Dublin Institute Analysis of Risk and Insurance Policy ABC Moving Company Case Study

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Title: Analysis of Risk and Insurance Policy - Case Study of ABC Moving Company

A 7-10 page report and a PPT

PART 1: CASE ANALYSIS (the case is in the file attached)

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. The five major risks faced by ABC Moving Company

2. Risk mitigation strategies for each of the five major risks

3. The metrics, financial implications of the risks, and the risk mitigation strategies

4. Legal issues related to the risks and the risk mitigation strategies

5. Two opportunities that exist for ABC Moving Company

6. 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

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.

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(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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Explanation & Answer

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Running Head: ANALYSIS OF RISK AND INSURANCE POLICY

Analysis of Risk and Insurance Policy

Name

Institution

Authors Note

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Analysis of Risk and Insurance Policy

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Introduction
ABC Moving Company is still young. In Lincoln, Nebraska, the company is prone to face various
challenges from its competitors to gain public trust. The company being under sole proprietorship
means that the main person who faces a risk in case it occurs is Mr. Smith. With the start of three
employees, the company's swiftness in terms of delivery is limited. This means that profitability
is limited, and the resulting competition from competitors is prone to wipe away Lincoln's away
in Nebraska. Every move the company takes needs serious scrutiny. Some of the risks are supposed
to be insured to ensure continuity. Since a growing company can insure not all risks, some risks
need to be evaded, and some decisions fully thought about.
Risks faced by ABC Moving Company
Driver Shortage and Retention
The company being three years old means that Mr. Smith cannot afford to synchronize
company operations to meet its competitors' standards. Being a moving company it requires
standby drivers. The amount of drivers with a commercial driving license in Nebraska is limited.
The shortage is because of the government's age restriction and other tickets served by the police
department for those breaking the law. The shortage is also influenced by increased demand from
e-commerce and the Lincoln area having an aged population.
Government oversights
The government legislates moving companies. ABC Moving Company is under the radar
of government ventures. The government fits trucks with devices to tracks their daily activities.
Mr. Smith being 46 years old, the tracker aims at combating drivers working hours to evade
accidents that accrue due to fatigue. This means that Mr. Smith can work on a limited time
spectrum daily or be served with a ticket. ABC Company truck has covered 187,000 miles. The

Analysis of Risk and Insurance Policy

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tracker aims to ensure its mileage is periodically monitored to ensure that its operational limit is
adhered to.
Injury Liability
During the daily operations, Mr. Smith gets injured in the spine. ABC faces injury liability.
The company is prone to managerial shortcomings because the proprietor who works as an
employee and the company driver is sick. ABC Moving Company is a form of Logistics Company
that will be crippled if the sole driver is not available. The reliability of any logistics company lies
in its capability to move goods and services from one location to another. Like ABC Moving
Company faces the threat of Mr. Smith's injury...


Anonymous
Really helped me to better understand my coursework. Super recommended.

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