M.Com. DEGREE EXAMINATION, APRIL 2016
First Semester
INSURANCE AND RISK MANAGEMENT
(CBCS 2012 onwards)
Time 3 Hours Maximum 75 Marks
Part A 3 15)
Answer all questions.
All questions carry equal marks.
1. Distinguish between risk and uncertainty.
2. What useful purpose does nomination serve?
3. What is reinstatement value policy?
4. Distinguish between drawdown and maximum
drawdown.
5. Distinguish between insurance and hedging.
Part B 10 50)
Answer all questions, choosing either or
All questions carry equal marks.
6. Describe the various kinds of insurance.
Or
What is the role of IRDA in the development of
Insurance sector?
Sub. Code
611701
RW-10904
2
WSS
7. Describe the procedure of issuing a life insurance
policy.
Or
Determine the different economic uses life
insurance offers.
8. What is the claim settlement procedure followed for
a fire insurance policy?
Or
Substantiate the claim that non-life insurance
business surges ahead due to the entry of private
insurance companies.
9. What is value at risk and its limitations? Explain
any one basic approach to compute value at risk.
Or
What is the interaction between asset liability
management and financial risk?
10. What are the financial risks associated with
Futures
Options (Option purchaser and Option writer).
Or
On what basis you would choose hedging strategy?
Compare and contrast at least three features of
static and dynamic hedging.
RW-10904
3
WSS
Part C 10 10)
(Compulsory)
11. Read the following case and answer the questions.
Pandey was covered with a LIC policy for a sum of
Rs. 50,000 with Double Accident benefit. During the
insurance policy cover, Pandey was shot dead by
some miscreants. Wife of Pandey filed a claim with
the LIC, she was asked to deposit certain
documents like copy of post-mortem report, F.I.R
etc. which could not be deposited by her. LIC paid
Rs. 60,700 (sum assured along with vested bonuses)
but refused the claim under double accident benefit.
The contention of the LIC was that since under
para-10 of the policy bond, the life assured (Pandey)
was to furnish these documents to avail the double
accident benefit to the satisfaction of the LIC.
However, LIC did not take any initiative to make
independent enquiries on its own to verify the cause
of death of Pandey. Wife of Pandey won the case in
court of law.
Can the insurer deny liability because of non-filing
of documents?
In March 2010, an Air show was undertaken at
Begumpet in Hyderabad which turned out to be
very tragic for some people. Two pilots of naval
aircraft and a civilian were killed after an aircraft
crashed on a nearby residential building. Seven
others were also injured in the mishap.
What are the risks involved in the above
event?
Identify and discuss, how such risks can be
managed by insurance and who should be
taking insurance?