CUSTOMER_CODE
SMUDE
DIVISION_CODE
SMUDE
EVENT_CODE
JAN2016
ASSESSMENT_CODE MF0018_JAN2016
QUESTION_TYPE
DESCRIPTIVE_QUESTION
QUESTION_ID
16593
QUESTION_TEXT
Explain the different forms of intermediaries operating in the
market place.
SCHEME OF
EVALUATION
Insurance agent
Insurance broker
Insurance consultant
Home service representative
Reinsurance broker
Underwriter
QUESTION_TYPE
DESCRIPTIVE_QUESTION
QUESTION_ID
16597
QUESTION_TEXT
Explain the types of liability policies.
1.compulsory public liability policy
2.voluntary public liability policy
SCHEME OF EVALUATION 3.products liability policy
4.professional indemnity policy
5.employer liability policy 2*5=10
QUESTION_TYPE
DESCRIPTIVE_QUESTION
QUESTION_ID
72855
QUESTION_TEXT
Explain insurance as a mechanism of Risk Sharing and Risk Transfer.
SCHEME OF
EVALUATION
There are number of methods through which risks may be dealt with. In
financial terms, insurance may be defined as the transfer or sharing of risks
from one individual to a group on an equitable basis by all the members of the
group. That means the higher the value of risk brought by a member, the higher
would be amount of contribution to be made to the group fund. Therefore,
insurance may be considered as an important method of risk transfer and
hence may be considered as a technique of risk management.
It is an important contract between the insurer and the insured. The insurer
agrees to reimburse the losses suffered by the insured in return for the
payment of upfront premium(s). An insurance transaction has normally has the
four elements:
a. A contractual agreement between the insurer and the insured
b. The insured is bound to pay the premium upfront to the insurance
company
c. A benefit payment by the insured based upon the occurrence of the
contingent event
d. A pool of resources to be held and managed by the insurer to reimburse
the losses suffered by the few unfortunate individuals.
QUESTION_TYPE
DESCRIPTIVE_QUESTION
QUESTION_ID
126196
QUESTION_TEXT
What is pure risk? Mention different types of pure risk
The risk that can be insured is generally referred to as pure risk. The risk
management function has traditionally focused on the management of pure
risk. The major types of pure risk that affect businesses include:
(1) Property Risk: The risk of reduction in value of business assets due to
physical damage, theft, and expropriation (i.e., seizure of assets by foreign
governments).
SCHEME OF
EVALUATION
(2) Legal Liability Risk: The risk of legal liability for damages for harm to
customers, suppliers, shareholders, and other parties.
(3) Other Risks:
The risk associated with paying benefits to injured workers under workers’
¾compensation laws and the risk of legal liability for injuries or other
harms to employees that are not governed by workers’ compensation laws.
The risk of death, illness, and disability to employees (and sometimes family
members) ¾for; which businesses have agreed to make payments under
employee benefit plans, including obligations to employees under pension
and other retirement savings plans.
QUESTION_TYPE
DESCRIPTIVE_QUESTION
QUESTION_ID
126197
QUESTION_TEXT
What is causa proxima? Explain through examples.
This is applied to decide the amount of loss.
SCHEME OF
EVALUATION
If there are multiple causes to damage then only immediate cause and not
the distant cause is considered
Proximate cause is nearest cause of damage
Proximate cause means the most closely and directly connected of the
perils insured against with loss.
Thus the insurer is liable for loss, if the risk must be insured against is
the proximate or the last cause of loss occurred
If there is one cause of loss identified, it is not required to go further
into the cause of causes.
If there is a series of causes of damage or loss is identified in such the
nearest peril is the one insured against the principle of because
proxima is applied.
And also the insurer is bound to be responsible only if the closest
cause comes within the meaning of the risk insured
Thus the closest peril is the one insured against risk, the loss of the
subject matter would be compensated.
For examples related to marine or other policies
QUESTION_TYPE
DESCRIPTIVE_QUESTION
QUESTION_ID
126199
What are pricing objectives in case of life and health insurance?
QUESTION_TEXT
Rate Adequacy:
SCHEME OF
EVALUATION
The first regulatory requirement is that rates must be adequate. This means the
rates charged by insurers should be high enough to pay all losses and expenses.
If rates are inadequate, an insurer may become insolvent and fail. As a result,
policy owners, beneficiaries, and third-party claimants may be financially
harmed if their claims are not paid
However, rate adequacy is complicated
by the fact that the insurer does not know its actual costs when the policy is
sold The premium is paid in advance, but it may not be sufficient to pay all
claims and expenses during the policy period
It is only after the period of
protection has expired that an insurer can determine its actual costs.
Rate Not Excessive:
The second regulatory requirement is that the rates must not be excessive. This
means that the rates should not be so high that policy-owners are paying more
than the actual value of their protection. Exorbitant prices are not in the public
interest.
Rate Equity or Not Unfairly Discriminatory:
The third regulatory requirement is that the rates must not be unfairly
discriminatory. This means that exposures that are similar with respect to
losses and expenses should and expenses should not be charged
substantially different rates. It is one of the goals of underwriting