MF0018-Insurance and Risk Management

Fall-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.
Fall-2016
Get solved assignments at nominal price of Rs.130 each.
Mail us at: subjects4u@gmail.com or contact at
09882243490

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