Principles of Insurance

Anoop Thomas 9/16/16

Professor Angelo BUS 327

Application Questions Pages 63-64: 1& 5

1a. Four Steps In Risk Management Process:

- (1) Potential losses must be identified.

- (2) The potential loses must then be analyzed in terms of loss frequency and loss severity.

- (3) An appropriate technique or combination of techniques for treating loss exposure must be selected.

- (4) The program must be implemented.

1b. Techniques that may be helpful in dealing with the company’s products liability exposure:

- (1)The firm can show avoidance by choosing not to make/manufacture ladders and products that can create future problems for the company, and having to go through lawsuits.

- (2)The firm can show loss prevention by creating instruction manuals on the safety precautions necessary to use these firms’ products such as their ladders and scaffolds safely.

- (3)The firm can show loss reduction by creating procedures that people should follow once an injury occurs so that the amount of loss to the frim can be reduced.

- (4)The firm can show noninsurance transfers by creating an agreement that makes Scaffold Equipment exempt from any blame in the case of any injury.

5. a. Personal Risk Management Program:

-Identify loss exposures.

-Analyze the loss exposures.

-Select appropriate techniques for treating the loss exposures.

-Implement and review the program periodically.

b. (1) Personal Loss Exposure:

- Analyze the loss exposures.

- Select appropriate techniques for treating the loss exposures.

- Implement and review the program periodically.

(2) Property Loss Exposures:

- Physical damage or theft of household personal property.

- Physical damage or theft of family cars.

- Theft of the laptop computer used by Karen while traveling.

- Damage or theft of the business computer used by Chris.

- Residing in a high crime-rate area, which increases the probability of theft or robbery.

(3) Liability Loss Exposure:...