Examination Paper: Insurance Management
7
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Risk Management and Insurance
Section A: Objective Type (30 marks)
•This section consists of Multiple choices questions and Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. HMOs charge employers a monthly fee called:
a. A coverage fee
b. The pro rata plan fee
c. The subrogation payment
d. The capitation payment
2. Which of the following alternatives is not a typical dividend option?
a. Cash
b. A lifetime income annuity
c. Reduction of the next premium
d. Accumulation of the next premium
3. Choose the True statement about industrial life insurance.
a. It is less expensive than ordinary life insurance
b. It is more expensive than ordinary life insurance
c. It is also called discount life insurance
d. It is widely used in estate plans
4. Replacement cost at the time of loss less depreciation is the definition of:
a. Actual cash value
b. Fair market value
c. The maximum covered loss
d. The maximum replacement of loss
5. Assets that are readily available to pay claims are called:
a. Admitted assets
b. Accepted assets
c. Real assets
d. Standard operating assets
Examination Paper: Insurance Management
8
IIBM Institute of Business Management
6. Stare demises means:
a. All things considered
b. Innocent parties prevail
c. It is impolite to stare
d. To stand by decisions
7. In most states the insurance commission is:
a. Impeached
b. Elected
c. Appointed by the government
d. Appointed by the governor
8. The federal law that promotes a safe working environment for workers is:
a. OSHA
b. CERCLA
c. Equal Opportunities Act
d. Superfund
9. The organization that collects data on insurance applicants is the:
a. CBS
b. MIB
c. CIA
d. FCAS
10. The percent of uninsured Americans in 2001 was about:
a. 14 percent
b. 2 percent
c. 4 percent
d. 10 percent
Part Two:
1. What are Moral and Morale hazards?
2. What do you understand by ‘Subsidization’?
3. What are ‘Waiver’ & ‘Estoppel’?
4. Write a short note on ‘Patient’s bill of rights.
END OF SECTION A
Examination Paper: Insurance Management
9
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
Vacancy Clause
The Roberts family owned a house in Alabama. It was insured with a fire insurance policy issued by
the Sparkler Mutual Insurance Company. On April 1, the Roberts moved to Tennessee. Their son,
Bob, remained in the Alabama home for an additional month. Thereafter, the home was rented to a
tenant who lived in the home for the month of May. Mr. Roberts returned to the home irregularly,
remaining overnight on July 4 and on a few other occasions. A few pieces of furniture remained in the
home until August. On or about August 4, the home and its contents were destroyed by fire.
Questions:
1. Do you think that Sparkler Mutual should pay for the loss? Explain your reasons.
2. Did the family’s absence affect the chance of loss in this case?
Caselet 2
Case for Discussion
Ed “Bonzo” Jones was a college student. He played outfielder on his fraternity’s softball team. A
home run was hit, and the ball went into an area of electrical transformers operated by the local
utility, Total Power and Light Company. The electrical transformers were surrounded by a 5-foot
wire fence that Jones claimed to retrieve the ball. Warnings signs were posted by the utility indicating
the area was dangerous. It was later determined the gate to the area was left unlocked, although Jones
did not use it to gain access. In retrieving the ball, Jones made contact with some equipment and was
severely burned by the electrically. He was hospitalized for three months and suffered permanent
disfigurement. His medical bills amounted to $300,000.
Questions:
1. What arguments would you make if you were planning the legal defense of Total Power and
Light Company?
2. If you were on the jury in this case, would you award a judgment for damages to Jones? Explain
your reasons.
END OF SECTION B
Examination Paper: Insurance Management
10
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. If you were a large business with $ 10 million of property, would you want your primary
insurer to purchase reinsurance? Explain your reasons. Would you prefer to deal with a small
primary insurer who reinsured your risk or a large primary unsurer who did not purchase
reinsurance?
2. Do you think a college education is necessary to perform the following occupations
effectively?
a. Life insurance agent
b. Loss adjuster
c. Property insurance underwriter
d. Actuary
END OF SECTION C
S-2-210311
7
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Risk Management and Insurance
Section A: Objective Type (30 marks)
•This section consists of Multiple choices questions and Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. HMOs charge employers a monthly fee called:
a. A coverage fee
b. The pro rata plan fee
c. The subrogation payment
d. The capitation payment
2. Which of the following alternatives is not a typical dividend option?
a. Cash
b. A lifetime income annuity
c. Reduction of the next premium
d. Accumulation of the next premium
3. Choose the True statement about industrial life insurance.
a. It is less expensive than ordinary life insurance
b. It is more expensive than ordinary life insurance
c. It is also called discount life insurance
d. It is widely used in estate plans
4. Replacement cost at the time of loss less depreciation is the definition of:
a. Actual cash value
b. Fair market value
c. The maximum covered loss
d. The maximum replacement of loss
5. Assets that are readily available to pay claims are called:
a. Admitted assets
b. Accepted assets
c. Real assets
d. Standard operating assets
Examination Paper: Insurance Management
8
IIBM Institute of Business Management
6. Stare demises means:
a. All things considered
b. Innocent parties prevail
c. It is impolite to stare
d. To stand by decisions
7. In most states the insurance commission is:
a. Impeached
b. Elected
c. Appointed by the government
d. Appointed by the governor
8. The federal law that promotes a safe working environment for workers is:
a. OSHA
b. CERCLA
c. Equal Opportunities Act
d. Superfund
9. The organization that collects data on insurance applicants is the:
a. CBS
b. MIB
c. CIA
d. FCAS
10. The percent of uninsured Americans in 2001 was about:
a. 14 percent
b. 2 percent
c. 4 percent
d. 10 percent
Part Two:
1. What are Moral and Morale hazards?
2. What do you understand by ‘Subsidization’?
3. What are ‘Waiver’ & ‘Estoppel’?
4. Write a short note on ‘Patient’s bill of rights.
END OF SECTION A
Examination Paper: Insurance Management
9
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
Vacancy Clause
The Roberts family owned a house in Alabama. It was insured with a fire insurance policy issued by
the Sparkler Mutual Insurance Company. On April 1, the Roberts moved to Tennessee. Their son,
Bob, remained in the Alabama home for an additional month. Thereafter, the home was rented to a
tenant who lived in the home for the month of May. Mr. Roberts returned to the home irregularly,
remaining overnight on July 4 and on a few other occasions. A few pieces of furniture remained in the
home until August. On or about August 4, the home and its contents were destroyed by fire.
Questions:
1. Do you think that Sparkler Mutual should pay for the loss? Explain your reasons.
2. Did the family’s absence affect the chance of loss in this case?
Caselet 2
Case for Discussion
Ed “Bonzo” Jones was a college student. He played outfielder on his fraternity’s softball team. A
home run was hit, and the ball went into an area of electrical transformers operated by the local
utility, Total Power and Light Company. The electrical transformers were surrounded by a 5-foot
wire fence that Jones claimed to retrieve the ball. Warnings signs were posted by the utility indicating
the area was dangerous. It was later determined the gate to the area was left unlocked, although Jones
did not use it to gain access. In retrieving the ball, Jones made contact with some equipment and was
severely burned by the electrically. He was hospitalized for three months and suffered permanent
disfigurement. His medical bills amounted to $300,000.
Questions:
1. What arguments would you make if you were planning the legal defense of Total Power and
Light Company?
2. If you were on the jury in this case, would you award a judgment for damages to Jones? Explain
your reasons.
END OF SECTION B
Examination Paper: Insurance Management
10
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. If you were a large business with $ 10 million of property, would you want your primary
insurer to purchase reinsurance? Explain your reasons. Would you prefer to deal with a small
primary insurer who reinsured your risk or a large primary unsurer who did not purchase
reinsurance?
2. Do you think a college education is necessary to perform the following occupations
effectively?
a. Life insurance agent
b. Loss adjuster
c. Property insurance underwriter
d. Actuary
END OF SECTION C
S-2-210311
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