The cheaper. By not purchasing the insurance, the

The Swift Corporation
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To the Swift Corporation, the benefits of a partial retention program are: The Corporation gets to hoard money if the corporation’s actual losses are fewer compared to the insurer’s premium loss allowance. Furthermore, cash flow may significantly increase since the Swift Corporation can utilize the funds that would typically be retained by the insured.
For the corporation, the drawbacks of the partial retention program are: Contributions towards a funded reserve under a retention program are usually not income-tax deductible. Expenses may, in fact, be higher, because of the establishment of loss prevention programs, which insurers provide and are cheaper. By not purchasing the insurance, the losses retained by the Swift Corporation can be higher compared to the loss allowance that is saved in the insurance premium. Additionally, on a short-timescale, there may be substantial instability in the firm’s loss experience.

1. The Corporation’s tax aspects.
2. The Corporation’s previous loss experience.
3. The severity of losses and average frequency.
4. Maximum probable loss.
5. Added retention costs.
6. The monotony of losses.
7. Whether Swift Corporation’s management is a risk-averse.
8. The total loss amount that the corporation will retain.
9. Availability of other alternatives.

The various methods that can be utilized by the Swift Corporation to subsidize the physical damages of the losses to company cars are; losses can be paid out of earmarked assets, current net income, finances received from commercial lenders, or payment from a captive insurer if one exists. Losses exceeding the retention levels can be paid by commercial insurance.

Two risk-control approaches that the firm can utilize in the partial retention program to mitigate physical damage losses is risk control. Risk-control involves a technique by which corporations assess potential risk and incorporate actions to eliminate or reduce such threats. Swift Corporation could avoid employing drivers with poor driving records like drivers whose road records are tarnished due to frequent accidents or criminal charges. Besides risk-control, Swift Corporation could lower the losses by obligating drivers to take defensive driving courses in aims of decreasing the physical damage losses.


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