(all quotes are fictional)
Risk Analysis and Insurance
FIN610
Property and Liability Insurance
Allstate
American Insurance
Ace Group
Property
$10m max
$10m max
$15m max
Casualty/Liability
25%
30%
30%
Health Insurance
Aetna
Anthem
UNHC
Deductible
$5,000
$10,000
$5,000
Max out of pocket
$7,500
$10,000
$8,000
Moving Van Quotes
Allstate
Bakers International
Transguard
Liability
$1m
$1m
$900K
Person Property
$500,000
$450,000
$600,000
Life Insurance
Globe
State Farm
Geico
Amount
$500,000
$500,000
$500,000
Exam needed
yes
no
yes
Workmans Comp
yes
no
yes
Product Liability
yes
yes
yes
Deductible
5000
5000
3500
Monthly Premium
$1,000
$1,100
$1,200
network/out of network
80/20
75/25
80/20
Pre-existing
yes
yes
no
Lifetime Max
$1m
$1m
$1m
Monthly Premium
$800
$600
$750
Mileage limit annually
125,000
225,000
NA
CDL Required
yes
yes
yes
Minimum age
25
40
30
Premium month
$3,500
$3,750
$4,100
Term/whole
cash value
NA
$400,000
$425,000
Exclusions
no
yes
yes
Monthly Premium
$125
$85
$105
Term
either
either
Syllabus
Risk Analysis and Insurance - FIN610 - 3 credits
Course Description
This course focuses on analyzing and solving risk management problems in business organizations based
upon the assumption that risk can be managed if risks are identified prior to a loss and that insurance is an
important tool for that purpose. Utilizing managerial, consumer, and societal perspectives, topics include
methodology for risk analysis, insurance principles and practices, and techniques for risk and loss control.
Course Objectives
1. Evaluate how firms use metrics to mitigate risk by measuring losses and opportunities
2. Critique qualitative aspects used to appraise homeowner’s, auto, commercial, life, health, retirement,
property, and liability insurance
3. Compare corporate and consumer perspectives related to risk management
Course Materials
Baranoff, E., Brockett, P., & Kahane, Y. 2009. Risk management for enterprises and individuals. Flat
World Knowledge, Inc.
ISBN: 978-0-9823618-0-1 (black & white) or ISBN: 978-1-936126-18-7 (color)
Grading System
POINTS
GRADE
895 – 1000 points
A
Outstanding
795 – 894 points
B
Competent
695 – 794 points
C
Competent
595 – 694 points
D
Not Proficient (no credit)
Below 595 points
F
Not Passing (no credit)
Course Outline
UNIT
LEARNING OUTCOMES
Introduction to Risk
1
•
•
•
Analyze risk metrics and attitudes
Develop a risk map to identify risks within a company
Evaluate how the ERM function maximizes a firm’s value
Insurance Foundations
2
•
•
•
•
Assess the concept of insurance and insurable risks
Analyze the broad categories of insurance
Evaluate insurance industry practices and how various organizations are interrelated
Appraise the effectiveness of various regulatory and licensing agencies
Insurance Contracts
3
•
•
•
Explain the basic elements of insurance contracts
Analyze the differences among selected insurance contracts
Critique various aspects of agency law and doctrines affecting insurance contracts
Risk Management
4
•
•
•
Interpret how global risk is reduced
Appraise property risk management methods
Summarize liability risk management methods
Multi-Risk Management
5
•
•
•
Compare different types of homeowners' policies
Evaluate automobile plans with respect to litigation on no-fault systems
Appraise commercial property insurance options available to businesses
Job-Related Benefits
6
•
•
•
Describe workers’ compensation laws
Examine the complexity of workers’ compensation benefits and issues
Critique the components of unemployment compensation
Life Insurance and Entitlements
7
•
•
Analyze the effectiveness of Social Security and Medicare
Predict future trends in Social Security and Medicare
UNIT
•
LEARNING OUTCOMES
Compare various individual and group life insurance structures
Employment-Based Risk Management Plans
8
•
•
•
Critique employment-based longevity plans
Appraise group and individual-based health plans
Evaluate various aspects of disability, long-term care, and supplementary insurance
Final Project:
You must receive a minimum score of 70% in order to pass the Final Project and class.
Final Project
Risk Analysis and Insurance
COURSE OBJECTIVES
Upon successful completion of this course, the student will be able to:
1. Evaluate how firms use metrics to mitigate risk by measuring losses and opportunities
2. Critique qualitative aspects used to appraise life, health, retirement, property, and liability
insurance
3. Compare corporate and consumer perspectives related to risk management
CASE DESCRIPTION (OR BACKGROUND INFORMATION)
CASE 1: ABC MOVING COMPANY
ABC Moving Company is a sole proprietorship owned by Mr. Jay Smith. For the past three
years, the company’s only employees have been Mr. Smith, who is 46 years old, his 42-year-old
wife, and his 20-year-old son. When they need extra help with large moving jobs, they hire high
school students and pay them cash. For the past three years, ABC has used one large moving
van (2007 GMC 7500) which was purchased used for $30,000 when Mr. Smith started the
business. The odometer on the moving van shows 187,000 miles. Mr. Smith was able to pay off
the van during the first year of the business. With only one moving van, ABC Moving has limited
its services to within a 200 mile radius of its location in Lincoln, Nebraska.
After placing an advertisement in the local paper and on the cable television station, ABC has
seen its business increase to the point at which it needs to expand.
Last month, after working long hours to meet increased demand, Mr. Smith fell and injured his
spine. In order to keep insurance costs reasonable, the Smith family had purchased a high
deductible insurance plan, and when Mr. Smith was injured, they had to pay $10,000 out of
pocket for medical care. Mrs. Smith hired a temporary employee to assist while Mr. Smith was
recovering.
This week, they learned that although Mr. Smith’s recovery is going well, he will no longer be
able to do the heavy lifting required in moving furniture. To regain full use of his back, he is
going to need to spend several weeks working with a physical therapist. Mr. Smith’s injury
means that ABC is down to one driver for the moving van, as last year, Mrs. Smith obtained a
commercial driver’s license (CDL) so that she could drive the moving van. Mr. Smith’s son is
driving on a restricted license because of several speeding tickets, and he is not eligible to
obtain a CDL to drive the truck. In addition, the company cannot afford insurance to cover the
© 2013. Any unauthorized reproduction or distribution of this material is prohibited without
express written permission. Students are expected to maintain the integrity of the assignment by
refraining from reproducing or posting the assignment or their completed work where it can be
viewed by current or future students.
Final Project
Risk Analysis and Insurance
son because he is under 25 and has several tickets. ABC is going to need at least one more
full-time employee and two temporary employees to accommodate its schedule for the next few
months.
As part of his marketing campaign, Mr. Smith committed to providing moving services within a
500 mile radius of Lincoln, more than doubling the area previously covered by the company. To
accommodate the need to move beyond the three-county area, Mr. Smith purchased two used
box trucks, a 2007 International 4300 with 102,000 miles and a 2011 Isuzu NPR with 85,000
miles.
Mr. Smith financed the cost of the trucks ($80,000) using an equity line of credit he had
established as a second mortgage against the office building where the company is located.
The equity line of credit has an interest rate of 5.65 percent. The first mortgage on the office
building is for $75,000 at 6 percent APR. Last year, the office building was appraised at
$175,000. Mr. and Mrs. Smith’s home was not used to finance the business because the home
declined in value from $450,000 to 300,000 because of the downturn in the housing market in
Lincoln. They owe $190,000 on the mortgage.
Mr. Smith is very concerned about the future of ABC Moving. On the recommendation of a
friend, he hired you to evaluate the risks associated with the expansion of ABC Moving and to
design a plan for mitigating these risks.
PROJECT INSTRUCTIONS
PART 1: CASE ANALYSIS
Mr. Smith has asked you to research the risks that will be confronted by ABC Moving Company.
You agreed to present a written document of your findings to Mr. Smith in a 7-10 page report.
The report should include:
1.
2.
3.
4.
5.
6.
The five major risks faced by ABC Moving Company
Risk mitigation strategies for each of the five major risks
The metrics, financial implications of the risks, and the risk mitigation strategies
Legal issues related to the risks and the risk mitigation strategies
Two opportunities that exist for ABC Moving Company
The insurance needs of the company, including business property and liability, health,
life, and retirement
7. A plan for organizing and implementing an enterprise risk management (ERM) function
for the organization
© 2013. Any unauthorized reproduction or distribution of this material is prohibited without
express written permission. Students are expected to maintain the integrity of the assignment by
refraining from reproducing or posting the assignment or their completed work where it can be
viewed by current or future students.
Final Project
Risk Analysis and Insurance
Part 2: INSURANCE QUOTES
Mr. Smith has asked you to research costs associated with purchasing the insurances that you
recommended. You agreed to compile three estimates for each type of insurance and present a
summary of your findings to Mr. Smith. For each insurance quote, you should include the name
of the company, the name of the company representative, and the date you contacted the
representative. Prepare a 12-20 slide PowerPoint presentation for Mr. Smith that addresses
each of items listed below. For each slide, you are required to include speaker notes that
provide sufficient detail to support the slides (approximately 250 words).
A. Three quotes for business property and liability insurance with information on the
insurance companies
B. Three quotes for health insurance for the family and employees with contact information
for the estimates
C. Three quotes for insurance on the moving vans with contact information for the
estimates
D. Three suggestions on retirement planning
E. Three quotes on life insurance for Mr. and Mrs. Smith. Both Mr. and Mrs. Smith are in
good health and are non-smokers. You should include the names of the companies and
the contact names.
F. Summary of the most critical actions that Mr. Smith needs to take in securing the proper
insurance coverage.
Reviewing your paper and presentation before submission is very important. Please complete
the following steps to ensure that your paper is ready for submission.
1. Edit your paper and presentation closely for grammar, mechanics, and typographical
errors. If you prepare your paper in Word, you should review any green or red lines
in your paper, as those lines indicate possible grammatical or spelling errors. Use
PowerPoint for your presentation.
2. Review the format of your paper. Does it conform to APA formatting guidelines?
3. Check your references. If you have used someone else’s original writing, ideas, or
material in your paper and presentation, you need to cite it and include the full
reference in a reference page at the end of your paper or presentation. All references
should be formatted according to APA style.
PROJECT SUBMISSION
1. A title page is not required for project submissions. Because evaluators do not see student
names when reviewing student work, it is important that students not include any personal
identifiers in their project submissions.
© 2013. Any unauthorized reproduction or distribution of this material is prohibited without
express written permission. Students are expected to maintain the integrity of the assignment by
refraining from reproducing or posting the assignment or their completed work where it can be
viewed by current or future students.
Final Project
Risk Analysis and Insurance
2. If your project requires a video, you should post the video to a free video hosting site
like www.youtube.com, www.photobucket.com, or another free web hosting site. The
following website maintains a list of video hosting sites: http://www.videohostings.com. In
the written materials that you submit as part of the assignment, you should include the title
of the video and a link for the evaluator to use to grade your submission. Please make sure
that the privacy settings on your video are set to allow third parties to view it.
3. When you are ready, click on the Upload Files button in the Project tab of your course to
submit your assignment. Your project should be graded within 7 days. Please contact your
instructor if this is not the case.
4. Your assignment will not be returned to you, so keep a copy for your files.
© 2013. Any unauthorized reproduction or distribution of this material is prohibited without
express written permission. Students are expected to maintain the integrity of the assignment by
refraining from reproducing or posting the assignment or their completed work where it can be
viewed by current or future students.
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