But not totally, and would presumably protect against catastrophic catastrophes by spreading the meta-risk.
You could make the same argument against having home or medical insurance, that it erodes the advantage of having the totality of your take home pay. But it seems responsible to have home insurance and medical insurance, and it would seem responsible for a self-insurer to reinsure.
The problem with re-insuring is it's not one thing and its not the other. The advantage of self-insurance is diminished, and the advantage of conventional insurance is diminished also.
> it would seem responsible for a self-insurer to reinsure.
Reinsuring is sort of like being married, and not being married, at once. Many people think that sounds pretty cool -- until they try it.
Reinsurance policies can be pretty bespoke; you could for instance get a policy that only covers you in the event that a tornado hits corporate HQ (=> driving corporate revenues down and healthcare costs up at the same time), or individual payments above a certain amount, or N% of aggregate claims above a certain level. You still preserve most of the benefits of self-insuring while protecting yourself against outliers, in the same way that you come out ahead if you skip insuring the loss of your refrigerator, but do insure the loss of your house.
The biggest issue is the principal-agent problem - it costs some amount to insure against once-every-20-year claims, and by that time the CEO is likely to be retired, so why buy the coverage?
That's one of the reasons why insurance companies per se are highly regulated.
You could make the same argument against having home or medical insurance, that it erodes the advantage of having the totality of your take home pay. But it seems responsible to have home insurance and medical insurance, and it would seem responsible for a self-insurer to reinsure.