What is the implication of having a customer who has chosen to retain risk?

When a customer chooses to retain risk, it means they are opting to handle the financial consequences of certain losses themselves instead of transferring that risk to an insurance company. This decision often indicates that the customer may have evaluated their potential losses and decided that they can manage or absorb these risks without the need of insurance coverage for them.

Retaining risk can involve self-insuring for certain exposures, where individuals or businesses take on the responsibility for losses up to a certain limit rather than paying premiums for coverage they believe they can effectively manage. It allows them to save on insurance costs but also places the onus of any associated financial damage directly on them.

In this context, the options suggest various implications that are not applicable when a customer chooses to retain risk. For example, being responsible for no losses or avoiding all risks entirely does not align with the concept of risk retention, and while premium discounts may be available under certain circumstances, they are not guaranteed just because an individual retains risk. Therefore, the correct understanding of retaining risk is that the customer handles the financial consequences themselves.