(a) Who is an actuary? (b) Differentiate between contribution and group insurance (c) Describe three types of risks that may be insured against under marine...
Question 1 Report
(a) Who is an actuary?
(b) Differentiate between contribution and group insurance
(c) Describe three types of risks that may be insured against under marine insurance.
Answer Details
(a) Who is an actuary?
An actuary is a professional expert in insurance mathematics and statistics who calculates insurance risks and, using probability and mortality tables, determines the premiums that policyholders should pay so that the insurance fund remains solvent. The actuary assesses the likelihood of insured events occurring and fixes premiums high enough to cover expected claims, administrative costs and profit, yet competitive enough to attract policyholders.
(b) Difference between contribution and group insurance
| Contribution | Group insurance |
|---|---|
| It is a principle of insurance which requires that where the same risk is insured with more than one insurer, each insurer bears only its rateable proportion of the loss. | It is a single policy taken to cover a number of persons who share a common characteristic, for example the employees of one firm. |
| It prevents the insured from recovering more than the actual loss from several insurers. | Its purpose is to give affordable cover to many people under one master policy. |
| It applies to indemnity contracts such as fire and marine. | It commonly applies to life, accident and health cover. |
(c) Three types of risks insured under marine insurance
- Marine perils of the sea: loss or damage to the ship or cargo caused by storms, heavy waves, collision, sinking or the vessel running aground.
- Fire: destruction of the ship or its cargo by fire while at sea or in port.
- Jettison and general average: the deliberate throwing overboard of cargo to lighten and save the ship; the loss so caused is shared by all parties to the voyage.
Other insurable marine risks include piracy and theft, and barratry (wrongful acts of the master or crew against the shipowner).
Download The App On Google Playstore
Everything you need to excel in your exams
