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Bmgt 211:Introduction To Risk And Insurance March 2009 Question Paper
Bmgt 211:Introduction To Risk And Insurance March 2009
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2009
KABARAK UNIVERSITY
EXAMINATIONS
2008/2009 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
COURSE CODE: BMGT 211
INSTRUCTIONS:
1. Answer question ONE and any other TWO
QUESTION ONE
The recent fire related tragedies and road facilities have left business and political leaders
wondering how these events can be effectively handled. The government has pointed an
accusing finger on the operators of Nakumatt supermarket in Nairobi of negligence and
the residents of Sachangwan of irresponsibility. Soon after those infernos, Kenyans in
Kisumu and Naivasha were still “harvesting” where they had not sowed.
a) Explain the importance of the concept of risk in risk management
(5mks).
b) Discuss the significance of hazards in the risk management initiatives of those
concerned with business operations (6mks).
c) Why is risk evaluation very key in risk management? (5mks)
d) How can the law of utmost good faith and subrogation be related to insurance?
(7mks)
e) The power to incorporate and license insurance business lies squarely on the
commissioner of insurance. Discuss these powers as contained in the Insurance
Law CAP 487 of the laws of Kenya and any subsidiary thereunder. (7mks)
QUESTION TWO
a) The foundation of liability is negligence. What is the relationship between
negligence and liability insurance? (4mks)
b) Explain how the law of contract is related to the contract of insurance in Kenya.
(6mks)
c) The use of insurance has been hailed as the most effective risk management.
Discuss why this statement is true or false. (10mks)
QUESTION THREE
Ochieng and Wangui recently got married in Mombasa and their employer has asked
them to identify their insurance needs. Unfortunately, they are not conversant with
insurance matters and have approached you for professional advice.
a) Explain how they can effectively use joint life policies. (3mks)
b) Differentiate for the couple life assurance contracts from other insurance
contracts. (7mks)
c) Explain to the couple the role of various types of term life policies. (11marks)
QUESTION FOUR
The manager of Cathy Hotel in Nakuru has been alarmed by the recent wave of fire,
accidents, theft and criminal activities in Kenya. He is contemplating how to mitigate
such heavy losses.
Required:
a) Explain to the manager how he can effectively use fire insurance policy.
(8mks)
b) Discuss with the manager the obligations of hotel management and the insurance
company if fire loss materializes. (6mks)
c) What is a theft insurance policy? (6mks)
QUESTION FIVE
a) Kabarak Univeristy students were recently hosted by their chancellor at Merica
Hotel to recognize their committed contribution to needy causes of society in and
around Nakuru District. However, Njuguna, a fourth year student, became very
ill upon eating the meal served by the hotel. He was reshed to war memorial
hospital and was admitted for three weeks. Medical investigation revealed that
the student had been food poisoned. The food had been contaminated by the
waiters and waitresses.
Required:
i) What ramifications exist for the student and the hotel? (3mks)
ii) What forms of insurance can the hotel use in dealing with such losses
including those that may effect workers and even the general public.
(10mks)
b) The owner of Tumbo bar in Molo was shocked to learn from her insurance agent
that the insurer had declined to indemnify the heavy losses she suffered following
the post election violence. The agent told her that the nature of the cause of loss
had not been covered under the policy she had purchased. She is seeking your
professional advice on the prerequisites of risks that can be insured.
(7mks)
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