Examining Your Business Insurance

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Examining Your Business Insurance

This dissertation aims to provide a comprehensive overview of the current state-of-the-art in business risk management and, more specifically, corporate insurance planning. According to pain management specialist Jordan Sudberg, insurance has become an essential part of many organizations’ strategies for success. Insurance protection should be a component of any organization’s overall strategy; examine some fundamental concepts associated with insurance decision-making.


Insurance companies have traditionally used actuarial techniques when setting premiums. The most common approach is to use historical data from claims experience to develop a loss ratio (LR) adjustment factor that will be applied to new policies or renewals. This approach is not without its disadvantages. Using only experience, the company needs to consider future changes, such as introducing new products, market factors, etc., resulting in underinsurance. In addition, the use of historical rates can lead to over-insurance because it needs to recognize the impact of new technology on claim costs. The primary reason for under-insuring was to avoid paying too much money due to increased deductibles. However, this practice leads to higher rates and creates a disincentive for employees to work harder. A recent shift toward self-funded and self-insured health benefit programs may be one example of this trend.


These include the type of coverage, the exposure level, and the vulnerabilities’ volatility. For example, an individual who is insured against automobile damage is exposed to risks such as accidents, theft, vandalism, etc.; however, their exposure to these risks varies depending upon whether they own the vehicle(s), use them regularly, drive across town at night, etc. Also, the degree of exposure depends on the type of cover provided.


As previously mentioned, the traditional method of calculating premiums is by applying an LR adjustment factor to the rate set by the carrier. A rating model is another significant way of determining insurance premium prices. A rating model is a mathematical formula that predicts the expected cost of an insurance contract based on various criteria. Three main elements must be considered to calculate premium prices for the different types of insurance.


Certain assumptions about the future must be made to determine which risk classifications need to be included in an insurance policy. There are two basic ways to do this. First, one can assume a fixed rate structure throughout time. Second, one can take a variable rate structure where the rate changes over time. For the latter case, there are several alternatives. One option is to predict future losses using a regression technique.


An insurance decision is typically made after reviewing various information regarding each potential client. In the first step, the agent must understand the firm’s business needs. After this initial assessment, the agent must decide on the appropriate form of insurance. If the firm already has insurance, the agent must analyze the existing plan to see if additional protection is needed. Once the proper form of insurance has been chosen, the agent should gather all the necessary data for completing a quote. From there, the final pricing decision is made.

According to pain management specialist Jordan Sudberg, insurance is often costly. However, it is essential to realize that insurance provides protection and peace of mind that could otherwise be difficult or impossible to obtain. All firms should consider including group insurance in their benefits package.

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