Travel$ense User's Guide (PDF, 139 MB) - NBAA

TRAVEL$ENSE• provisional costs for replacement in event of the loss of employee,167• potential loss of revenues, profits and return on equity value in the eventof the loss of the employee.KEY MAN INSURANCE AND VALUES OF EMPLOYEE COVERAGEInsurance companies that write business life insurance and businessinterruption insurance have been in the business of valuing companies andmanagement long before the current focus on human resource accounting.Their studies and experience in both writing and underwriting policies in thisarea have formed a basis for a large part of the research on managerialresource accounting.Key man insurance, for example, is designed to cover the loss to a company ofone or more of its senior managers or skilled professionals. Some of thefactors that key man insurance considers in determining the amount ofcoverage appropriate are:• adverse impact on stock value,• adverse impact on sales and revenues,• adverse impact on business negotiations,• adverse impact on credit,• loss of goodwill,• replacement costs.There are many valuation methods and techniques for determining key maninsurance coverage. These include:• Five Times Salary Method,• Stock Coverage Method,• Human Resource Accounting Method,• The 10 Percent Rule of Thumb Method,• The Replacement Cost Method,• Loss of Excess Earnings Method,• The Social Psychological Method,• The Group-Human Value Approach. 1313 0p. Cit., Todd, J.D., pp. 27-28.Copyright © 1999, National Business Aviation Association, Inc.