What factors influence the self-insured reserve for collision and comprehensive coverage?

• A. Branch's 12-month damage waiver loss history plus a buffer
• B. Average market rates for insurance premiums
• C. Projected vehicle sales revenue
• D. Cost of employee training for safety protocols

Answer: (A)

The self-insured reserve for collision and comprehensive coverage is heavily influenced by historical loss data, which provides insights into how frequently and severely claims have occurred within a specific branch. By analyzing the branch's 12-month damage waiver loss history, an organization can set aside an appropriate amount of money to cover future claims based on that historical performance.

Incorporating a buffer is essential because it accounts for unforeseen situations that may exceed expected loss levels, providing a safety net that ensures funds are available when needed. This historical analysis helps in accurately assessing risk and adequately preparing for potential expenses associated with collision and comprehensive claims.

The other factors mentioned, while potentially relevant to an understanding of overall insurance practices, do not directly relate to the calculation of reserves needed for self-insurance in the same specific manner. Average market rates for insurance premiums, projected vehicle sales revenue, and employee training costs might influence overall financial strategies, but they do not provide the targeted, data-driven insight necessary to establish a self-insured reserve. The focus should be on past actual losses to create a reliable and adequate reserve.