Author: Kaya Stanley, Board Chair and CEO, CRMBC
As the insurance landscape in California continues to evolve, self-insurance is becoming an increasingly attractive option for business owners, particularly in the restaurant industry. While not new, the concept is gaining renewed interest as traditional insurance markets fluctuate. I spoke with three seasoned insurance professionals, Michael Der Manouel Jr., Mike McDonough, and Ruben Medina, to shed light on this complex but promising avenue. Each broker brings a unique perspective, offering valuable insights into why self-insurance is gaining traction and how it can benefit California’s restaurant owners.
A Shift Towards Strategic Risk Management
For many brokers, the shift towards self-insurance represents a strategic pivot from viewing insurance as a mere commodity to recognizing it as a critical element of business management. Mike McDonough, whose company, McDonough Insurance Services, has been with CRMBC since its inception, emphasizes the importance of education in this transition. “Brokers need to understand that self-insurance isn’t just another product to sell; it’s a long-term strategic decision,” he explains. McDonough’s approach to guiding clients through this transition is rooted in providing them with the knowledge and tools they need to make informed decisions.
Similarly, Mike Der Manouel Jr. of Hub International points out market conditions often drive brokers and their clients to explore self-insurance. Reflecting on the early 2000s when the workers’ compensation market collapsed, Der Manouel recalls how many carriers pulled out of California, leaving business owners with few options.
“Self-insurance became a stable, budgetable alternative during that crisis, and it’s a model proving resilient even today,” he says. Der Manouel’s experience highlights how external pressures can push businesses to seek more predictable and sustainable insurance solutions.
With Acrisure Southwest, Ruben Medina brings an operational perspective to the conversation. For him, the appeal of self-insurance lies in the control it offers business owners over their workers’ compensation costs. “Self-insurance allows business owners to take control of their workers’ comp costs and directly influence outcomes,” Medina notes. This control, he argues, is crucial in a state like California, where the regulatory environment can be particularly challenging for employers.
The Growing Appeal in a Hardening Market
As the traditional insurance market becomes increasingly volatile, self-insurance is emerging as a more stable and predictable option. Der Manouel Jr. sees this as a natural fit for businesses looking to mitigate the risks of a hardening market. “Self-insurance doesn’t just provide cost savings; it offers predictability, which is invaluable in an uncertain market,” he explains. This predictability, combined with the collaborative nature of self-insured groups, makes the model particularly appealing to those seeking long-term solutions.
Medina also sees the collective aspect of self-insurance as a significant advantage. “In a group self-insurance model, you’re not just managing risk—you’re sharing it with other like-minded business owners,” he says. This shared responsibility fosters community and mutual support, which can be especially beneficial in turbulent economic times.
For McDonough, the current market volatility is a compelling reason for brokers and their clients to consider self-insurance seriously. He notes that while there may be a learning curve, the benefits outweigh the challenges. “The market’s current volatility is exactly why brokers and their clients should be looking at self-insurance as a serious option,” he asserts.
Control, Collaboration, and the Benefits of Self-Insurance
According to Medina, one of the most significant advantages of self-insurance is the control it gives business owners over their operations. “The ability to directly manage claims and safety practices gives business owners a level of control they simply can’t get with traditional insurance,” he explains. This control extends to financial management, where surplus funds can be returned to members, providing a tangible benefit that traditional insurance models do not offer.
McDonough, on the other hand, emphasizes the collaborative nature of self-insurance groups. “The sense of community and shared goals within a self-insured group can lead to better outcomes for everyone involved,” he says. This collaboration, he believes, is what differentiates self-insurance from other models and contributes to its success.
Der Manouel highlights the operational advantages, such as selecting best-in-class partners for claims management and other services. “In a self-insured group, you’re not just a policyholder—you’re a partner in the operation, which means you have a say in how things are run,” he notes. This involvement allows business owners to tailor the services they receive to meet their specific needs better, leading to improved outcomes and greater satisfaction.
Overcoming Challenges and Misconceptions
Despite its benefits, self-insurance has its challenges. Medina acknowledges some self-insured groups’ historical difficulties, particularly in the early 2000s. However, he quickly points out that the industry has learned from those experiences. “The issues of the past were due to poor management and lack of oversight—those problems have been addressed in today’s programs,” he assures.
Der Manouel Jr. is upfront about the commitment required for self-insurance. He emphasizes that it is not a quick fix but a strategic decision that requires a long-term commitment. “It’s not for everyone—businesses must be prepared for a long-term commitment. But for those who are, the rewards can be significant,” he says.
McDonough, meanwhile, stresses the importance of transparency and education in overcoming misconceptions. He believes brokers play a crucial role in ensuring that their clients fully understand self-insurance. “Brokers need to be honest about what self-insurance entails—both the risks and the rewards. Only then can they guide their clients to make informed decisions,” he advises.
Looking Ahead: The Future of Self-Insurance
As California’s regulatory environment evolves, self-insurance will likely become an even more attractive option for business owners. All three brokers agree that self-insurance’s stability, control, and collaborative nature make it a compelling choice in an increasingly unpredictable market.
Medina, in particular, is optimistic about the future of self-insurance. He believes that as more business owners become aware of the benefits, the model will continue to grow in popularity. “Self-insurance offers a level of control and predictability that is hard to find in the traditional insurance market. It’s a model that’s built to last,” he concludes.
For brokers like Der Manouel Jr., McDonough, and Medina, self-insurance is not just a product—it’s a strategic tool that can help clients navigate the complexities of the modern insurance landscape. As the market shifts, their insights provide a valuable roadmap for business owners looking to take control of their workers’ compensation costs and ensure long-term stability for their operations.
For more insights and strategies from industry experts, subscribe to the CRMBC Self-Insurance Podcast. The knowledge shared in these discussions could significantly improve your restaurant’s ability to navigate California’s ever-changing insurance market. If there are any specific topics you’d like us to cover in the future, please email us at info@CRMBC.com.
Kaya Stanley is an attorney, published author, business owner, and highly sought-after strategic turnaround expert. Ms. Stanley serves as CEO and Chairman of the Board for CRMBC, the largest restaurant workers’ compensation self-insured group in California, and she is the Licensee for TEDxReno, an independently organized TEDx Event.
Throughout her 22 years of practicing law, Ms. Stanley has served as outside counsel for Wal-Mart and Home Depot. She was voted one of the country’s “Top 25 OZ Attorneys” by Opportunity Zone Magazine and published a best-selling book called “The Employer’s Guide to Obamacare.” Before that, she earned her master’s degree in social work and public policy, after which she worked with at-risk girls in Detroit and lobbied for women and families.
