W1-2-60-1-6

JOMO KENYATTA UNIVERSITY

OF
AGRICULTURE AND TECHNOLOGY
UNIVERSITY EXAMINATIONS 2015/2016
FIRST YEAR SECOND SEMESTER/THIRD YEAR FIRST SEMESTER
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE/BUSINESS
INFORMATION TECHNOLOGY/PURCHASING AND SUPPLIES MANAGEMENT

HBC 2109:/HPS 2403: INSURANCE AND RISK MANAGEMENT

DATE: APRIL, 2016 TIME: 2 HOURS

INSTRUCTIONS: ANSWER QUESTION ONE (COMPULSORY) AND ANY

OTHER TWO QUESTIONS

QUESTION ON (COMPULSORY)
CASE STUDY: SIMPLE LIFE INSURANCE COMPANY
Simple Life Insurance Company is a locally based company operating
in Kenya and Tanzania and currently planning to expand its operations
to Uganda and Rwanda.
The company is partly owned by Old Mutual 52% and CIC group 48%.
Currently, the company has four lines of business namely; Term Life,
Universal Life, Single Premium Immediate Annuities and Variable
Annuities.
The company was founded at Term Life Insurance company, made
its name from selling term life insurance and this continues to be
a hallmark of the company today.
The company is at a cross roads where competition has required
significant compression of margins. Therefore, the company is
considering diversifying its product lines as a solution to high
competition and small profit margins. The goal is to capture a portion
of the assets building-up within the ‘baby boomer’ generation as the
final that term after finding that term insurance in insufficient for their
needs and therefore considering to change their product line. The
company also considers rebranding to simple life Assurance company
as away to strategize in its competitive strategy. The company has also
employed Robert James as an Actuary to the company, a job that was
created under Visla and Insurance section within the company.

1
Required:

a) Discuss any other FOUR reasons for increased level of risks

in the company apart from competition . [8 marks]

b) Discuss any FOUR responsibilities Mr. Robert James will

be given with the Company as an Actuary. [8 marks]

c) Discuss any FIVE contemporary issues in the insurance industry

in Kenya that may be affecting the company especially in the
Kenyan insurance sector operations. [10 marks]

d) Highlight and discuss any two non-financial risk management

strategies that the company can use in mitigation risks in the
process of risk management. [4 marks]

QUESTION TWO

a) “The Federation of Kenya Insurers is a body developed and

established in 1987 to bring together insurers transacting
business in Kenya” .

Discuss the relevance of this statement highlighting any

SIX roles played by the federation of Kenya Insurers in Kenya. [12 marks]

b) Discuss any FOUR key roles a risk manager can play in any
profit making company. [8 marks]

QUESTION THREE
a) You have been approached by a Chief Executive Officer of
your own organization on issues concerning risk management.
As a manager of the risk management department, identify and
briefly explain any SIX elements of risk management for
the company. [12 marks]

b) Differentiate between the following categories of risks:

i) Transaction and operational risks [4 marks]

ii) Financial and strategic risks [4marks]

2
QUESTION FOUR

a) Discuss any FOUR factors a risk manager would consider

when choosing between risk retention and risk transfer under
risk management . [8 marks]

b) Discuss any SIX roles played by government in risk

management in Kenya. [12 marks]

QUESTION FIVE

Discuss how the following tools can be used in risk identification

in a large company:

a) Checklists [4 marks]
b) Delphi technique [4 marks]
c) SWOT analysis [4 marks]
d) System or process flow charts [4 marks]
e) Documentation Reviews [4 marks]