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Master of Business Administration - MBA Semester 4
MF0018-Insurance and Risk Management
(Book ID: B1816)
Assignment (60 Marks)
Note: Answers for 10 marks questions should be approximately of 400
words. Each question is followed by evaluation scheme. Each Question
carries 10 marks 6 X 10=60.
Q1. Explain price risk and its types. Explain Risk management
methods.
Answer. Price risk is the risk of a decline in the value of a security or a
portfolio. Price risk is the biggest risk faced by all investors. Although price risk
specific to a stock can be minimized through diversification, market risk cannot
be diversified away. It is the Probability of loss occurring from adverse
movement in the market price of an asset.
A price risk is the risk that an investor will invest in an equity that will
eventually be worth less than what they paid for it. There are ways to manage
price risk, but as long as there is some investment going on in unsecured
products, there is no way to totally eliminate it. Therefore, the

Q2. An organization is a legal entity which is created to do some

activity of some purpose. There are elements of a life insurance
organization. Explain the elements of life insurance organization.
Important activities-2
Internal organization-3
Distribution system-2
Functions of the agent-3

Answer. An organization is a legal entity which is created to do some

activity or to achieve some purpose. It is created under some law, which gives
it a status and identity. Because of the identity, the organization is considered
to be a person in law. Therefore, it can enter into contracts, be sued in courts,
accumulate property and wealth, and do business, in the same manner as any
individual can do. The way activities are grouped lead to the formation of
offices, departments and sections Responsibilities (for results) have to be
clarified and authorities (to take decisions and utilize resources) have to be
defined. When all these are clarified, there will be people holding

Q3. Explain the doctrine of indemnity, doctrine of subrogation and

warranties and its types and classification.
Answer. Doctrine of indemnity:
Indemnity means security or compensation against loss or damage. The
principle of indemnity is such principle of insurance stating that an insured
may not be compensated by the insurance company in an amount exceeding
the insureds economic loss. In type of insurance the insured would be
compensation with the amount equivalent to the actual loss and not the
amount exceeding the loss.

Q4. Give short notes on:

a. Evidence and claim notice.
b. Subrogation
c. Salvage
Answer. a. Let's say that you have a reading passage that has an essay
writing prompt at the end. After you read the passage, your writing prompt
asks you to determine the theme for the passage and to give supporting
evidence to prove your point. In this writing prompt, it's not enough to just tell
your reader what your theme is. It is also not enough to show the evidence
that confirms your answer. You also need to include information that explains
why you believe your answer is right.
Here's how it works:

Q5. Explain the marketing mix (7 Ps) for insurance companies

Answer. The Marketing Mix Extended 7Ps:

1. Product - the Product should fit the task consumers want it for, it should
work and it should be what the consumers are expecting to get. A product is an
item that is built or produced to satisfy the needs of a certain group of people.
The product can be intangible or tangible as it can be in the form of services or
goods.
A product has a certain life cycle that includes the growth phase, the maturity
phase, and the sales decline phase.

Q6. Explain the benefits of reinsurance. Elaborate on the application

of reinsurance.
Answer. Purchasing reinsurance reduces insurers insolvency risk by
stabilizing loss experience, increasing capacity, limiting liability on specific
risks, and/or protecting against catastrophes. Consequently, reinsurance
purchase should reduce capital costs. However, transferring risk to reinsurers
is expensive. The cost of reinsurance for an insurer can be much larger than
the actuarial price of the risk transferred. With purchasing reinsurance, insurers
accept to pay higher costs of insurance production to reduce their underwriting
risk.

Fall-2016
Get solved assignments at nominal price of
Rs.130 each.
Mail us at: subjects4u@gmail.com or contact at
09882243490