Risk Management Insurance Assignment Two
Part –I Say “ TRUE “ For the correct statement and “ FALSE” for incorrect Statement
_________1, Hatred is a contingency that may cause loss
_________2. Fundamental risk is a risk that affect the entire economy or large numbers of
persons or groups within the economy.
_________3. A financial risk is one where the outcome can be measured in monetary terms.
_________4, Objective risk is defined as uncertainty based on a person’s mental condition or
state of mind.
_________5. A specwative risk is a risk where there either profit or loss os possible, where as a
pure risk is a risk where there are only possibilities of loss or no loss.
_________6. In standard fire insurance policy indirect losses as a result of fire are couered (In
demnified)
_________7, Net single premium is the premium charged for insurance that includes
anticipated cost of losses, overhead, & profit .
_________8. Ocean marine insurance provides protection for gods shipped on the land .
_________9. As variation between expected and actual loss increases, the risk will decreases.
________10. Principle of utmost good faith means that a higher degree of honest is imposed on
both parties to an insurance contract that is imposed on both parties to other
contract .
Part II Match the following from column “ B” To “ A”
“A”
“ B”
____1. Moral hazard
A. Dishonesty or character defects in an individual that
increases the frequency or severity of loss .
____2. Morale hazard
B. The identification, measurement , & treatment of
exposure to potential accidental losses
____3. Risk Management
C. The carelessness or indifference to a loss because of
existence of insurance
____4. Ocean marine Insurance
D. Provides protection for items transported by panes
____5. Aviation Insurance
E. Provides protection for items transported over water
Part I : Chose the best answer among given alternatives and write the answer on the space
provided .
____1 All are exception to principle of Indemnity, except ?
A. Valued policy
B. Life Insurance C. Replacement cost Insurance
D. None
____2. Which of the following is/are not correct ?
A. Principle of insurable interest applied in a someway in property and liability
insurance and life insurance
B. Subrogation applied in life and health insurance
C. Principle of Indemnity is applicable for property insurance
D. None
____3 The standard fire insurance policy couers losses of financial and property resources if
A. Caused by war
B. Intentionally set by the insured
B. Intentionally set by public authorities
D. Unintentional cowsed of losses
____4. Medical expense insurance include all of the following, except ?
A. Hospital insurance
B. Sorsical insurance C. Phrygian’s expense insurance
C. Major Medial insurance D. None
___5. If Ato Gemechu, are 35, purchased a 20year life insurance and died any time within the
20 year period, the face amount would be paid to his beneficiary and if he survives to the end
of the period, the face amount is paid to him. The type of life Insurance purchased by Ato
Gemehu is : _____________
A. Term
B. Endowment
C. Whole
D. Annuity
Part V Work out Questions ( Show all the necessary steps)
1. A hypothetical distribution of venial accident repair costs in a fleet of five vehicles is
given below.
Cost ( Birr)
Probability
0__________________________
0.604
1000_______________________
0.283
4000_______________________
0.100
10,000____________________
0.011
20.000 ______________________
0.002
Depending on the above data answer the following questions
A)
B)
C)
D)
What is expected amount of loss that a company suffers at the end of the year?
What is the standard deviation
What is coefficient of variation
Coldwater risk relative to maximum exposure
Part VI: Case analysis ( Analyze the carefully the following cases and briefly explain your
answer)
Wonji sugar factory lWSF carried insurance covering the dishonest acts of employees in the
amount of 20,000 birr with awash Insurance Company. The Coverage was replaced with
Ethiopia Insurance corporation / EIC in the amount of 30 ,000 birr. Three years offer the change
of insurers, wonji sugar Factory discovered that a dishonest accountant had embezzled 25, 000
birr whole Awash Insurance company coverage was in farce. Depending on the above
statement which insurer pays an embezzlement loss & how much the insurer Pays? ( your
answer should be with Justification)
Risk Management And insurance
Project Work
1, Visit any organization and try to identify the potential pure losses that the company
encountered or may encounter in future, measure the identified losses and recommend the
organization the techniques to be used to control or finance the risks.
2, Visit any Insurance company and ask the following
Questions: - Over all organizational background, that include Mission, vision, objectives of
the insurer.
-- Type of insurance given by the insurer you have selected
-- Procedures followed in providing Insurance Service to service seeks
-- Assume yoursetp as one who seeks life Insurance, ask the procedures
requirements you are expected to fulfill to get the service
---