$1.$ Pancove Company is evaluating a Guaranteed Cost and two Large Deductible Workers' Compensation Insurance program alternatives. Examine the analysis below and select the best explanation for Pancove binding the $$100,000$ deductible option.

Guaranteed Cost Per Occurrence Deducible $=$ $$100,000$ Per Occurrence Deducible Option $$250,000$

Premium $$5,000,000$ $$2,500,000$ $$1,200,000$

Discount Factor N$/$A $82\mathrm{.}14\%82\mathrm{.}14\%$

Losses within Per Occurrence Deductible N$/$A $$3,000,000$ $$4,300,000$

Discounted Losses $$0$ $$2,464,000$ $$3,500,000$

Total Cost $$5,000,0004,714,200$ $$4,700,000$

$2.$ The large deductible insurer obtains collateral from the insured for the expected deductible loses because:

$3.$ The CFO will have an issue with this analysis because it does not consider what important variable?

Guaranteed Cost Per Occurrence Deducible $=$ $$100,000$ Per Occurrence Deducible Option $$250,000$

Premium $$5,000,000$ $$2,500,000$ $$1,200,000$

Discount Factor N$/$A $82\mathrm{.}14\%82\mathrm{.}14\%$

Losses within Per Occurrence Deductible N$/$A $$3,000,000$ $$4,300,000$

Discounted Losses $$0$ $$2,464,000$ $$3,500,000$

Total Cost $$5,000,0004,714,200$ $$4,700,000$