BM/APR 2009/INS200

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UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE

RISK AND INSURANCE

COURSE CODE

INS200

EXAMINATION

APRIL 2009

TIME

3 HOURS

INSTRUCTIONS TO CANDIDATES
1.

This question paper consists of two (2) parts :

2.

Answer ALL questions from PART A and answer any two (2) questions from PART B in the
Answer Booklet. Start each answer on a new page.

3.

Do not bring any material into the examination room unless permission is given by the
invigilator.

4.

Please check to make sure that this examination pack consists of:
i)
ii)

PART A (6 Questions)
PART B (4 Questions)

the Question Paper

an Answer Booklet - provided by the Faculty

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages
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BM/APR 2009/INS200

PART A

QUESTION 1
a)

Describe with examples, a high frequency with low severity risk profile and low
frequency with high severity risk profile.
(4 marks)

b)

Explain the differences between pure and speculative risk.

(6 marks)

QUESTION 2
What are five (5) basic benefits of insurance?
(10 marks)
QUESTION 3
a)

Describe underwriting in the context of insurance?

(2 marks)

b)

Differentiate between "risk selection" and "risk classification".

(8 marks)

QUESTION 4
Define risk and explain four (4) types of personal risks.
(10 marks)
QUESTION 5
Define the term "fire" and its scope of coverage under standard fire policy.
(10 marks)
QUESTION 6
Explain the three (3) ways in calculating an insured's individual risk premium.
(10 marks)

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BM/APR 2009/INS200

PARTB

QUESTION 1
The frequency distribution table is given as below:
Claim cost (RM)
0<500
500<1000
1000<1500
1500<2000
2000 < 2500

Number of claims
10
20
15
20
35

Based on the following, calculate:a)

Relative frequency for all level of claims.

(5 marks)

b)

Cumulative frequency for all level of claims.

(5 marks)

c)

Percentage of claims:
i)
ii)
iii)
iv)

less than RM500

less than RM1,500
more than RM1,000
more than RM2,000.
(5 marks)

d)

Present the data above using histogram.

(5 marks)

QUESTION 2
a)

Explain the differences between real and perceived risk.

(12 marks)

b)

Explain three (3) basic behavior types of risky decision-making.

(8 marks)

QUESTION 3
Discuss any five (5) sources of risk capable of being identified.
(20 marks)

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BM/APR 2009/INS200

QUESTION 4
a)

State four (4) components of premium and explain the purpose of each component.
(12 marks)

b)

Write notes on the following components of a policy:

i)

cover notes
(4 marks)

ii)

renewal notice.
(4 marks)

END OF QUESTION PAPER

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