Question

. The Silver Drive company is a taxi operator in Singapore, which owns a fleet of 5,000 cars. The risk manager is considering a partial retention program for physical losses to company cars.

Identify the factors that the company should consider before it adopts a partial retention program for physical damage losses to company cars. 


If a partial retention program is adopted, what are the various methods the company can use to pay for physical damage losses to company cars? 


Identify two risk-control measures that could be used in the company’s partial retention program for physical damage losses.

Answer 1

Partial Retention Program:

"Partial Retention Program" is a Risk Management technique use to cover the risk or to reduce the risk. For Example, in case of Physical damage of Car, car insurance can be treated as Partial Retention program to cover the risk.

Factors that should consider before adoption of Partial Retention Program:

1. Percentage of Loss that has to bear by Silver Driver Company and Percentage of loss which gets covered under Partial Retention Program.
2. Cost under Partial Retention program to cover the physical damage loss.
3. Average Physical Damage loss that company bears during past years.
4. Estimated savings of the company due to Partial Retention program.

Methods to pay Physical Damage Loss:

Silver Driver Company can use Insurance cover to pay Physical Damage Loss. In which, the amount of loss in excess of retention level has to pay by company and balance amount will pay by insurer.

Two Risk-Control Measures:

1. Company may starts hiring driver who is properly trained and have a good prior experience to reduce physical Damage loss.
2. Company may give training to driver about Defensive Driving to reduce physical Damage loss.

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