FYUG Even Semester Exam, 2025 ECONOMICS: ECOSEC-151 (Insurance Principles and Practices)

Course No: ECOSEC-151 | Time: 2 Hours | Full Marks: 50

UNIT-I

Question 1 (Answer any three) 1 x 3 = 3 Marks

(a) Define the concept of risk.

Risk is the uncertainty concerning the occurrence of a loss or an unfavorable outcome.

(b) What is risk evaluation?

Risk evaluation is the process of determining the significance and priority of risks by comparing the estimated level of risk against established criteria.

(c) Define risk pooling.

Risk pooling is the spreading of financial risks among a large group of people to minimize the impact on any single individual.

(d) Define risk transfer.

Risk transfer is a strategy where the financial burden of a potential loss is shifted from one party to another, typically through an insurance contract.

Question 3 (Answer any one) 5 Marks

(a) Write a short note on management of risk.

Risk management is the systematic process of identifying, analyzing, and responding to risk factors. It involves:

  • Risk Identification: Recognizing potential threats.
  • Risk Assessment: Analyzing the frequency and severity of risks.
  • Risk Mitigation: Implementing strategies like avoidance, reduction, or transfer (insurance).
  • Monitoring: Continually reviewing and updating risk strategies.

UNIT-II

Question 4 (Answer any three) 1 x 3 = 3 Marks

(a) Define insurance.

Insurance is a legal contract where one party (insurer) agrees to compensate another party (insured) for specific potential future losses in exchange for a premium.

(b) Define principle of utmost good faith.

Both parties to an insurance contract must disclose all material facts honestly and completely.

(c) What is indemnity in insurance?

Indemnity is a principle ensuring the insured is restored to the same financial position they were in before the loss, without making a profit.

Question 6 (Answer any one) 5 Marks

(a) Explain the need and role of insurance in an economic system.

Insurance plays a crucial role in economic stability by:

  • Providing Security: Protecting individuals and businesses from financial ruin.
  • Capital Formation: Insurance companies invest premiums into national infrastructure and industries.
  • Promoting Trade: Marine and transport insurance facilitate global and domestic commerce.
  • Social Benefits: Reducing the burden on the state by providing life and health covers.

UNIT-III

Question 8 (Answer any one) 2 Marks

(a) Distinguish between general insurance and life insurance.

Feature Life Insurance General Insurance
Subject Matter Human Life Property and Assets
Duration Long-term Short-term (usually 1 year)
Principle Not a contract of indemnity Strict contract of indemnity

UNIT-IV

Question 10 (Answer any three) 1 x 3 = 3 Marks

(a) Define reinsurance.

Insurance for insurance companies; an insurer transfers part of its risk to another insurer.

(b) Define coinsurance.

A joint insurance where the risk is shared between two or more insurers at the same time.

(d) What is insurance fraud?

Any act committed to deceive an insurance process for illicit financial gain.

UNIT-V

Question 13 (Answer any three) 1 x 3 = 3 Marks

(b) Write the composition of IRDA.

The Authority consists of a Chairman, not more than five whole-time members, and not more than four part-time members.

(c) In which year was IRDA constituted?

IRDA was constituted in the year 1999 (under the IRDA Act, 1999).

Question 15 (Answer any one) 5 Marks

(b) Write a short note on IRDA.

The Insurance Regulatory and Development Authority (IRDA) is the apex statutory body that regulates and promotes the insurance and re-insurance industries in India. Its primary objectives are:

  • To protect the interests of policyholders.
  • To ensure orderly growth of the insurance sector.
  • To specify codes of conduct for intermediaries and agents.
  • To promote efficiency in the conduct of insurance business.

Exam Tips

Common Mistakes

Important Formulas & Acts

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