MedWear Manufacturing Inc. is the provider of personal protective equipment and other equipment and wearables for hospitals, nursing homes and long term care homes. The manufacturing plant is located IN London, Ontario and the product is distributed world wide. The majority of sales are direct to the commercial buyers using an online third party distribution provider. This year MedWear Manufacturing will start production on a line personal protective equipment to meet the growing need during the pandemic. This production will also happen in London, Ontario but at a second manufacturing plant. Recently, MedWear Manufacturing has negotiated a deal with Wal-Mart to retail some of their products in stores in the Canadian and US markets to consumers for personal use. They will also be available to purchase online and shipped directly to the consumer. The company has annual revenue of C$6,350,000. With the increase in their distribution options and the offering of new products, the goal is to double that revenue by 2025. Although a lofty ambition, the company is ready to tackle it. Part of their growth strategy was to increase their corporate risk management budget. The goal of MedWear’s Risk Management Department is to “provide support by protecting the corporation from financial consequences resulting from the destruction, damage or loss of its assets and/or its liability to others”. The focus is on risk management techniques and financing methods which promote financial stability. You are the risk management team employed by the MedWear Manufacturing Inc. 

Part A: Estimating Hazard Risk (5%)“Estimating hazard losses entails calculating an estimate of the Based on the financial information attached to this assignment, and the process as outlined  Estimating Hazard Riskin your text, calculate the company’s risk associated with General Liability Losses. These are losses in which the company was found liable for bodily injury or property damage that occurred to a third party. Your team has the following information available to them from the previous five (5) year term;

In 2016 there were a total of 10 claims resulting in paid losses of $167,000 and loss reserves (which include the loss adjustment expense reserves) of $32,000.

In 2017 the total amount of losses increased to 14 resulting in paid losses of $562,000 and loss reserves (which include the loss adjustment expense reserves) of $95,000.

In 2018 the total amount of losses increased again to 20 resulting in paid losses of $719,000 and loss reserves (which include the loss adjustment expense reserves) of $201,000.

In 2019 the total amount of losses decreased slightly to 18 resulting in paid losses of $675,000 and loss reserves (which include the loss adjustment expense reserves) of $279,000.

In 2020 the total amount of losses increased to their highest yet at 26 resulting in paid losses of $1,289,900 and loss reserves (which include the loss adjustment expense reserves) of $650,000.

1.Calculate the Total Losses Incurred for each accident year.

2.Using the development factor provided calculate the Estimated Ultimate Incurred Losses.

3.Using the trend factors provided calculate the Adjusted Total Incurred Losses.

Ultimate Incurred General Liability Losses Accident Year Total Date(months)Total Loss Incurred Losses Development Factor Estimated Ultimate Incurred Losses Trend Factor to 2017 Adjusted Total Incurred Losses  

2016     661.   001.      66   

2017     541.    031.   60

2018     421.   131.    55

2019    301.    381.  50