MF0018 - INSURANCE AND RISK MANAGEMENT

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ASSIGNMENT

DRIVE	SUMMER  2015
PROGRAM	MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4) / PGDFMN – (SEM 2)
SUBJECT CODE & NAME	MF0018 - INSURANCE AND RISK MANAGEMENT
SEMESTER	4
BK ID	B1816
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Explain the risk management methods.

Answer : Comprehensive business risk management is a multi-stage process that will vary depending on the needs and requirements of each individual enterprise.

The first stage is to determine exactly what the risks facing your business are, in order to assess the likely and potential impact of each incident occurring.

Once this process has been completed, you can get down to evaluating the technique which will best suit your business and maximise your risk management moving forward.

Here are the four key potential risk treatments to consider.

2 An organization is a legal entity which is created to do some activity of some purpose. There are elements of a life insurance organization. Explain the elements of life insurance organization.

Answer : Activities & elements of life insurance organisations :

The money you pay for your business's many insurance premiums might seem to be a waste, especially if you never claim a loss. But the primary function of an insurance company is to safeguard your business against such losses. The type of business you own determines the type of insurance you need. The government requires you to have certain types of insurance to protect the public, and lenders require insurance to protect their investment.

3 Insurance is the most important industry. Elaborate the different types of mediclaim and liability policies.

Answer : 5 types of mediclaim policies

1)      Individual Medical Insurance - This is typically a policy that covers an individual. It pays for hospitalization and medical expenses incurred in treatment of an illness/injury.

2)      Family Floater - A family floater gets all the family members insured under one single cover. The name ‘floater’ is derived from the fact that a single sum insured floats over all the covered members including self, parents, spouse and children.

3)      Senior Citizen Insurance - As one ages, it becomes harder to get a decent health cover. Senior Citizen Health Insurance is designed to address the specific healthcare needs of the old aged. It comes at a higher premium compared

4 Give short notes on :

a) Pricing objectives.

Answer : It is necessary that the marketing manager decide the objective of pricing before actually setting price. According to experts, pricing objectives are the overall goals that describe the role of price in an organization’s long-range plans. The objectives help the marketing manager as guidelines to develop marketing strategies. The following are the important pricing objectives.

·         Market penetration

·         Market skimming

·          

b) Pricing elements.

Answer : Pricing has no ‘one size fits all’ answer that works for every size company, but there is a sequence of steps that can be followed to develop the pricing that works for you.  They’re interrelated but don’t necessarily have to be followed in the order they appear below.  Use them simply as guideposts to consider or eliminate in determining what’s right for you and your business.

·         Develop a marketing strategy (market

c) Rate computation

Answer : Rates must be rounded to the nearest cent, counting one-half cent and over as the next higher cent (e.g., round $18.845 to $18.85).

Procedure

Follow the rules below to compute rates of pay.  (Note:  The examples below are based on annual rates that have been increased by a locality pay percentage

5 Explain the creation and application of insurable interest. Give the differences between wagering and insurance.

Answer : Creation of insurable interest :

Insurable interest exists when an insured person derives a financial or other kind of benefit from the continuous existence of the insured object (or in the context of living persons, their continued survival). A person has an insurable interest in something when loss-of or damage-to that thing would cause the person to suffer a financial loss or other kind of loss. Typically, insurable interest is established by ownership, possession, or direct relationship. For example, people have insurable interests in their own homes and vehicles, but not in their neighbours' homes and vehicles, and certainly not those of strangers. The "factual expectancy test" and "legal interest test" are the two major concepts of insurable interest.

6 Identify the role of insurance in managing risk financing. Explain the importance of insurance transaction. Discuss in different perspectives of insured and insurer

Answer : Role of insurance in managing risk financing :

Rising insurance premiums and the occasional inability to obtain coverage at any cost have changed the traditional role of insurance. Obtaining coverage for every insurable risk is being replaced by the risk management concept. Risk management, which includes insurance coverage, is intended to minimize the costs associated with assuming certain types of risk and providing prudent protection. It deals with pure risks that are characterized by

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