Are you using “self-insured” as a euphemism for “just eats the losses”? Because it’s not really insurance if there’s no risk pooling, and a large retailer is a single entity—who are they pooling risk from? Individual stores? That would make sense only if they are franchises.

That’s basically what self-insured is. Large employers offer health insurance but they aren’t pooling risk with other companies, they just pay all expenses.

Insurance is meant to protect against catastrophic loss. If a loss isn’t catastrophic, it’s often cheaper to just pay for the loss yourself.

It is a well-defined term: https://www.investopedia.com/terms/s/self-insure.asp

They may not be pooling risk, but they may be hiring actuaries to look at their past losses compared to similar businesses, and setting aside a reserve to cover expected future risk.

I’m sure that’s exactly what they do, but that’s not insurance—just prudent risk management.