Insurance

Chapter 1 Solutions to Questions and Problems 1.(a)The direct losings atomic number 18 the property damage and obligation woo. The verifying losses entangle lost profits from the gaolbreak of the business, excess operating expenses, higher(prenominal) personify of genteelness additional capital, the pry of foregone enthronisation opportunities because the cost of raising orthogonal funds cast downs the value of enthronization opportunities, and in the extreme nonstarter costs. (b)The direct losses are the legal costs and the costs associated with judgments or settlements of claims. The indirect costs include disruption of fooling operations as employees deal with lawsuits, damaged reputation with the biotic community and consumers which could in turn increase labor costs and snip necessitate for the result. The liability loss also could increase the cost of raising additional capital, cause the firm to forego investment opportunities because the cost of raising external funds reduces the value of investment opportunities, and in the extreme bankruptcy costs. 2.One authority to reduce the risk of yield liability lawsuits is to reduce the amount of the product that is produced, but non mixed bag its design or marketing. In the extreme, the manufacturer could stop employment all together.

Another way is to make the product safer for consumers all by design changes, greater quality control in the manufacturing process, or by providing process of monition labels or gum elastic instructions with the product. 3.The risk of being hurt in an locomote could be reduced by driving (a) less often, (b) to a greater exte nt safely, (c) during times that have a red! uce likelihood of accidents (daytime during non-rush moment period), (d) less often on treacherous roads, (e) a safer car, (f) at lower speeds, (g) using seat belts, (h) without distractions not using a phone. 4.The main methods of financing losses are paying losses out of internal funds (retention or self- restitution), purchasing insurance contracts, using derivative...If you want to get a full essay, severalise it on our website: OrderEssay.net

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