MF0018-Insurance and Risk Management

Spring-2016

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Master of Business Administration - MBA Semester 4

MF0018-Insurance and Risk Management

(Book ID: B1816)

Assignment (60 Marks)

Note: Answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60.

Q1. Explain price risk and its types. Explain Risk management methods.

Answer. Price risk is the risk of a decline in the value of a security or a portfolio. Price risk is the biggest risk faced by all investors. Although price risk specific to a stock can be minimized through diversification, market risk cannot be diversified away. It is the Probability of loss occurring from adverse movement in the market price of an asset.

A price risk is the risk that an investor will invest in an equity that will eventually be worth less than what they paid for it. There are ways to manage price risk, but as long as there is some investment going on in unsecured products, there is no way to totally eliminate it. Therefore, the

Q2. 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.

Important activities-2

Internal organization-3

Distribution system-2

Functions of the agent-3

Answer. An ‘organization’ is a legal entity which is created to do some activity or to achieve some purpose. It is created under some law, which gives it a status and identity. Because of the identity, the organization is considered to be a person in law. Therefore, it can enter into contracts, be sued in courts, accumulate property and wealth, and do business, in the same manner as any individual can do. The way activities are grouped lead to the formation of offices, departments and sections Responsibilities (for results) have to be clarified and authorities (to take decisions and utilize resources) have to be defined. When all these are clarified, there will be people holding

Q3. Explain the doctrine of indemnity, doctrine of subrogation and warranties and its types and classification.

Answer. Doctrine of indemnity:

Indemnity means security or compensation against loss or damage. The principle of indemnity is such principle of insurance stating that an insured may not be compensated by the insurance company in an amount exceeding the insured’s economic loss. In type of insurance the insured would be compensation with the amount equivalent to the actual loss and not the amount exceeding the loss.

Q4. Give short notes on:

a. Evidence and claim notice.

b. Subrogation

c. Salvage

Answer. a. Let's say that you have a reading passage that has an essay writing prompt at the end. After you read the passage, your writing prompt asks you to determine the theme for the passage and to give supporting evidence to prove your point. In this writing prompt, it's not enough to just tell your reader what your theme is. It is also not enough to show the evidence that confirms your answer. You also need to include information that explains why you believe your answer is right.

Here's how it works:

Q5. Explain the marketing mix (7 P’s) for insurance companies

Answer. The Marketing Mix Extended 7P’s:

1. Product - the Product should fit the task consumers want it for, it should work and it should be what the consumers are expecting to get. A product is an item that is built or produced to satisfy the needs of a certain group of people. The product can be intangible or tangible as it can be in the form of services or goods.

A product has a certain life cycle that includes the growth phase, the maturity phase, and the sales decline phase.

Q6. Explain the benefits of reinsurance. Elaborate on the application of reinsurance.

Answer. Purchasing reinsurance reduces insurers’ insolvency risk by stabilizing loss experience, increasing capacity, limiting liability on specific risks, and/or protecting against catastrophes. Consequently, reinsurance purchase should reduce capital costs. However, transferring risk to reinsurers is expensive. The cost of reinsurance for an insurer can be much larger than the actuarial price of the risk transferred. With purchasing reinsurance, insurers accept to pay higher costs of insurance production to reduce their underwriting risk.

Spring-2016

Get solved assignments at nominal price of Rs.125 each.

Mail us at: subjects4u@gmail.com or contact at

09882243490