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Bmgt 211:Introduction To Risk And Insurance December 2010 Question Paper

Bmgt 211:Introduction To Risk And Insurance December 2010

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2010

KABARAK UNIVERSITY
UNIVERSITY EXAMINATIONS
2010/2011 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
COURSE CODE: BMGT 211

INSTRUCTIONS:
Answer question ONE (compulsory) and any other TWO questions

QUESTION ONE
a) Briefly state and explain SIX specific types of risks which are uninsurable and identify a
possible reason as to why they are uninsurable. (6 marks)
b) It has been argued that some of the work done by risk managers can be done by independent
insurance agents.Explain why it is desirable to have a separate risk manager in company when
independent insurance brokers are available to perform this function. (6 marks)
c) In the recent past, there have been reports in the media about some companies that have
suffered losses due to theft of cash in transit or due to fire outbreaks. Explain five possible
post-loss objectives for such organizations. (10 marks)
d) You have been appointed a risk manager by Marigat Bank Limited which is currently facing
financial problems. Your first task is to evaluate the risks facing the organization using the
priority Ranking Technique. Using specific examples explain the possible risks facing the
organization using the technique and state the advantages of such an evaluation. (8 marks)
(30 marks)

QUESTION TWO
a) One cannot insure another person or property unless he/she have insurable interest in the
person or property. Explain the application of insurable interest principle in the following
types of insurance.
i) Assurance of the person himself or herself (3 marks)
ii) Assurance of other persons (3 marks)
iii) Insurance of property (5 marks)
iv) Liability insurance (3 marks)
b) For compensation to be effected, explain when insurable interest must exist in life assurance,
marine insurance and in all other insurances ( 6 marks)

QUESTION THREE
Elvis graduated from kabarak University last year. He recently secured employment in a
Manufacturing company in Nakuru as a risk manager. His first task it to identify the risks facing
the company and to advise the top management on how to handle those risks.
Required;
(a) Explain the techniques he can use in risk identification to ensure that all the risks facing the
Company are identified (10 marks)
(b) Explain FIVE possible methods of handling risk that Elvis can explain to the top
Management so that they can make an informed decision on the issue. (10 marks)

QUESTION FOUR
Reinsurance arrangements are done between the insurer and the reinsurance company and the
insured may not even know about.
(a) Explain the functions of reinsurance (6 marks)
(b) Critically evaluate the role of Insurance Regulatory Authority as the major regulator of
Insurance companies in Kenya (8 marks)
(c) Explain the challenges facing Kenya’s insurance industry (6 marks)
(20 marks)

QUESTION FIVE
The principle of utmost good faith indicates that the insured must disclose accurately and
fully all “material facts” concerning the person or property being insured.
(a) Explain FOUR facts that must be disclosed (4 marks)
(b) Explain the remedies for breaching ‘the utmost good faith’ principle (6 marks)
(c) Citing a specific type of business, explain any FIVE insurance policies offered by
Insurance companies in Kenya that may be useful to a small and medium Enterprise in
Kenya (10 marks)
(20 marks)

Bmgt 211:Introduction To Risk And Insurance December 2010 Question Paper

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