Telluride Manufacturing is a financially sound company that sells products around the country. Its products are shipped to customers using its own fleet of 4,500 trucks.

Telluride management asked Sue, the company's risk manager, to study and make a presentation to the Board of Directors as to whether the organization should self-insure its fleet liability bodily injury claims since it already self-insures its fleet liability property damage claims or stay with the current large deductible ($1.5 million) plan. Tellluride's insurer charges an average of $2 million a year in premium for the deductible plan. Management thinks it is currently paying too much for the deductible plan and is convinced this is because its insurer does not completely recognize Telluride's superior loss control efforts.

Bodily injury liability losses to third parties generally have low frequency and high severity. Telluride's chief financial officer (CFO) assures Sue the company will set aside the amount it normally would pay its insurer in premium to pay for next year's losses and the cost to administer the self-insurance plan. Sue predicts the losses will be $1.5 million and that the cost to administer the plan will be $300,000 next year.

Using the case facts, identify three advantages and three disadvantages Sue should include in her presentation for implementing a self-insurance plan vs staying with the deductible plan. Set your assignment up as follows:

	Advantages	Disadvantages
Self-insured plan	1.	1.
	2.	2.
	3.	3.
Large deductible plan	1.	1.
	2.	2.
	3.	3.