...– Olagunju Tahir Matric No. – 139022111 Course Title – Theory of Risk and Insurance Topic - Social and Economic benefits of Insurance. Insurance occupies a critical position in any developing economy yet insurance penetration remains abysmally low in Nigeria. Insurance penetration is measured by Total Premium to Gross Domestic Product. Nigeria is ranked 85th in terms of global Insurance Density Premium Per Capita (IDPPC) while South Africa occupies 32nd position-Sigma Publication 2011. The latter is number 1 in Africa with IDPPC of $1,037 while that of Nigeria is $10. Prior to rebasing of the GDP, insurance contribution was N 300billion or just a little less than 1% of Nigerian GDP. Insurance contributes 15% (approx) to South Africa GDP whilst the average for Africa is 3%. The rebasing of Nigeria GDP which came on stream on Sunday 6th April 2014, has further depressed Nigeria IDPPC to 0.56% of GDP. With the attendant hardship associated with economic downtown and systemic disappearance in public corporate and solidarity funding for social and economic disasters, businesses and households have become increasingly vulnerable to risks of losses caused by fire, industrial accidents, sudden death of critical staff or family breadwinner, motor accidents, flash floods and emerging risks such as aircraft crashes, terrorism and kidnapping. The last two are not covered by conventional insurance but are special risks the market accommodates under special arrangement on request. It...
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...for insurance should be aproximately 10 times of annual expenses. So in this case the Sum assured should not be less than Rs.20,00,000/- present premiums of term insurance of sum assured 20 lacs. are for a male of 1. 25 years old is around Rs.2500 p.a. 2.35 years old is around Rs.3500 p.a. Making same premium amounts for health insurance would earn a health cover of Rs.2-3lacs. for him. @25 years TOTAL INVESTABLE AMOUNT after insurance expenses (50000-2500-2500)=Rs.45000p.a. investment term (55-25)=30years equity and/or M.F exposure (100-25)=75% Allocating 37.5% into equity and 37.5% into M.F. Equity amount to be invested 37.5%*45000= Rs.16875 Using compound interest formula for equal installments. A=P*({1+r}^n-1)/r r=rate of return. n= number of years. P=annual investment amount. A=total amount at end of "n" years. For equity n=30,r=0.15,P=16875. A=16875*({1+0.15}^30)/0.15 A=Rs.7,33,63,324 ............a * risk factor=16875/50000*100*5=168.75 Similarly for M.F. n-30,r=.12,P=16875. A=Rs.40,72,489................b * risk factor=16875/50000*100*4=135 Now amout that is left out of investable 45000 is 11250. equally allocating 11250 amongst bank f.d and gold means 5625. Gold n=30,r=0.10,P=5625 A=Rs.925279....................c * risk factor=5625/50000*100*3=33.75 Bank F.D. n=30,r=0.08,P=5625. A=Rs.637218...................d * risk factor=5625/50000*100*2=22...
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...Finance 341 Risk Management and Insurance Fall 2014 - Niehaus Overview This is a foundational course that focuses on the economics of risk, decision making under uncertainty (including behavioral biases), methods for managing risk, markets for transferring risk (e.g., insurance markets and derivative markets), and public policy issues related to risk. Specific topics include risk measurement, diversification, moral hazard, adverse selection, insurance pricing, the role of capital in ensuring performance, biases affecting decisions, safety regulation, longevity risk, systemic risk, natural catastrophe risk, and cyber risk. In addition to learning about risk, the course is designed to improve your analytical thinking and problem solving skills. Class Tuesday: 4:25-5:40 Thursday: 4:25-5:40 Office Hours: Room 457H Tuesday: 2:30-4:00 Thursday: 2:30-4:00 Or stop by my office Or make an appointment Expectations I expect students to spend a considerable amount of time outside of class reading the required materials, working on problems, and studying for exams. Expect to spend 6-9 hours outside of class each week. My strong recommendation is not to get behind. If you have questions, do not hesitate to ask either in class, outside of class, or in question and answer sessions which typically are held on Friday afternoons. Grading Homework (problems and writing assignments) 20% 1st exam (Sept. 18) 20% 2nd exam (Oct. 28)...
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...EXAMINATION IN INVESTMENT-LINKED LIFE INSURANCE PREFACE This course contains the study materials for the Certificate Examination in InvestmentLinked Life Insurance. The book may look ominously thick but please bear in mind that the market out there, both, the product producers and clients market has undergone tremendous changes in the last 15 years. The sudden deluge of information found here as compared to the earlier version is to provide a slightly higher level of understanding amongst agents, so that they can be better prepared when facing a client. The objective of this course is to provide basic fundamental knowledge of how investment-linked life insurance works and how to market it to the public. This course also introduces the agent to the world of Investment-Li n k e d L i f e Insurance sales and it is also hoped that the agents will not stop with this course but empower themselves with higher qualifications in the coming future. The Chapters in this course are designed in such a way, that a new person will get a clear picture of what Investment-Linked Life Insurance is all about and also sets a template for them to follow to a higher level in the future. It is hoped that the agents will utilise this course effectively and carry out their sales activities with stronger conviction and heightened confidence. CERTIFICATE EXAMINATION IN INVESTMENT-LINKED LIFE INSURANCE CEILLI CERTIFICATE EXAMINATION IN INVESTMENT-LINKED LIFE INSURANCE 1st Edition 1998 (First published...
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... the cAsuAlty ActuARiAl society And the cAnAdiAn institute of ActuARies Risk Management: The Current Financial Crisis, Lessons Learned and Future Implications Copyright 2008 by the Society of Actuaries. R I s k M a n a g e M e n T: the current financial crisis, lessons learned and future implications introduction the current financial crisis presents a case study of a “financial tsunami” (as former federal Reserve chairman Alan Greenspan recently called it) on what can go wrong. its ramifications are far-reaching and the lessons learned will be embedded in risk management practices for years to come. As one of the premier enterprise risk professions in practice today, the actuarial profession is sharing its substantial insight into what went wrong and the implications for the future. on behalf of the society of Actuaries, the casualty Actuarial society and the canadian institute of Actuaries, we are pleased to provide a series of essays on Risk Management: The Current Financial Crisis, Lessons Learned and Future Implications. this e-book is the result of a call for essays on the subject coordinated by the following groups: • • • • The Joint Risk Management Section of the Society of Actuaries, Casualty Actuarial Society and Canadian institute of Actuaries The Investment Section of the Society of Actuaries International Network of Actuarial Risk Managers Enterprise Risk Management Institute International included in this are the opinions of a...
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...Essays on the Structure of Financial Markets A thesis presented by Oved Yosha to The Department of Economics in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the subject of Economics Harvard University Cambridge, Massachusetts May 1992 Abstract Chapter I: Adverse selection in an insurance market may result in low-risk individuals remaining uncovered. In the framework of a monopolistic insurance market with private information, it is shown that government entry to the market as a competitor which sells insurance, results in all potential buyers actually purchasing insurance. Chapter II: The welfare trade off between reduction in risk and enhanced market power, as depository institutions become larger but fewer, is studied. The main result is that when there are enough independent risks in the economy, it is possible to achieve high diversification through mergers between depository institutions at a very small cost in terms of greater market power. Chapter III: Firms wishing to issue securities on the stock market are required to disclose private information which might be beneficial to competitors. Issuing securities publicly is more costly than doing so privately. In equilibrium, firms with sensitive information issue securities privately, while competitors cannot unambiguously infer that the information withheld is very sensitive. This suggests that one special role of banks and venture capital in financial markets, is to provide debt and...
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...elsevier.com/locate/econbase Moral hazard in insurance, value-based cost sharing, and the benefits of blissful ignorance Mark V. Pauly ∗ , Fredric E. Blavin Health Care Systems Department, The Wharton School, University of Pennsylvania, 3641 Locust Walk, Philadelphia, PA 19104-6218, United States a r t i c l e i n f o a b s t r a c t The conventional theory of optimal coinsurance rates for health insurance with moral hazard indicates that coinsurance should vary with the price responsiveness or price-elasticity of demand for different medical services. An alternative theory called “value-based cost sharing” indicates that coinsurance should be lower for services with higher (marginal) benefits relative to costs. This paper reconciles the two views. It shows that, if patient demands are based on correct information, optimal coinsurance is the same under either theory. If patient demands differ from informed demands, optimal coinsurance depends both on information imperfection and price responsiveness. Value-based cost sharing can be superior to providing information (even if the cost of information is minimal) when patient demands fall short of informed demands. An extended numerical example illustrates these points. © 2008 Published by Elsevier B.V. Article history: Received 17 August 2007 Received in revised form 20 June 2008 Accepted 8 July 2008 Available online 18 July 2008 JEL classification: I11 Keywords: Health insurance Moral hazard Value-based cost sharing 1...
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...The Hongkong and Shanghai Banking Corporation Limited Annual Report and Accounts 2012 THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED Annual Report and Accounts 2012 Contents Financial Highlights ........................................................................................................................................... Report of the Directors ...................................................................................................................................... Financial Review ............................................................................................................................................... Statement of Directors’ Responsibilities ............................................................................................................ Auditor’s Report ................................................................................................................................................ Financial Statements .......................................................................................................................................... Consolidated income statement ......................................................................................................................... Consolidated statement of comprehensive income ............................................................................................ Consolidated balance sheet .......................................
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...opportunities arise and others die off. Catastrophe bonds are an example of a new market opportunity that had not been thought of before. Catastrophe bonds can be defined as a high-yield debt instrument that is usually insurance linked and meant to raise money in case of a catastrophe such as a hurricane or earthquake. One of the advantages of catastrophe bonds is that they are not linked to the stock market or the poor economic conditions occurring today. The emergence of catastrophe bonds occurred because of the large losses insurance companies suffered following Hurricane Andrew. A catastrophe bond deal occurs as; “an insurer will issue a bond whose returns are tired to the likelihood of one or more natural disasters over a certain period of time. If the event does not happen, investors earn a yield on the bond. But the principle can be wiped out if a devastating storm does strike,” (Ahmed). The catastrophe bond can be beneficial to the insurance company when a natural disaster occurs because they now have more money on hand due to the investors. It can also be very beneficial for investors when a natural disaster does not occur and they earn a relatively high yield compared to other securities. The main issue with the catastrophe bond as both an insurance company and an investor is that the likelihood of a natural disaster is entirely random and cannot be predicted through any mathematical formula. The Japanese earthquake was the first large natural disaster to occur during...
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...invest in short term products so that their funds are readily available. Household B has many more resources and wealth to invest and could consider long term options. The third economic decision that households face is financing decisions. Household A would have a greater need to apply for loans to satisfy their needs and wants. Household B, with double income, would be less likely to borrow funds to fulfil their consumption but expected to utilize the availability of funds to accomplish their investment plans. The last financial decision that involves households is risk-management decisions. Household A would want to reduce their risks at all cost due to challenges that they may face unexpectedly. Household A should consider insurance to protect themselves from uncertainties. Household B could engage in increasing their risk within their investments in order to make a greater profit. They are able to assume this risk because of the resources and cash...
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...Variable Life Insurance Proposal In the Philippines, insurance products are being offered through Sun Life of Canada (Philippines), Inc., a member of the Sun Life Financial group of companies. In this proposal, you and your refer to the policy owner while we, us, our and the Company refer to Sun Life of Canada (Philippines), Inc. Proposal Information On the life of : Joseph Ryan Lansangan Basic Plan Sun MaxiLink Prime - Non-Smoker Ps Age Last Birthday : 28 (Male) Currency : Philippine Peso Benefit Amount Regular Premium 1,000,000.00 Ps Ps Ps Ps Ps Ps Ps Ps Ps 52,500.00 1,260.00 1,430.00 5,860.00 61,050.00 0.00 61,050.00 15,262.50 0.00 Additional Benefits Total Disability Benefit (Waiver of Premium) - TDB Accidental Death Benefit - ADB Hospital Income Benefit - HIB Class: Standard Ps 1,000,000.00 Ps 2,000.00 /day Total Annual Regular Premium Annual Excess Premium (to be Billed Regularly) Total Annual Premium (to be Billed Regularly) Total Quarterly Premium to be Billed Excess Premium (One-time) Sun MaxiLink Prime is a variable life insurance product until age 88 payable for 10 years*. The living benefit is equal to the fund value, which is partially or fully withdrawable from the policy's share in the separate account(s). The death benefit is the higher of the sum of 200% of the face amount and the fund value or the minimum death benefit. The minimum death benefit is equal to 500% of the regular premium plus 125% of each paid excess premium, if any, less 125% of...
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...month) | | 350 | A2 Matilda’s goals and objectives on timelines Timeline 1: Goal of travelling overseas in 3 years when she finishes her degree Month | 0 | 1 | 2 | 3 | …… | 34 | 35 | 36 | Cash flows | 0 | 350 | 350 | 350 | …… | 350 | 350 | 350 | n=36, r=0.5%, C=350, PV=0, payments are made at the end of each period. FV=C*PVIFA(n,r) =C*[(1+r)^n-1]/r =$350*[(1+0.005)^36-1]/0.005 =$13767.64 Timeline2: Objective of buying a unit after she has worked for 5 years. Month | 48 | 49 | 50 | …… | 70 | 71 | 72 | 73 | 74 | 75 | …… | 106 | 107 | 108 | | Cash flows | 0 | 1400 | 1400 | …… | 1400 | 1400 | 1400 | 2100 | 2100 | 2100 | …… | 2100 | 2100 | 2100 | | Month 48 – 72: n=24, r=0.5%, C=1400, PV=0 FV1=$1400*[(1+0.005)^24-1]/0.005=$35,604.74 Month 73 – 108: n=36, r=0.5% FV1’=$35,604.74*(1+0.005)^36=$42,607.50 C=2100, PV=0 FV2=$2100*[(1+0.005)^36-1]/0.005=$82,605.82 At the end of month 108: FV=FV1’+FV2 =$42,607.50+$82,605.82 =$125,213.32 A3 Based on the calculation in A2, Matilda will get approximately $13,767.64 and will not meet her first goal of saving $18000 when she graduates. To achieve her first objective, Matilda needs to make a payment of $457.59 per month (PV=0, FV=$18000, r=0.5%, n=36). Budgetary measures to help Matilda to save: 1) Make more money * Look for jobs with higher wage....
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...accounts 36 Balance sheets 37 Cash flow statements 38 Notes to the financial statements 39 Statement of value added 73 Five-year financial summary 74 Financial risk analysis 78 DIAMOND BANK PLC Directors' Report For period ended 31 December 2011 The directors present their annual report on the affairs of Diamond Bank Plc (“the Bank”) and its subsidiaries ("the Group"), together with the financial statements and auditors' report for the period ended 31 December 2011. a. Legal Form The Bank was incorporated in Nigeria under the Companies and Allied Matters Act 1990 as a private limited liability company on 20 December 1990. It was granted license on the 15 March 1991 to carry on the business of commercial banking and commenced business on 21 March 1991. The Bank converted into a Public Limited Liability Company on 28 February 2005. The Bank’s shares were listed on the 27 May 2005 on the floor of the Nigerian Stock Exchange by way of introduction. b. Principal Activity and Business Review The principal activity of the Group continues to be the provision of banking and other financial services to corporate and individual customers. Such services include granting of loans and advances, corporate finance and money market activities. At the start of the period, the Bank had seven subsidiaries ADIC Insurance Limited (96.15%), Diamond Capital and Financial Markets Limited (100%), Diamond Securities Limited (owned through Diamond Capital), Diamond Registrars Limited(owned through...
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...service. 2. An alphanumeric number issued by the insurance company giving approval of a procedure or service is a(n) authorization. 3. An individual entitled to receive benefits from an insurance policy or program or from a government entitlement program offering healthcare benefits is considered the beneficiary. 4. 5. 6. Capitation is a payment method used by many managed care organizations in which a fixed amount of money is reimbursed to the provider for patients enrolled during a specific period of time, no matter what services were received or how many visits were made. 7. In the insurance business, companies that assume the risk of an insurance policy are considered the carrier. 8. 9. The health benefits program run by the Department of Veterans Affairs (VA) that helps eligible beneficiaries pay the cost of specific healthcare services and supplies is the (give full name and acronym) Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) 10. A(n) co-insurance provision frequently is found in medical insurance policies whereby the policyholder and the insurance company share the cost of covered losses in a specified ratio. 11. 12. A(n) co-payment is the sum of money paid at the time of medical service; it is a form of coinsurance. 13. Typically met on a yearly or per-incident basis, this specific amount of money, a(n) deductible is what a patient must pay out of pocket before the insurance carrier begins paying. 14. Dependents are the...
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...paper only. 3. Do not use report covers. 4. Staple your assignment prior to handing it in. 5. Be sure to print clearly your names, student numbers, section and Assignment 1 at the top of the first page. 6. Spelling and grammar may affect your marks. 7. Late assignments will be penalized and no assignments will be accepted after the last class. Question 1: Risk Management Meet the Jones family: Mom, Maria age 47 Dad, Daniel age 51 Three kids – Patty (6), Kobe (9) and Gordon (12). They have come to you for advice on how to manage their risk. They have provided you with the following information about their family. Maria and Daniel both work in the financial services industry, which is how they initially met. Daniel was working as a Sales Representative for a mutual fund company and Maria was his Inside Sales Associate. They continue to work for the same firm; however, Daniel is now VP of sales earning an annual salary of $250,000 plus bonus and Maria is a Sales Representative earning a salary of $60,000 plus bonus based on net sales. The company provides them with a group RRSP, life insurance coverage of one times salary for Maria and two times salary for Daniel, and they each have an expense account. They do not have any extended health care benefits. Maria uses her personal vehicle for work purposes such as attending client...
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