Premium Essay

Risk Management and Insurance

In:

Submitted By Austine
Words 1556
Pages 7
CLASSES OF INSURANCE
LIFE INSURANCE
This is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual’s or individual’s death. It is the risk pooling plan and economic device through which the risk of premature death is transferred from the individual to a group In return the policy owner or policy payer agrees to pay a stipulated amount called a premium at regular intervals or in lump sums (so-called “paid up” insurance).
A life insurance contract is intended to meet the needs of survivors or beneficiaries, when the investor dies. From the life insurance contract, the beneficiaries receive a sum of money that far exceeds the value of the premiums the investor had paid. The beneficiaries, of course, receive this benefit if the person insured dies during the contract period.
The contract of life insurance is different from other types of insurance in the following respects.
The event insurer against is an eventual certainty i.e. nobody lives forever.
It is not the possibility of death that is insured against; rather, it’s the untimely death. The risk is not whether the insured person is going to die but when.
The risk increases as the individual ages or grows older because chances of death are greater in later years than in initial years.
There is no possibility of partial loss in life as in the case of property and liability insurance. Therefore, if a loss occurs under life assurance, the insurer will have to pay the face value of the policy.
Life assurance is not a contract of indemnity, that is, the position after the loss as before the loss. This is because it is not possible to place a value on human life.
Life assurance does not violet the principle of contribution i.e. counts of law have held that every individual has unlimited interests in their own

Similar Documents

Premium Essay

Insurance & Risk Management

...Acknowledgement * History of EFU Insurance * Vision * Mission * Policies Offered By EFU Insurance * Detail About Policies * Coverage Under Policies * Risk Management * Claims * Payment of claims and Process * Duration of Policies * Marketing Plan ACKNOWLEDGEMENT All the Acclimations and Appreciation are for Almighty ALLAH, the Compassionate; the Benevolent. That knows the mysteries & secrets of universe. We would like to show the special gratitude to MISS Khudaija who provided with us knowledge Vision about the management. At the end, we would like to thank all who directly or indirectly help us in making the project. Introduction:- In 1932, Mr. Ghulam Mohammad, a far sighted man, established Eastern Federal Union Insurance Company (EFU) with financial assistance from the Aga Khan III and the Nawab of Bhopal. Mr. Abdur Rehman Siddiqui became the founder chairman. The company was originally registered at Kolkata and operated in India (undivided) and Burma. In 1947, on the birth of Pakistan, EFU found a new home in a new country. In Pakistan, EFU rapidly established itself as a progressive and innovative insurer. It gave the emerging insurance industry the leadership, the manpower and the drive needed to grow in a situation where at one time, three-fourths of insurance was held by foreign companies. By 1961, EFU had become the flag bearer of Pakistan's insurance industry on the world stage...

Words: 4817 - Pages: 20

Premium Essay

Insurance and Risk Management

...INSURANCE AND RISK 1.0 Definition of insurance. Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Categories of risk include:- 1. Financial risks which means that the risk must have financial measurement. 2. Pure risks which means that the risk must be real and not related to gambling 3. Particular risks which means that these risks are not widespread in their effect, for example such as earthquake risk for the region prone to it. 1.1 Basic Characteristics of insurance. The insurance has the following characteristics which are, generally, observed in case of life, marine, fire and general insurances. 1.Sharing of Risk:- Insurance is a device to share the financial losses which might befall on an individual or his family on the happening of a specified event. The event may be death of a bread-winner to the family in the case of life insurance, marine-perils in marine insurance, fire in fire insurance and other certain events in general insurance, e.g., theft in burglary insurance, accident in motor insurance, etc. The loss arising nom these events if insured...

Words: 1778 - Pages: 8

Free Essay

Risk Management & Insurance on Reliance Insurance Company

...approaches and methodologies are required to be followed. The following approaches were followed in conducting this term paper. 1.1 Origin of the Report: The report is a partial requirement of the course Risk Management & Insurance (FIN 410). That is why our honorable instructor assigned us to do a term paper on Reliance Insurance Company Limited. The report is conducted based on the financial statement and the website of the company. This report is a reflection of what we have learned in between the course. 1.2 Objective and the Scope of the Report: The report was prepared as a part of our course work. The basic objectives of preparing this report are: * Analyze the financial statement of the insurance company and calculate different ratios. * Different policy the company offers. * Overall structure of the company. 1.3 Methodology of the Report: The term paper was based on different numeric values collected from the financial statement of the company and plotting them in different equations, also some information regarding the company was collected from the company’s website 1.4 Sources of Data: All the data and the information which was required to complete the term paper have been collected from the financial statements and the website of Reliance Insurance Company Ltd. That means, only secondary sources of data was used to complete the term paper, no primary source was used. 1.6 Limitations of the study: Of course this term paper is not flawless and we...

Words: 2938 - Pages: 12

Premium Essay

Ethical Issues in Consumer Behaviour

... ABOUT MUA MUA is a premier University in management, governance and leadership sponsored by The Kenya Institute of Management (KIM). The University was established on 2nd September 2011. Since then the University has established itself as a leader and local hub for Management, Leadership and Governance training in the Higher Education sector. The University offers market driven courses to spur economic growth and produce dynamic Managers and Leaders for Africa and the World. This module has been developed for use in the Management University of Africa ODEL Programme by Isabella Sile. She is a lecturer at the Management University of Africa, School of Management and Leadership. Ms. Sile is currently pursuing her PhD in Business Administration –Finance at The University of Nairobi. MODULE OVERVIEW. This module is developed for student taking the course unit “Risk and Insurance Management” in the Bachelor of Management and Leadership Programme. The module follows the outline given below. (Note: Assignments are issued separately) BMT 302 : RISK AND INSURANCE MANAGEMENT. Credit hours: 3 hrs 1.0 COURSE PURPOSE This course equips the learner with skills and knowledge in managing risk and insurance practice and its effects. 2.0 COURSE LEARNING OUTCOMES At the end of this course, the learner should be able to: 1. explain the meaning of risks in insurance; 2. distinguish between the different...

Words: 24831 - Pages: 100

Premium Essay

Honeywell Case Study

...Honeywell, Inc. and Integrated Risk Management Case Analysis Submitted to: Prof. A. Kanagaraj By Vivek Gupta Section C, 944 Executive Summary: Honeywell was a multibillion-dollar, International Corporation employing 53000 people and managing operations in 95 countries. It was the largest producer of control systems and products used to regulate heating and air conditioning in commercial buildings and of systems in avionics systems. Carrying out business in 95 countries firm faced a number of risks. Honeywell’s risk management activities were dispersed throughout the firm as shown in the table. Other risks were managed operationally. [pic] The committee voting for this new program depends on whether the anticipated savings of the program would be realized, and whether the coverage provided by the new contract would be adequate. The proposed plan is a first step in a firm wide integrated risk management program that would extend to cover all of Honeywell’s financial and operational risks, the finance committee’s decision would establish Honeywell’s risk management strategy for some years to come. Honeywell’s existing strategy was consistent with its risk management objective of minimizing earnings volatility and its cost of risk. The team wondered about the applicability of the relatively new concept of enterprise risk management, which is grouping many risks together into a portfolio of risks, rather than managing each risk separately. The team thought...

Words: 1187 - Pages: 5

Premium Essay

Job Design

...and Marine Insurance Company Time Frame: 2001 to 2002 The case happened on between 2001 to 2002. Taisei Marine and Fire InsuranceIn November 2001, following the September, 11th 2001 (“9/11”) terrorist attack on the World Trade Center, Taisei Fire and Marine Insurance Co (TFMI) collapsed, due to catastrophic insurance claims of $2.5 billion.   TFMI, together with two other Japanese companies, had a management agreement with Fortress Re, which pooled the funds of the companies to share the risks of reinsuring aviation portfolios. All four planes that crashed on the World Trade Center and other sites during the 9/11 attack were reinsured in the Fortress Re pool.   During this period, Taisei ascribed its failure - only the second bankruptcy in Japanese non-life insurance since World War II - to the freak events of 11 September. The expected loss from reinsurance was caused purely by the terrorist attacks and we could not foresee that such a huge loss would be generated because the four airplanes simultaneously crashed. The participated companies’ lack of skills in management of Fortress Re and their limited understanding of liabilities in the pool were revealed after the event. Apparently, TFMI had completely relied on Fortress Re’s management decisions. Even though it was true that the unforeseen nature of terrorist attack was a trigger for TFMI’s bankruptcy, this event showed that delegating the entire authority of managing the pool to the Fortress Re management added considerable...

Words: 4036 - Pages: 17

Premium Essay

Financial Management

...FINANCIAL MANAGEMENT Module Run No: R19/3-2011 PROJECT REPORT By: Tengku Mohamad Hedir (Intake: R19/03-2011) In partial fulfillment of the requirement of the HIGHER DIPLOMA IN SUPPLY CHAIN MANAGEMENT NO | TABLE OF CONTENTS | PAGE | 1 | INTRODUCTION | 3 | 2 | OBJECTIVE | 3 | 3 | EXECUTIVE SUMMARY | 4 | 4 | CAUSE OF THE ECONOMIC CRISIS | 5 | 5 | RISK MANAGEMENT | 6 | 6 | VARIOUS FORMS OF RISKS | 7 | 7 | MANAGING RISKS | 9 | 8 | CONCLUSION | 11 | INTRODUCTION This Project Report is based on the topic of “The Global Economic Crisis Challenges Management of Business Risks”. With view to the economic crisis in 2008 up till today, many businesses and major world economies are still reeling from the effects of the global downturn. This is primarily due to the onset of the subprime credit crisis. The subprime crisis is characterized by a rise in mortgage delinquencies and foreclosures backed by housing loans to individuals who face difficulty maintaining the repayment schedule. However, those who turn out better from the crisis have been seemingly those with greater awareness of their risks of doing business and practice more effective management of these risks. OBJECTIVE The objective of this Project Report is to identify the various risks that a business in Singapore needs to be aware of and to manage. EXECUTIVE SUMMARY The importance of risk management cannot be overstated. This is a fundamental part of doing business that...

Words: 2486 - Pages: 10

Premium Essay

Insurance Background

...Background of insurance industry of bd Insurance is not a new idea or proposition to the people of Bangladesh. About half a century back, during the British regime in the then India, some insurance companies started insurance business, particularly life, in this part of the world. Since 1947 until 1971 insurance business gained momentum in this part of what was then known as East Pakistan. There were about 49 companies transacting both life and general insurance business. These companies were operating under a free competitive economy. After the emergence of the People’s Republic of Bangladesh in 1971, the government, in order to make available the fruit of liberation to the general mass, nationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95. By virtue of this order, save and accept postal life insurance and foreign life insurance companies (other than the Pakistani companies), all companies and organization transacting all types of insurance business in Bangladesh came under this nationalization order. At the same time, five insurance corporations were initially established by the Government, viz, Jatiya Bima Corporation (National Insurance Corporation), Teesta Bima Corporation (Teesta Insurance Corporation), Karnaphuli Bima Corporation (Karnaphuli Insurance Corporation), Rupsa Jiban Bima Corporation (Rupsa Life Insurance Corporation), Surma Jiban Bima Corporation (Surma Life Insurance Corporation). On 14th May, 1973 the Insurance Corporation...

Words: 1410 - Pages: 6

Free Essay

Risk Management

...The Influence of Enterprise Risk Management on Insurers’ Stock Market Performance: An Event Analysis   Dr. Madhu Acharyya                                                                        Copyright 2009 by the Society of Actuaries.  All rights reserved by the Society of Actuaries. Permission is granted to make brief excerpts for a published  review.  Permission  is  also  granted  to  make  limited  numbers  of  copies  of  items  in  this  monograph  for  personal, internal,  classroom or  other instructional  use,  on  condition  that the  foregoing  copyright  notice is  used so as to give reasonable notice of the Society's copyright. This consent for free limited copying without  prior  consent  of  the  Society  does  not  extend  to  making  copies  for  general  distribution,  for  advertising  or  promotional purposes, for inclusion in new collective works or for resale.  Abstract    Enterprise  risk  management  (ERM)  increases  shareholder  value.  In  this  study  we  test  whether  ERM  influences  insurers’  stock  market  performance.  The  results  indicate  that  insurers’  stock  market  performance  is  linked  to  the  characteristic  of  industry  events  and  specific  firm  characteristics  rather  than to the success of ERM. In this study the 2007–2008 subprime mortgage and financial market crisis  was found unique compared to other industry events. The study recommends further research on the  methodology  of  determining  the  value ...

Words: 4987 - Pages: 20

Premium Essay

Swot Analysis Of Sbi Life Insurance

...COMPANY ANALYSIS SBI Life Insurance is a joint venture life insurance company between State Bank of India and BNP Paribas Cardiff. SBI owns 74% of the total capital and BNP Paribas Cardiff owns the remaining 26% of the capital. State Bank of India is the largest state owned banking and financial service company in India whereas BNP Paribas is a French multinational bank and financial service company with its global headquarters present in Paris. SBI Life Insurance has an authorised capital of ₹2,000 crores and a paid up capital of ₹1,000 crores. The company received a AAA/Stable/P1+ rating from Crisil Ltd in 2007. Vision: “To be most trusted and preferred life insurance provider” Mission: To emerge as the leading company offering a comprehensive...

Words: 1021 - Pages: 5

Premium Essay

Risk Management

...Risk Management Students Name Course Tutor Date Philosophy/Policy Statement Risk management is a process that involves risk assessment and a mitigation strategy for the risks. This means that identification of potential risk and evaluation of the impact of the risk is necessary. This is what is called risk assessment. A mitigation strategy is a plan that has designed and put in place to minimize the impact of the potential risk events or the adverse effects of a risk on a project. Risks in a project are unpredictable. Some are yet to happen, and some will not occur. This means that one has to get prepared to deal with any risks. The underlying philosophy of handling risk is avoiding, mitigating transferring and accepting. Avoiding means that if prevention of the happenings of the risk is possible, then that would be the best option. If it cannot be prevented or avoided, taking action so that the risk will do little harm to a project would be the other option known as mitigation. The other effective way is to pay another party to accept it. This is called transfer and are such as insurance. Lastly, if the risk cannot be solved by transfer, avoidance or mitigation then one has to accept it. This means you have to face the risk although have other alternatives when this happens. Needs Assessment Needs assessment in risk management is an essential process for any company. This is an important tool that helps in identifying the lapses in various areas of risk management...

Words: 2823 - Pages: 12

Premium Essay

Management Insurance

...which are avoidable), like dishonesty (such as burning down the warehouse when your company goes bankrupt to collect insurance money or buying insurance on someone with yourself as beneficiary and then killing them); and * morale hazards, like a careless attitude since "insurance will pay for it."   b. Define physical hazard, moral hazard, attitudinal. hazard, and legal hazard. (1) Physical hazard: physical environment which could increase or decrease the probability or severity of a loss. It can be managed through risk-improvement, insurance policy terms, and premium rates. (2) Moral hazard: attitude and ethical conduct of the insured. It cannot be managed but can be avoided by declining to insure the risk. Read more: http://www.businessdictionary.com/definition/hazard.html#ixzz3PRGECZxS 4. a. Explain the difference between pure risk and speculative risk 1. Pure Risk situations are those where there is a possibility of loss or no loss. There is no gain to the individual or the organization. WHERE AS Speculative Risks are those where there is a possibility of gain as well as loss. The element of gain is inherent or structured in such a situation. 2. Pure risks are generally insurable while the speculative ones are not. 3. The conceptual framework of the risk pooling can be applied to the pure risks, while in most of the cases of speculative risks where it is not possible. However, there may be...

Words: 1270 - Pages: 6

Premium Essay

Danish Insurance

...CHANGE AFFECT THE INSURANCE INDUSTRY Contents Introduction 3 Problem statement 4 Delimitation 4 Methodology 5 Risk management 6 Charateristics of insurance industry 6 Risk qualification 8 Approximate cost for a threat determination 8 Probability of threat accuracy or that vulnerability will be affected 9 SWOT analyses 10 Matrix between Strengths-Threats and Opportunities-Weaknesses 11 Conclusion of SWOT analysis 13 CONCLUSION 14 Introduction Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average. Climate change may be limited to a specific region or may occur across the whole Earth. Nowadays the impact of the climate change can be seen around the globe - seasons are shifting, temperatures are climbing and sea levels are rising. And meanwhile, our planet must still supply us – and all living things – with air, water, food and safe places to live. Weather related consequences, caused by climate change, present challenges that threaten the understanding of extreme weather and natural disaster related damages. Many natural disasters (like floods, earthquakes, tsunamis and volcanic eruptions) all around the world have showed that people are now exposed to extreme weather events. The lack of financial preparation to face the risk of extreme weather...

Words: 3072 - Pages: 13

Premium Essay

Mba Student

...Risk and Insurance in International Trade AMB 302 ACeL Amity University Risk refers to a situation where outcome are uncertain. In other words risk occurs whenever there is a variation in the actual outcome and expected value. In Business if there is a variation between the actual and the expected value, business suffers a loss, therefore the term risk is also used to describe the expected losses or the variation from the actual outcome. Course Objectives: The course aims at making the students conversant with risk of cross border business (Trade, Investments and Long Term Projects) and the techniques available for mitigating those risks. The role of Insurers and the products and services offered by them would be gone in detail to equip the students with decisions making tools. Learning Outcomes: At the end of the course, the student will be able to: understand the concept of risk in business management learn various techniques available to assess and mitigate those risks develop strategic alternatives evaluate different kinds of risks and their impact on different areas Table of Contents Course Objectives: ........................................................................................................................................ 2 Learning Outcomes: ...................................................................................................................................... 2 Chapter 1: Concept of Risk ................................

Words: 11816 - Pages: 48

Premium Essay

American National Insurance Co.

...American National Insurance Co. COMPANY OVERVIEW American National Insurance Co. is a major American insurance corporation. The corporate headquarter is located in Galveston, Texas since founding in 1905 by William Lewis Moody. American National Insurance Co. and its subsidiaries (collectively “American National”) operate in all 50 U.S. states, the District of Columbia, Puerto Rico, and American Samoa. Subsidiaries consist of six life insurance companies, eight property and casualty insurance companies, and numerous non-insurance subsidiaries all operating only domestically. The company conducts its business through five segments. The following segments are: * Life * Annuity * Health * Property and casualty * Corporate and Other In addition, through non-insurance subsidiaries, American National invests in stocks and real estate. The majority of revenues are generated by the insurance business. It is ranking among the largest of life insurance companies in the United States. Therefore, the life insurance continues to be the core product today through their long history. Various distribution systems are utilized, including multiple-line exclusive agents, independent agents, third-party marketing organizations, career agents, and direct sales to the public. As of September 2011, American National Insurance Company’s (Nasdaq: ANAT) total revenue was $3.04 billion. RISK FACTORS American National, being a leading insurance company, is also exposed...

Words: 3132 - Pages: 13