Insurance and risk management SEP 2025

Description

Insurance & Risk Management

Sep 2025 Examination

 

 

Q1. An insurance company has received a proposal to insure a large manufacturing plant that has reported several claims in the past three years, including fire and machinery breakdown incidents. The underwriter is required to evaluate the risk, determine the appropriate coverage terms, and recommend risk mitigation measures. The company wants to avoid excessive losses while remaining competitive in the industrial insurance market. How should the underwriter apply the underwriting process to assess and manage the risk of insuring a large manufacturing plant with a history of frequent claims? (10 Marks)

Ans 1.

Introduction

The underwriting process in insurance is a systematic evaluation of risks associated with a proposal to ensure that the insurer maintains financial stability while offering fair and competitive coverage. When a large manufacturing plant with a history of frequent claims—such as fire incidents and machinery breakdowns—seeks insurance, the underwriter faces a complex challenge. On one hand, the company must remain competitive in the industrial

 

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Q2. You are working as a financial advisor at a personal finance consultancy. One of your clients, a 35-year-old working professional with a spouse and two young children, is uncertain about purchasing life insurance. He believes that it is an unnecessary expense since he is currently healthy and has a stable job. As an advisor, evaluate the importance of life insurance in personal financial planning, especially for individuals with dependents. In your response, consider. Based on your evaluation, prepare a reasoned argument for whether the client should invest in life insurance. (10 Marks)

Ans 2.

Introduction

Life insurance is often misunderstood as an optional expense rather than an essential pillar of personal financial planning. Many individuals, particularly those who are young and healthy, underestimate the role it plays in securing the future of their dependents. For a 35-year-old working professional with a spouse and two young children, life

 

 

Q3 (A) You are pursuing your MBA internship with a non-profit organization that works with low-income urban families. The NGO is launching a financial literacy campaign to educate households about the importance of health insurance. Your team leader has asked you to design a community-focused awareness module.

Create a comprehensive health insurance awareness plan that includes:

– A clear explanation of what health insurance is and how it works.

– The importance of health insurance in preventing financial hardship during medical emergencies.

– Real-life examples or stories that illustrate the consequences of being uninsured.

– Suggested affordable health insurance schemes available in India (e.g., Ayushman Bharat, ESI, etc.).

Your module should be easy to understand, engaging, and tailored to the needs of low-income families. (5 Marks)

Ans 3a.

Introduction

Health insurance is one of the most important yet often neglected aspects of financial protection, particularly among low-income families. In India, where medical costs are rising and healthcare access is unequal, health insurance provides an essential safety net. Many urban low-income households avoid insurance due to lack of awareness, myths, or affordability concerns. An effective financial literacy campaign must therefore focus

 

 

Q3 (B) You have recently joined a logistics company as a Risk Management Officer. The company has faced multiple losses in the past year due to cargo damage, theft during transit, and rising insurance premiums. The management has now tasked you with designing a comprehensive Risk Management Plan to protect the company from further losses. You are required to create a detailed process for risk management and highlight the significance of insurance and risk management. (5 Marks)

Ans 3b.

Introduction

Risk management is essential for logistics companies where goods are constantly exposed to transit risks such as damage, theft, or delays. In the current case, repeated losses and rising insurance premiums highlight weaknesses in the company’s approach. A comprehensive risk management plan must focus on identifying vulnerabilities, minimizing exposures, and balancing insurance costs with preventive measures. Such a