James Fitzpatrick owns a factory in an industrial park. There are five other businesses in the park, some larger than his, some smaller, some in older buildings, some newer. James is a friend of the owners of each of these businesses
He thinks that if they pool together, they can self-insure the risk of loss to any of them at a cost that is less than they are currently paying for insurance. Which of the following statements is TRUE?
A) James's plan will have to include a mechanism for deciding how much each participant pays to cover a loss.
B) James's plan will have to include a mechanism for determining whether a claim is valid.
C) James's plan is contrary to law because it would place him in a conflict of interest.
D) It is illegal for different businesses to self -insure as they all have different risks
E) Both A and B
E
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