Bmgt 211- Introduction To Risk And Insurance Question Paper
Bmgt 211- Introduction To Risk And Insurance
Course:Bachelor Of Commerce(Bcom) ()
Institution: Kabarak University question papers
Exam Year:2011
KABARAK
UNIVERSITY
UNIVERSITY EXAMINATIONS
2011/2012 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
BMGT 211- INTRODUCTION TO RISK AND INSURANCE
DAY: WEDNESDAY
DATE: 14/12/2011
TIME: 9.00 – 11.00 A.M.
STREAM: Y2S1
INSTRUCTIONS
Attempt question ONE and any other TWO questions.
QUESTION ONE
a) Research has established that many small scale enterprises in Kenya do not celebrate
their fifth birthday before closing down. Explain the various risks the small scale
business face in kenya and their possible solutions. (10 mks)
b) Listed companies and all banks are required to publish their annual accounts every year
in a newspaper of nationwide circulation. Highlight the types of risks that can be
identified by perusing such a firm’s financial statements . ( 10 mks)
c) Credit insurance is very important in Kenya’s economy. Explain the various type of
credit insurance (6 mks)
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d) The risks facing enterprises are not static but dynamic. Explain any two activities that
may have affected the level of risk in Kenya in the course of this year. Also state the
risks affected. (4 mks)
(30 mks)
QUESTION TWO
a) Insurance is a contract between the insured and the insurer. Explain the elements of the
general law that form the prerequisites for any contract to be legally binding and
therefore apply also to the insurance contract. (10 mks)
b) Insurance arrangement is a contract between the insured and the insurer. However, it is
different from other types of contracts. Describe the features that distinguish it from
other types of contracts. (10 mks)
(20 mks)
QUESTION THREE
a) Evaluation and review of the risk management programme is a very important step in
risk management .Explain its importance (4 mks)
b) You have been hired as a risk manager by a company that deals with importation of
medical supplies based in Nairobi .Describe the risk management activities that you
would be expected to undertake. (6 mks )
c) There are five major methods of handling risk. Citing relevant examples explain the
circumstances in which each can be used in an enterprise to mitigate against the risks
facing an enterprise. (10 mks)
(20 mks)
QUESTION FOUR
An insurance contract is legally binding only if the insured has an interest in the subject
matter of insurance.
a) Explain the essentials of insurable interest ( 8 mks)
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b) Insurable interest arises out of ownership where the insured is the owner of the subject
matter of insurance. Explain the circumstances in which insurable interest may arise
where one is not the owner of property ( 6 mks)
c) Explain when insurable interest must exist in the following insurances for the insurance
companies to pay compensation. ( 6 mks)
i Life assurance
ii. Marine insurance
iii. Fire insurances
QUESTION FIVE
a) Only a small percentage of Kenyans are insured (2.86 % of the population). Critically
examine the factors responsible for this scenario and the possible solutions. (10 mks)
b) Various insurance companies have collapsed in the past which includes Stallion
insurance, Lakestar Insurance, United Insurance, Kenya National Assurance Company,
Standard Insurance among others. Among the companies licenced to offer insurance in
Kenya in 2011 by the Insurance Regulatory Authority, four existing companies have
been an able to meet the solvency margin set by the regulator . Critically evaluate the
possible causes of the failure by insurance companies in Kenya and the possible
solutions (10 mks)
(20 mks)
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