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DRIVE-SPRING 2014
PROGRAM-MBADS (SEM
4/SEM 6) MBAFLEX/ MBAN2 (SEM 4) PGDFMN (SEM 2)
SUBJECT CODE &
NAME-MF0018 & INSURANCE AND RISK MANAGEMENT
BK ID-B1816
CREDIT & MARKS-4
Credits, 60 marks
Q1. Risk is used to
describe any situation involving an uncertainty about the outcome. What is the
meaning of risk management? Explain the Risk Management process and methods
with a flow chart.
(Introduction of
risk management, Explanation of risk management process, Explanation of risk
management methods, Flow Chart)2,3,3,2
Answer.
Risk management
The process of identification,
analysis and either acceptance or mitigation of uncertainty in investment
decision-making refers to
Q2. Insurance
industry is highly regulated in all the countries. Explain on solvency margin
and methods of determining solvency margins. Write down the claim procedures in
respect of a general insurance policy.
(Introduction of
solvency margin, Methods of determining solvency margins, Explanation of claim
procedures in respect of a general insurance policy)2,3,5
Answer.
Solvency margin
It is necessary to have some safety
margin to absorb sudden setbacks. Financial strength required for this purpose
is usually provided by shareholders and promoters, which is why the owners’
funds in insurance entities are termed as ‘policy holders surplus’. There are
multitudes of ways in which the financial prowess of insurers may be
ascertained. Assessing of the ratio of owners’ funds to outsiders’ liability
gives an idea of how much a company is geared. If a company is highly geared,
though increasing the profitability, it increases the level of risk undertaken
Q3. What do you
understand by the concept of insurable interest? Write down about the
essentials, creation and application of insurable interest. How does a life
insurance plan work and write about the two key elements. Also write about
riders.
(Explanation on
concept of insurable interest, Essentials, creation and application of
insurable interest, Explanation on life insurance plan with two elements, Explanation
on riders)2,3,3,2
Answer.
Concept of
insurable interest
Despite the conventional belief
that everything is insurable, all risks are not insurable. The risks must be
financially measurable and there should be adequate number of comparable risks
for the purpose of rating. Further, there must be pure and specific risks. The
happening of the event insured against should not be against public policy, the
premium should be logical, and most importantly, there must be insur-able
interest on the part of the insuring
Q4. Liability
insurance is classified into two categories. Explain on the types of liability
policies and explain on aviation insurance with all the three section of the
policy.
(Explanation on
types of liability policies, Explanation on aviation insurance with three
section of the policy)5,5
Answer.
Types of
liability policies
There
are following types of liability policies:
Compulsory public liability
policy
The Public Liability Insurance
Act, 1991 imposes no fault liability, i.e., irrespective of any wrongful act,
neglect or default on the part of the owner of any hazardous substance, he has
to pay relief in the event of death or injury to
Q5. When a policy
has been issued, the risk for the danger insured against gets covered. Explain
on the evidence and claim notice. Also write about the Extent of liability
(Explanation on the
evidence and claim notice, Explanation on extent of liability)5,5
Answer.
Evidence and
claim notice
When the policy has been issued,
the risk for the danger insured against gets covered. In the case of the
occurrence of the contingency against which protection is given, the insured
has to file a claim on the insurer for the indemnification of the loss. In case
the incidence of loss does not happen, the insured is not entitled for the
payment.
Q6. Insurance
Ombudsman was created for quick disposal of the grievances of the insured
customers. Write the complete information on Insurance Ombudsman.
(Explanation on
Insurance Ombudsman)10
Answer.
Insurance
Ombudsman
The institution of Insurance
Ombudsman was created by a Government of India Notification dated 11 November
1998 with the purpose of quick disposal of the grievances of the insured
customers and to mitigate their problems involved in redressal of those
grievances. This institution is of great importance and relevance for the
protection of the interests of policyholders and also in building their
confidence in the system. The institution has helped to generate and sustain the
faith and confidence amongst the consumers and insurers.
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