Advantages 1. The Corporationis encouraged to embrace loss prevention2. The firmwill notice an increase in their expense savings.3. Withactual losses below theactual loss permitted within the insurerPS1 s3. premium, Swift Corporation is bound save moremoney. 4.
SwiftCorporation will notice increase in cash flow as they have access to cash whichis typically held by the insuredDisadvantages1. loss allowance in theinsurance premiumPS2 1. which1.
isretained through non. procuringinsurance may be1. less than the losses retained by thePS3 1.
Swift Corporation, thus creating a huge1.instabilityin the company’s loss history over the Long haul.2.
Introductionof loss prevention programs which insurer can provide at fair prices, becausethe expenses may be higher than imagined. 1. Thecompany tax aspects 2. Theaverage frequency and the level of severity of the company losses.3. Consistencyof the losses 4.
The fullamount of losses to be retained by the company 5. Extra costin relation to the retention of loss like administrative issues.6. The totalpast losses incurred by the company.7. Confirmincase the management of Swift Corporation are risk averse There different methods Swift Corporation can use topay up for the physical damages. The company can approach a captive insurer tohelp in this case. Another option is to pay out from the current net incomes ofthe company.
Borrowing funds from commercial lenders is also an option SwiftCorporation may take into account when trying to find solution to theseproblems. 41. SwiftCorporation should avoid employing drivers with tainted driving experienceswith history of poor driving skills and accidents2. Thecompany needs to go level higher by ensuring all drivers undergo through adefensive driving course to reduce the losses and physical damages.