Premium Essay

Hateeeee

In:

Submitted By weihannsh
Words 732
Pages 3
UECM 3453 Insurance Practice

Test 1 (30 marks convert to 15 marks)

1. Explain how the items below can affect the insurance industry and give ONE example each.

a) Judiciary decisions (4 marks – 2 marks for explanation, 2 marks for example)

Judiciary decisions are rulings made by judges in courts of law. Whenever there is grey area not specified clearly in contracts or Insurance Act especially in meeting Policyholders’ Reasonable Expectations (PRE), the court decisions act as a precedent or common law (2m). Examples: insurance policy’s unclear wordings may be ruled by court to cover medical conditions that the insurer never intended to cover. The resulting unanticipated claims and underpricing could damage the insurer’s financial soundness (2m)

b) Political or government policy (4 marks – 2 marks for explanation, 2 marks for example)

Awareness and understanding of political/government policy helps actuaries to tailor the insurance industry according to the economic environment and also advise clients/employers on possible future changes in legislation/regulation (2m). Example: introduction of compulsory wearing of seat belts in vehicles or random breath testing on drivers may have dramatic effects on incidence and severity of accidents, thus the insurance claims (2m).

2. An insurance company is considering introducing a travel insurance policy. The insurer intends to sell the policy through a large local airline. The policy would be branded in the name of the airline, but the insurance company would cover the risks.

a) List FIVE examples of risks that the policy should cover. (5 marks)

Flight delays, trip cancellation, loss of luggage, illness, personal accident (accidental death, bodily disablement), baggage delay, missed flightFlight delays, loss of luggage, illness, an

Similar Documents