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Din 201: Risk Management And Insurance Question Paper

Din 201: Risk Management And Insurance

Course:Risk Management

Institution: University Of Nairobi question papers

Exam Year:2014

UNIVERSITY OF NAIROBI
FIRST SEMESTER EXAMINATIONS 2013/2014
(REGULAR)
SECOND YEAR EXAMINATIONS FOR THE DEGREE OF BACHELOR OF COMMERCE

DIN 201: RISK MANAGEMENT AND INSURANCE

DATE: SEPTEMBER 1, 2014 TIME: 2.00P.M.-4.00P.M.

INSTRUCTIONS
Answer question ONE and any other TWO questions.

Q1. JUA KALI Insurance Company Ltd. is a newly registered company providing both life and non-life insurance products. It has set up an underwriting
and claims administration departments with staff that may not quite understand their responsibilities. Several applications for life insurance have
been sourced through a number of agents.

REQUIRED
a) Explain to the management the factors that they must take into consideration in the determination of life premiums stating reasons why.
(17 marks)
b) Various lives may have different risks even though they may be of the same age. Advice the management how they could classify the variou lives for
purpose of applying an equitable premium to each life insured stating reasons for each classification. (10 marks)

c) On receiving death claims, what procedure must the claims administrator follow before paying a claim? (13 marks)

Q2. a) Differentiate between private and social risk costs giveng appropriate examples of each and how they may be appropriately managed.
(14 marks)
b) Critically examine the burdens of risk in the following functional areas:

i) Production
ii) Human Resource
iii) Procurement and storage

Q3. Mr. Apolo Ojuka is a businessman who owns a business in Kisii town valued at Ksh. 10,000,000/=. Mr. Ojuka has taken fire insurance with a face value
of Ksh. 12,000,000/=. He has an outstanding mortgage with Equity Bank at Ksh. 5,000,000/=. Adjacent to it is a second hand clothes shop whose value is
Ksh. 500,000/= i.e structure and content owned by Alphonze Mbita. An accidental fire emanated from Apolo''s premises has destroyed the entire building
and the adjacent shop and has declared a total loss. Alphonze had also insured his shop and contents for full value with Britam Insurance. Mr Ojuka had
insurad as follows:

CIC - Ksh. 4,000,000/=
Kenindia - Ksh. 8,000,000/=
Kenindia - Ksh. 5,000,000/= - Liability Insurance to 3rd Party fire losses

Mr. Ojuka has claimed from his insurers and refuses to honor a claim from Mr. Mbita stating that it was an accident therefore he should pursue his
insurers. Mr. Mbita''s insurers have a different view. Using the relevant principle of insurance, explain the stakes of each party.
(30 marks)

Q4. a) Critically discuss the various types of insurance companies to be found on the Kenyan market. (15 marks)

b) Explain the various channels through which insurance is marketed stating the strengths or weaknesses of each. (15 marks)

Din 201: Risk Management And Insurance Question Paper

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