In selecting a deductible, how does the risk manager balance considerations of potential premium savings and the firm's ability to pay losses?

 

The risk manager usually determines a targeted amount of lasses to exceed, such as 510,000. The risk manager is given a variety of choices of deductible levels and premium amounts from the insurance company. The objective is to obtain the optimal level of deducible and premium amount to consiatently pay over that targeted amount for the policy year The tradeoffs between lower deductible amounts and higher premiums are analyeed, and a decision is made. A The risk manager usually determines a targeted amount of losses to retain, but not exceed, such an $10,000. The nsk manager is given a variety of choices of deductible levels and premlum amounts from the insurance company The objective is to obtain the optimal level of deducible and premium amount to avoid paying over that targted amount for the policy year The tradeoffs between higher deductible amounts and lower premiums are analyeet, and a decision is made