting with individuals, risk owners started putting in place models that could help them not only retain their risks but also to manage them effectively. This approach is referred to as self-insurance.
Objective: The main objective of this study is to examine corporate self-insurance as a method for managing risks by corporate enterprises in Nigeria while the specific objective is to examine the role of corporate self-insurance in risk retention plans of specific small and medium enterprises in Ikeja, Lagos State.
Method: Descriptive survey research design was used for this study to empirically investigate the relationship between corporate self-insurance and risk retention plan for business enterprises in Nigeria.Due to the consideration of the objectives of the study and the nature of data needed to achieve the objectives, descriptive survey method was considered appropriate for the generation of primary data for the study. The justification for the choice of this method was because of the size of the study population which was relatively high.
Conclusion: Although very few small and medium enterprises in the country has embraced the use of corporate self-insurance in their risks retention plans, corporate self-insurance could be a good strategy for this firms to improve their risk retentions and reduce the cost of insurance. More so, these SMEs could maintain more control over their risk management process and avoid unnecessary payment of insurance premiums.
Unique Contribution: This study aimed at assisting SMEs improve their risk management process through reducing the cost of transferring risks which could be retained in house to a third party (insurance companies). This no doubt would help in improving the profitability of these firms.
Key Recommendation: SMEs in the country should consider strategies that would help them adopt corporate self-insurance in their risk retention plans as to reduce their costs of insurance premium.SMEs should use corporate self-insurance as a strategy for greater control their risk management processes.SMEs could use self-insurance to profile effectively their risk profile so as to ascertain those risks to be retained or transfer out by them.