Examination Paper: Insurance Management
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Insurance Management
Section A: Objective Type (30 marks)
•This section consists of Multiple choices questions & Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark & Part Two questions carry 5 marks each.
Part One:
Multiple choices:
1. India’s first insurance company was established in:
a. 1818
b. 1817
c. 1718
d. 1950
2. The word ‘Ombudsman’ in Insurance means:
a. Appointment of an official to sell the goods.
b. Appointment of an official to investigate the complaints.
c. Appointment of an official to inspect the quality of goods.
d. Appointment of an official to supervise the work force.
3. Insurance is a:
a. Contract
b. document
c. Agreement
d. Both (a) & (b)
4. ‘Asha deep’ is an Insurance:
a. Related to dreaded disease or death
b. Related to theft
c. Related to fire
d. Related to crops
5. ‘Actuary’ is:
a. A book that contains death data
b. A book that contains statics of production
c. A person expert in statics
d. A person expert in agent ship
Examination Paper: Insurance Management
2
IIBM Institute of Business Management
6. ‘Snobbish’ customers are:
a. Self loving or egoist customer
b. Those who lack confidence
c. Those who take quick and immediate decision
d. Logical customers who ask a lot of questions
7. What stands for ‘I’ in AIDAS related with the knowledge of selling process?
a. Ideal
b. Idol
c. Income
d. Interest
8. Endowment Policy is:
a. Sum of Term Assurance and Pure Endowment
b. Difference of Term Assurance and Pure Endowment
c. Sum of Endowment Assurance and Pure Endowment
d. Difference of Endowment Assurance and Pure Endowment
9. In case of Suicide in India:
a. It is not a crime
b. It is a crime
c. It has no relation with the Insurance Policy
d. None of the above can be said
10. USP stands for:
a. Unique Sales Promotion
b. Unique Sales Process
c. Unique Selling Proposition
d. None of the above
Part Two:
1. Elaborate the functionality of ‘Married Women’s Property Act’ of India.
2. What are the necessary documents that have to be submitted for getting a License for agent
ship in Insurance Business?
3. Mention any two Insurance Policies for Handicapped.
4. What is ‘Charter Policy Parity’?
END OF SECTION A
Examination Paper: Insurance Management
3
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Insurance Business- The Difference in Providing Services
With increasing competition and changing customer preference, companies both in the manufacturing and
service sectors, are increasingly focusing on services to differentiate their offering from each other. The
need is being felt more than ever before as the tangible features of ‘products’ offered by manufactures and
service providers tend to get imitated easily. This implies that companies will need to find certain
intangibles that can differentiate their respective ‘Products’. The insurance sector in India was a
government controlled till very recently. As of 1989-99, life and non-life insurance business generated a
premium of Rs 3,19,638 million (US $ 8.2 billion) which was about 2.6 per cent of the company’s Gross
Domestic Product (GDP). However in absolute terms, India’s insurance business is not just small, it is
miniscule compared to the economically advanced countries. India’s share in the world insurance market
is only 0.39 per cent as against 34.17 per cent of the US, 21.02 per cent of Japan and 8.5 per cent of the
UK. The Insurance sector comprises life and non-life business. During 1998-99 the former accounted for
a lion’s share of the total insurance market with a share of 73 per cent (US $ 6 billion). The non-life
insurance geared towards risk, which accounted for 85 per cent non-life business. Of the balance 15 per
cent, liability insurance accounted for three per cent and personal non-life insurance for only 12 per cent,
through the share of personal non-life according to a report. This report states that the personal non-life
business is likely to grow four thousand million rupees in 1998-99 to fifty thousand million rupees in
2009-10.
With the passage of the IRDA Bill in October, 1999, the character of the insurance industry in general
and the personal non-life segment in particular is likely to change, specifically with regard to rising
customer expectations. Given the development, it is imperative for existing insurance firms and new
entrants to understand customer’s changing expectations to develop strategies for the future. It is
importing to go through the following:
•Understand the salient features of personal non-life
•Insurance business
•Understand the key expectations of customers
•Examine sources of customer’s dissatisfaction
•Suggest strategies for building customers loyalty
Personal Non-Life Insurance
Personal non-life insurance schemes can be categorized into four major groups relating to property,
health, accident and liability. The basic objective of these schemes is to meet the personal risk protection
needs of individuals.
Insurance policy for these products is basically individuals who own certain consumer items or properties.
Health-related insurance schemes cater to the needs of individual to protect themselves from the
uncertainties of ill health/accident at home or abroad.
Accident-related products include various policies that cover personal accident and other specific
contingencies. The liability offers cover to professionals.
Customer Expectations in Personal Line of Business.
Examination Paper: Insurance Management
4
IIBM Institute of Business Management
These are the six major areas where customers expect a lot from the insurance companies.
Resolution of Customer Anxiety
In a service industry, one of the factors that motivates a customer to opt for a service is whether the
service provider is able to reduce his or her anxieties, articulated or not, in relation to the same, in case of
insurable products, perhaps, the only exception to the city-centric strategy will be Reliance’s push, which
is expected to reach even small town and villages in the districts of Gujarat and Maharashtra, the two
states where the petrochemical major is a household name.
It also has an investor base of five million which can be tapped as an initial point of contact for
marketing products beside this; it plans to leverage its large customer base in the retail segments (textiles
and cellular phones) to sell insurance. In development markets, even retail chains are used to sell policies
and that too could happen here.
Products
A lot will depend on the kind of products that these outfits launch. Initially, multinationals are expected
to push familiar products to test the markets. Incidentally, each product will need clearance from IRDA
before launch. Royal Sundaram Alliance, foe example will, launches a mix of personal and commercial
insurance policies. This will cover fire, motor, personal accident and health insurance. HDFC – Standard
life will launch two core life insurance products and then another dozen will be disability and healthrelated
(life insurance covers you in case of death: but others will also take into account these riders.)
Insiders reveal that in the run up to launch, many new private players have quietly conducted market
research to figure out what will work here Max New York life has spent eight month conducting
exhaustive research and its officials say that their policies will be drafted keeping the feedback in mind.
One of them will be credit risk insurance. Under this, a person can get his housing loan or car loan
insured. So, in case the person cannot repay the loan amount because of disability or death, the asset will
not be impounded because the insurance company will cough up the outstanding amount. A variation of
this product could be attaching a life insurance policy to a loan. In this case, due to death or disability the
bank or the institution pick up the insurance amount and the asset stays with the survivors. This works
like a double collateral.
Some bit of preliminaray segmentation of the market is also appearing. IFFCO-Tokyo marine, for
instance, is planning to target the 35,000 old farmers cooperatives to sell its policies. In the process, it will
create a whole new range of insurance policies for farmers. It will introduce farmer’s credit insurance and
weather insurance among other things. So, the farmers need not to be unduly worried in case of a drought
or flash floods. On the ground, the change the mind set of people, more so in life insurance. In India, life
insurance is seen more as tax-saving mechanism rather than a safety net in case of death. The battle for
talent for already begun to recruitment advertisement in the newspapers bears testimony to that.
According to industry watchers, given the emphasis on marketing policies, managers with a background
in fast moving consumer goods (FMCGs) are in great demand. Salaries are also according to some report
going through the roof. FMCG salaries insurance salaries are reportedly between a multiple of three to
four. The other industry which appears to have become the favourite hunting grounds for insurance
companies to tap talent is the hospitality industry.
Predictably, since more of the recruits have no prior insurance background, a lot of emphasis is being
out on training and development of the sales force. It will create trained agents on the field, along with
classroom training. Training will largely be abroad for one to three weeks to get an idea about how
insurance is handled there. Some entrants like HDFC- Standard life have decided to outsource training
need to speed up the process.
Price
This is the one aspect of strategy that’s completely hush-hush. But most insurance executives say that
given that the Indian customer is extremely price-sensitive they will price their policies close to existing
price points of product from the public sector outfits. HDFC’s Tawlaker adds that at least in life
Examination Paper: Insurance Management
5
IIBM Institute of Business Management
insurance, the sum insured of most of the policies will range between Rs 50,000 and 1 lakh. “This’s
where the volumes live”.
Questions:
1. What are the basic factors required as you feel for further improvement in Pricing?
2. According to some industry watches, the big players like Reliance the Tata, and the Birlas
contribute to almost 30% of the total premium collected by GIC and its four subsidiaries. And to
the extent, GIC and its subsidiaries could see their business shrink. Comment.
Caselet 2
A fire occurred on 15th December, 1999 in the premises of ABC Co. Ltd. From the following figures,
calculate the amount of claim to be lodged with insurance company for loss of stock:
Rs
Stock at cost as on 1st April 1998 20,00,000
Stock at cost as on 1st April 1999 30,00,000
Purchases for the year ended 31st March
1999
40,00,000
Purchases from 1st April 1999
to 15th December 1999
88,00,000
Sales for the year ended 31March 1999 60,00,000
Sales from 1st April 1999 to
15th December 1999
1,05,00,000
During the accounting year 1999-2000, cost of purchases rose by 10 percent above the previous year’s
level, while selling prices went up by 5 percent.
Salvage value of stock after fire was Rs 2,00,000. The policy was for Rs 55,00,000 and was subject to
average clause.
Question:
1. What according to you, ABCL should have used to claim its best insurance refunds?
END OF SECTION B
Examination Paper: Insurance Management
6
IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. How does Money Back Policy differ from Endowment Assurance? Which one is a better
option and why?
2. How important is the Consumer Protection Act an in today’s world of consumerism?
END OF SECTION C
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Insurance Management
Section A: Objective Type (30 marks)
•This section consists of Multiple choices questions & Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark & Part Two questions carry 5 marks each.
Part One:
Multiple choices:
1. India’s first insurance company was established in:
a. 1818
b. 1817
c. 1718
d. 1950
2. The word ‘Ombudsman’ in Insurance means:
a. Appointment of an official to sell the goods.
b. Appointment of an official to investigate the complaints.
c. Appointment of an official to inspect the quality of goods.
d. Appointment of an official to supervise the work force.
3. Insurance is a:
a. Contract
b. document
c. Agreement
d. Both (a) & (b)
4. ‘Asha deep’ is an Insurance:
a. Related to dreaded disease or death
b. Related to theft
c. Related to fire
d. Related to crops
5. ‘Actuary’ is:
a. A book that contains death data
b. A book that contains statics of production
c. A person expert in statics
d. A person expert in agent ship
Examination Paper: Insurance Management
2
IIBM Institute of Business Management
6. ‘Snobbish’ customers are:
a. Self loving or egoist customer
b. Those who lack confidence
c. Those who take quick and immediate decision
d. Logical customers who ask a lot of questions
7. What stands for ‘I’ in AIDAS related with the knowledge of selling process?
a. Ideal
b. Idol
c. Income
d. Interest
8. Endowment Policy is:
a. Sum of Term Assurance and Pure Endowment
b. Difference of Term Assurance and Pure Endowment
c. Sum of Endowment Assurance and Pure Endowment
d. Difference of Endowment Assurance and Pure Endowment
9. In case of Suicide in India:
a. It is not a crime
b. It is a crime
c. It has no relation with the Insurance Policy
d. None of the above can be said
10. USP stands for:
a. Unique Sales Promotion
b. Unique Sales Process
c. Unique Selling Proposition
d. None of the above
Part Two:
1. Elaborate the functionality of ‘Married Women’s Property Act’ of India.
2. What are the necessary documents that have to be submitted for getting a License for agent
ship in Insurance Business?
3. Mention any two Insurance Policies for Handicapped.
4. What is ‘Charter Policy Parity’?
END OF SECTION A
Examination Paper: Insurance Management
3
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Insurance Business- The Difference in Providing Services
With increasing competition and changing customer preference, companies both in the manufacturing and
service sectors, are increasingly focusing on services to differentiate their offering from each other. The
need is being felt more than ever before as the tangible features of ‘products’ offered by manufactures and
service providers tend to get imitated easily. This implies that companies will need to find certain
intangibles that can differentiate their respective ‘Products’. The insurance sector in India was a
government controlled till very recently. As of 1989-99, life and non-life insurance business generated a
premium of Rs 3,19,638 million (US $ 8.2 billion) which was about 2.6 per cent of the company’s Gross
Domestic Product (GDP). However in absolute terms, India’s insurance business is not just small, it is
miniscule compared to the economically advanced countries. India’s share in the world insurance market
is only 0.39 per cent as against 34.17 per cent of the US, 21.02 per cent of Japan and 8.5 per cent of the
UK. The Insurance sector comprises life and non-life business. During 1998-99 the former accounted for
a lion’s share of the total insurance market with a share of 73 per cent (US $ 6 billion). The non-life
insurance geared towards risk, which accounted for 85 per cent non-life business. Of the balance 15 per
cent, liability insurance accounted for three per cent and personal non-life insurance for only 12 per cent,
through the share of personal non-life according to a report. This report states that the personal non-life
business is likely to grow four thousand million rupees in 1998-99 to fifty thousand million rupees in
2009-10.
With the passage of the IRDA Bill in October, 1999, the character of the insurance industry in general
and the personal non-life segment in particular is likely to change, specifically with regard to rising
customer expectations. Given the development, it is imperative for existing insurance firms and new
entrants to understand customer’s changing expectations to develop strategies for the future. It is
importing to go through the following:
•Understand the salient features of personal non-life
•Insurance business
•Understand the key expectations of customers
•Examine sources of customer’s dissatisfaction
•Suggest strategies for building customers loyalty
Personal Non-Life Insurance
Personal non-life insurance schemes can be categorized into four major groups relating to property,
health, accident and liability. The basic objective of these schemes is to meet the personal risk protection
needs of individuals.
Insurance policy for these products is basically individuals who own certain consumer items or properties.
Health-related insurance schemes cater to the needs of individual to protect themselves from the
uncertainties of ill health/accident at home or abroad.
Accident-related products include various policies that cover personal accident and other specific
contingencies. The liability offers cover to professionals.
Customer Expectations in Personal Line of Business.
Examination Paper: Insurance Management
4
IIBM Institute of Business Management
These are the six major areas where customers expect a lot from the insurance companies.
Resolution of Customer Anxiety
In a service industry, one of the factors that motivates a customer to opt for a service is whether the
service provider is able to reduce his or her anxieties, articulated or not, in relation to the same, in case of
insurable products, perhaps, the only exception to the city-centric strategy will be Reliance’s push, which
is expected to reach even small town and villages in the districts of Gujarat and Maharashtra, the two
states where the petrochemical major is a household name.
It also has an investor base of five million which can be tapped as an initial point of contact for
marketing products beside this; it plans to leverage its large customer base in the retail segments (textiles
and cellular phones) to sell insurance. In development markets, even retail chains are used to sell policies
and that too could happen here.
Products
A lot will depend on the kind of products that these outfits launch. Initially, multinationals are expected
to push familiar products to test the markets. Incidentally, each product will need clearance from IRDA
before launch. Royal Sundaram Alliance, foe example will, launches a mix of personal and commercial
insurance policies. This will cover fire, motor, personal accident and health insurance. HDFC – Standard
life will launch two core life insurance products and then another dozen will be disability and healthrelated
(life insurance covers you in case of death: but others will also take into account these riders.)
Insiders reveal that in the run up to launch, many new private players have quietly conducted market
research to figure out what will work here Max New York life has spent eight month conducting
exhaustive research and its officials say that their policies will be drafted keeping the feedback in mind.
One of them will be credit risk insurance. Under this, a person can get his housing loan or car loan
insured. So, in case the person cannot repay the loan amount because of disability or death, the asset will
not be impounded because the insurance company will cough up the outstanding amount. A variation of
this product could be attaching a life insurance policy to a loan. In this case, due to death or disability the
bank or the institution pick up the insurance amount and the asset stays with the survivors. This works
like a double collateral.
Some bit of preliminaray segmentation of the market is also appearing. IFFCO-Tokyo marine, for
instance, is planning to target the 35,000 old farmers cooperatives to sell its policies. In the process, it will
create a whole new range of insurance policies for farmers. It will introduce farmer’s credit insurance and
weather insurance among other things. So, the farmers need not to be unduly worried in case of a drought
or flash floods. On the ground, the change the mind set of people, more so in life insurance. In India, life
insurance is seen more as tax-saving mechanism rather than a safety net in case of death. The battle for
talent for already begun to recruitment advertisement in the newspapers bears testimony to that.
According to industry watchers, given the emphasis on marketing policies, managers with a background
in fast moving consumer goods (FMCGs) are in great demand. Salaries are also according to some report
going through the roof. FMCG salaries insurance salaries are reportedly between a multiple of three to
four. The other industry which appears to have become the favourite hunting grounds for insurance
companies to tap talent is the hospitality industry.
Predictably, since more of the recruits have no prior insurance background, a lot of emphasis is being
out on training and development of the sales force. It will create trained agents on the field, along with
classroom training. Training will largely be abroad for one to three weeks to get an idea about how
insurance is handled there. Some entrants like HDFC- Standard life have decided to outsource training
need to speed up the process.
Price
This is the one aspect of strategy that’s completely hush-hush. But most insurance executives say that
given that the Indian customer is extremely price-sensitive they will price their policies close to existing
price points of product from the public sector outfits. HDFC’s Tawlaker adds that at least in life
Examination Paper: Insurance Management
5
IIBM Institute of Business Management
insurance, the sum insured of most of the policies will range between Rs 50,000 and 1 lakh. “This’s
where the volumes live”.
Questions:
1. What are the basic factors required as you feel for further improvement in Pricing?
2. According to some industry watches, the big players like Reliance the Tata, and the Birlas
contribute to almost 30% of the total premium collected by GIC and its four subsidiaries. And to
the extent, GIC and its subsidiaries could see their business shrink. Comment.
Caselet 2
A fire occurred on 15th December, 1999 in the premises of ABC Co. Ltd. From the following figures,
calculate the amount of claim to be lodged with insurance company for loss of stock:
Rs
Stock at cost as on 1st April 1998 20,00,000
Stock at cost as on 1st April 1999 30,00,000
Purchases for the year ended 31st March
1999
40,00,000
Purchases from 1st April 1999
to 15th December 1999
88,00,000
Sales for the year ended 31March 1999 60,00,000
Sales from 1st April 1999 to
15th December 1999
1,05,00,000
During the accounting year 1999-2000, cost of purchases rose by 10 percent above the previous year’s
level, while selling prices went up by 5 percent.
Salvage value of stock after fire was Rs 2,00,000. The policy was for Rs 55,00,000 and was subject to
average clause.
Question:
1. What according to you, ABCL should have used to claim its best insurance refunds?
END OF SECTION B
Examination Paper: Insurance Management
6
IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. How does Money Back Policy differ from Endowment Assurance? Which one is a better
option and why?
2. How important is the Consumer Protection Act an in today’s world of consumerism?
END OF SECTION C
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