First established in the 1980s, joint insurance funds (JIFs) have modernized risk management for governmental entities nationwide. PERMA pioneered the concept in New Jersey. To date, the property & casualty JIFs administered by PERMA have saved taxpayers over $3 billion.
Prior to the formation of JIFs, public entities had two choices for their property & casualty programs: commercial insurance or individual self-insurance. Over the long run, commercial insurance is the most expensive way to finance risk because insurance company overhead adds $75 to the cost for every $100 in claims. Overhead for self-insurance is only about $25 per $100 in claims. The overhead for PERMA-administered programs is even less.
However, most public entities are not large enough to individually self-insure, and even governmental units that are large enough often lack the managerial resources to properly administer their programs.
The JIF model allows small governmental entities to achieve the cost savings of self-insurance and large governmental entities to outsource the administrative functions.