You are working as an analyst at AMH Hospital. AMH wants to put money into a...

 

Transcribed Image Text:

You are working as an analyst at AMH Hospital. AMH wants to put money into a pool and then use that money to pay for losses that arise from medical malpractice claims (liability suits). They have asked you to determine how much money they must put into the pool so they can pay for losses. a. Is AMH using risk transfer or risk retention? Explain. (2 points) b. Refer to your answer in part a. Explain what exact types of transfer or retention AMH is using. (2 points) 2. A company has product liability insurance. The following explains how the insurance is structured. The company agrees to pay the first $250,000 of each loss. If the loss is greater than $250,000, then the insurer will pay for the rest of the loss. The company has set aside funds to pay for losses in an interest-bearing account. What exact types of risk financing is the firm using. Be specific! (4 points) 3. Explain why firms who self-insure retain the full benefits of good loss prevention and loss reduction programs. (2 points) You are working as an analyst at AMH Hospital. AMH wants to put money into a pool and then use that money to pay for losses that arise from medical malpractice claims (liability suits). They have asked you to determine how much money they must put into the pool so they can pay for losses. a. Is AMH using risk transfer or risk retention? Explain. (2 points) b. Refer to your answer in part a. Explain what exact types of transfer or retention AMH is using. (2 points) 2. A company has product liability insurance. The following explains how the insurance is structured. The company agrees to pay the first $250,000 of each loss. If the loss is greater than $250,000, then the insurer will pay for the rest of the loss. The company has set aside funds to pay for losses in an interest-bearing account. What exact types of risk financing is the firm using. Be specific! (4 points) 3. Explain why firms who self-insure retain the full benefits of good loss prevention and loss reduction programs. (2 points)

Answer rating: 100% (QA)

1 a AMH is using risk retention Risk retention refers to the strategy of assuming the financial responsibility for potential losses and not transferri... View the full answer