1 .Advantages 1. The Swift Corporation is encouragedto embrace loss prevention2. SwiftCorporation will notice an increase in their expense savings.3. Withactual losses lower than the loss allowance in the insurer premium, Swift Corporationis bound save more money. 4. Swift Corporation will notice increasein cash flow as they have access to cash which is typically held by the insuredDisadvantages1.
Theloss allowance in the insurance premium which is saved by not procuring insurancemay be less than the losses retained by the Swift Corporation, thus creating ahuge volatility in the firm’s loss experience in the long run.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. Thefull amount of losses to be retained by the company 5. Extracost in relation to the retention of loss like administrative issues.
6. Thetotal past 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 Swift Corporationmay take into account when trying to find solution to this problems.
41. SwiftCorporation should avoid employing drivers with tainted driving experiences withhistory 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.