RMIN 317 Lecture Notes - Lecture 2: Public Company, Moral Hazard, Court Costs

• School: University of Calgary
• Department: Risk Management and Insurance
• Course: RMIN 317
• Professor: Martin Halek

Document Summary

Eliminates many claims (high frequency/low severity) where most of the. Insurance is more expensive than retention because of the loading, but insurance also provides benefits in terms of reducing risk and providing services. Retain reasonably predictable losses and insure potentially large, disruptive. Refers to the decision to accept the uncertainty (variability) associated with a. Benefits of increased retention: particular risk exposure. Save on some administrative expense and profit loadings in. Specific sources of savings include lower commissions to insurance premiums, thus reducing the expected cash outflows for these loadings insurance brokers, possible savings in underwriting expenses and administrative costs of claim settlement, and savings in premium taxes. Desire to reduce their vulnerability to annual swings in insurance prices due to the effects of shocks to insurer capital on the supply of insurance and/or the insurance underwriting cycle. Without these contractual provisions, expected claims costs would be higher and therefore so would insurance premiums.