Risk retention

risk retention

1. Risk Retention Risk Retention Noninsurance Transfers Insurance Advantages And Disadvantages For Above

2. Advantages Of Retention Save money Lower Expenses Encourage Loss Prevention Increase cash Flow

3. Possible Higher Losses Possible Higher Expenses Possible Higher tax Disadvantages Of Retention

4. Noninsurance Transfers Are methods other than insurance by which a pure risk and it’s potential financial consequences are transferred to anther party .

5. The risk manager can transfer some potential losses that are commercially insurable Noninsurance transfer often cost less than insurance The potential loss may be shifted to some one who is in a better position to exercise loss control Advantages Of Noninsurance

6. The transfer of potential loss may fail Because the contract language is ambiguous If The party to whom the potential loss is transferred is unable to pay the loss the firm is still responsible for the claim An insurer may not give credit for the transfers, and insurance cost may not always be reduced Disadvantages Of Noninsurance

7. Insurance If the Risk Manager uses insurance to treat certain loss exposures, five key areas must be emphasized .

8. Five Key Periodic review of the program Dissemination of information concerning insurance coverage's Selection of insurance coverage's Selection of an insurer Negotiation of terms

9. Deductible Is a provision by which a specified amount is subtracted from the loss payment other wise payable to the insured .

10. Excess insurance A plan in which the insurer does not participate in the loss until the actual loss exceeds the amount a firm has decided to retain .

11. The firm will be indemnified after a loss occurs the firm can continues to operate and my experience litter or no fluctuation in earnings Uncertainty is reduced Insurance can provide valuable risk management service Insurance premiums are income-tax deductible as a business expense Advantages Of Insurance

12. The payment of premiums is a major cost Considerable time and effort must be spent in negotiating the insurance coverage's The risk manager may have less incentive to follow a loss-control program Disadvantages Of Insurance