Justin Girouard
Module 3 Assignment 2

Sn'o Risk Too Big Of A Risk

Toro was a company that was built on residual lawn care products and in the past couple years prior to 1983, Toro had begun to emerge into the winter care products such as snow throwers. Loss of sales in the previous years led unhappy retailers with a lot of left over inventory that Toro bought back in attempt to keep them happy. This brought about the Sn'o Risk campaign.

The SN'o Risk campaign was a huge success resulting in dramatic growth in sales and profit for Toro. American Home insurance company raised their interest rate in the Toro's snow thrower products was because they saw that the annual potential liabilities of the Toro's snow blower reached a potential $5,846,299 in 1982. This is a large liability for the company to take on for American Home and they realized the insurance policy they were providing was a necessity for Toro to have in order to keep this campaign successful. The $5,846,299 was 19.5% of the sales that year which exceeds the 10% discount rate Toro is accustomed to providing their customers and more importantly their shareholders. The Sn'o Risk promotional campaign was a great success due to the fact people were more interested in purchasing specifically the Toro product and the insurance company arranged themselves a contract readily accepting to meet the claims that were proposed in the campaign and in return the insurance company just take the 2.1% of the premium of the train value of the snow throwers. During the campaign there were very few actual claims, which is comforting for American home, but the probablity of claims is still based on the unpredictability of the weather. This unpredictability still presents a large risk for American Home and therefore an increase in premium is valid due to the increased risk of liabilities. I would estimate a