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Introduction To Insurance Question Paper

Introduction To Insurance

Course:Commerce

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
INSTITUTIONAL BASED PROGRAMME (IBP)
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BMS 101: INTRODUCTION TO INSURANCE
DATE: Wednesday, 1st September, 2010 TIME: 11.00 a.m. – 1.00 p.m.
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INSTRUCTIONS:
Attempt question ONE (COMPULSORY) and any other TWO.
Start each question on a new page.
Marks are awarded for proper explanation and use of appropriate examples.

QUESTION ONE
a) Safari Bus Company of Isibania operates a fleet of buses plying both National and
International routes (Isibania – Kisii – Nakuru) and (Isibania – Mwanza, TZ / Isibania – Malaba, UG) respectively. Over the past five years, the company’s insurance premiums have been souring high, because of what Kikulacho Insurance Company’s technical manager explains as the company’s poor claims history. Over this period, 20 of the company’s strong fleet of 50 buses have been involved in fatal accidents, while 30 or so minor claims have been lodged with the insurers. In desperation the company has created a position for an Insurance Manager within its ranks and has hired you as the new manager to immediately reduce the frequency and severity of losses thereby improving the general claims history of the company. Propose an action plan for the company that embraces all risk exposures currently faced by Safari Bus Company Ltd. (14 marks)

b) Define the following insurance terminologies:-
i) Insurable interest (2 marks)
ii) Uncertainty (2 marks)
iii) Peril (2 marks)
iv) Risk identification (2 marks)
v) Premium loading (2 marks)
(10 marks)

c) Discuss the requisites of insurability in the modern insurance practice.
(6 marks)
(TOTAL: 30 MARKS)

QUESTION TWO
a) Explain the purpose and the intention of the principle of subrogation, clearly
justifying how it fits in the insurance practice. (10 marks)

b) Briefly discuss the types of liability insurance covers offered by insurers in
Kenya. (10 marks)
(TOTAL: 20 MARKS)

QUESTION THREE
a) Discuss the concept of risk. (5 marks)
b) In common business conversations, how is the word risk used? (5 marks)
c) Discuss the classification of risk. (10 marks)
(TOTAL: 20 MARKS)

QUESTION FOUR
Risk protection, mitigation or reduction is very important in any economic endeavor. In the light of the above, discuss the socio-economic benefit of insurance. (20 marks)
(TOTAL: 20 MARKS)

Introduction To Insurance Question Paper

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