Final answer:
The firewall and security systems can save a company considerable loss expenses by reducing risks, leading to lower insurance rates and mitigating the risk of business exit due to sustained losses or loss of insurance clientele from adverse selection.
Step-by-step explanation:
The question 'How much does the firewall save the company in loss expenses?' revolves around the concept of reducing potential losses through precautionary measures. Installing minimum level of security measures, such as a top-level security system and fire sprinkler systems, can lead to insurance companies offering lower rates due to decreased risks. While moral hazard cannot be completely eliminated, insurance companies mitigate risks by monitoring behavior and incentivizing practices that lower the chance of fraud and excessive claims. As a result, these measures prevent significant financial outcomes like business exit due to sustained loss patterns or the loss of low-risk clients due to increased premiums in the face of adverse selection.