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Course: Insurance & Risk Management
Q1) In case if a Business Man want to avail 3 tier Insurance as Keyman Life & his Family Insurance, Health Insurance along with Property Insurance. As per Insurance basic Principles which 3 IMP / Crucial Principles would be foreseen in Insurer & Insured Contract Signing – Kindly explain with relevant paradigm (10 marks)
Answer: When a business person seeks to avail a 3-tier insurance package covering Keyman Life & Family Insurance, Health Insurance, and Property Insurance, several important insurance principles come into play during the contract signing process between the insurer and the insured. These principles ensure clarity, fairness, and appropriate coverage. Let’s discuss three crucial principles with relevant paradigms:
1. Utmost Good Faith (Uberrimae Fidei): This principle emphasizes that both the insured and the insurer must disclose all material information honestly and fully to each other. This ensures that both parties have a clear understanding of the risks and terms of the insurance contract.
Relevant Paradigm: Keyman Life Insurance Suppose a business owner seeks Keyman Life Insurance to cover the life of a key employee whose skills and expertise are crucial to the business. The business owner must provide accurate and complete information about the employee’s health, lifestyle, and other relevant details. Similarly, the insurer must provide complete details about the terms, coverage, and exclusions of the policy. This principle ensures that the insurance contract is based on accurate information, preventing disputes later on.
2. Insurable Interest: This principle states that the insured must have a legitimate financial interest in the subject matter of the insurance. Without insurable interest, the insurance contract becomes a mere wager and lacks the necessary element of risk transfer.
Relevant Paradigm: Property Insurance For Property Insurance, the business owner must demonstrate insurable interest by having ownership, possession, or some financial stake in the property being insured. For instance, if the business owner owns a commercial property, they have insurable interest in protecting that property against risks like fire, theft, or damage. This principle ensures that insurance contracts are valid and not used for speculative purposes.
3. Indemnity: The principle of indemnity states that insurance is meant to compensate the insured for the actual financial loss suffered and not to provide a profit. The insured should not be in a better financial position after a loss
Q2) If a Company establish Risk Management Dept. Kindly explain how a Risk Manager can foresee & chalk out different types of Loss Exposures for them? (10 Marks)
Answer: Establishing a Risk Management Department in a company is essential for identifying, assessing, and mitigating various types of risks that the organization may face. A skilled Risk Manager plays a crucial role in foreseeing and addressing different types of loss exposures. Here’s how a Risk Manager can go about this process:
1. Identify Loss Exposures: The first step for a Risk Manager is to identify all potential loss exposures that the company might face.
Q3.a. Explain the technicalities of Re Insurance that can be perceived /applied well in advance by an Insurance Company? (5 Marks)
Answer: Reinsurance is a crucial aspect of risk management for insurance companies. It involves an insurance company transferring a portion of its risks to another insurance company or multiple companies, known as reinsurers. This helps the primary insurer mitigate its exposure to large losses and maintain financial stability. Here are the technicalities of reinsurance that can be
Q3.b If a Health Insurance Policy plans with respective separate Covers of Rs 5-5 Lakhs have been taken from Govt. (Oriental) Insurance Company and STAR Health Insurance Company out of which is Oriental Insurance Policy cover is about to expire on 31st of December & somehow it has been skipped out to renew till date. On 25 th of Dec person gets Heart Attack & gets admitted in Hospital & undergone Angioplasty with cost of 4 Lakhs. Kindly advise which company will settle the Claim. (5 Marks)
Answer: In the scenario you’ve described, where a person holds separate health insurance policies from both Oriental Insurance Company and STAR Health Insurance Company, and one of the policies is about to expire, the claim settlement process will depend on the terms and conditions of each policy and the
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