Principles Of Risk Management And Insurance

Published Date: 02 Nov 2017

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College of Business Administration

Principles of Risk Management and Insurance

FIN 303

Section 51

Submitted to: Dr. Khalil

Submitted by:

Leina Elgazali 1006384

Mariam Bannout 1011545

Lina Shaker 1010943

Maya Hindawi 1027344

Dina Nabil 1028316

Index

Introduction……………………………………………………………

Background of the Insurance Industry in the UAE………….…………….

Al Wathba NIC Introduction …………………………

Al Wathba NIC History……….…………………………

Al Wathba NIC Products, Services, and Trends……..……..……………

Al Wathba NIC Financial Information…………………………………

Al Wathba NIC Questions and Answers…………………………………

Al Arabia Introduction……………………………………………………

Al Arabia History…………………………………………………………

Al Arabia Products, Services, and Trends…………………………………

Al Arabia Financial Information…………………..……………………….

Al Arabia Questions and Answers……………………………………..…..

Conclusion…………………………………………………………………

References……………………………………………………………….....

Appendix………………………………………………………………........

Introduction

Typically, the first words that come to mind when hearing risk is danger then the second thing that comes straight after it is how to avoid it. In many ways this is truthful and having studied a whole course on risk itself, risk to the average individual, risk in the society, and risk in the business world and the many ways of managing risk, is it proven that along with risk there is always a chance of loss. So therefore, not only do we need to recognize the danger what identify what category it fits in, we also need to study the techniques on how to deal with it and measure the options. The main idea is always the precedent. Since humanity has come to terms with risk, the cases have always been recognized as precedent.

In finance however, it is found that risk has a more technical definition. It is the probability that an actual return on an investment will be lower than the expected return. Financial risk advocates that certain areas are prone to risk and they are the following; Basic risk, capital risk, interest rate risk, exchange rate risk, economic risk, default risk, delivery risk, liquidity risk, operations risk, political risk, refinancing risk, sovereign risk, and underwriting risk. In insurance, risk has somewhat a similar but different meaning in terms of context. It creates a situation in which the probability of the chance of loss is a known variable but the actual value of the loss is not known. Risk here is not an uncertainty, a peril, or a hazard. Instead people pay to transfer the risk from one entity to another in exchange for payment. An insurer becomes the holder of a policy that is sold to the insured who is entitled to a certain amount of coverage by the insurer after being charged for a premium.

Risk has a destructive power over the economy. The global financial crisis is the biggest example of that. Some insurance companies played a reasonably huge part in this financial event. In this report, two insurance companies are approaches, examined, interviewed, and finally evaluated for their insurance policies, trends in products and services and profit models, and lastly, a brief view of the background of the insurance industry in the UAE is researched and provided.

Background of the insurance industry in the UAE

The widely known source 'Digest Arab Insurance Rating 2005' claims that the UAE had the highest premium in the Arab world (per capita) and it is $597.20. it is also said that the UAE insurance market is one of the largest and most dynamic of the markets in the Arab and Northern African region. This was as of late 2012. The multinational takaful operator based in the UAE called Salama has given out data that suggests takaful will not contribute to the overall growth of the sector.

As they continue to grow analysts say that the insurance industry will be a lot more competitive and will throw more challenges to its players, provoking innovation and marketing schemes.

The insurance industry in the UAE stands at 50 companies, 16 of which are on the stock market and has a gross premium at $900million. One percent of the country's GDP goes out to the insurance companies thus making it the largest contribution among AGCC countries.

To avoid the harsh throwbacks of competition, the Abu Dhabi Financial Services conducted an observation on the sector and advised on the encouragement to achieve the ultimate potential for the national insurance companies to develop newer strategies and keep their position in the market. It also wanted those national companies to strike back against the foreign players so that they depend less on investment income and more on market share and core insurance business.

"The Dubai Chamber of Commerce and Industry (DCCI), said in a report that Abu Dhabi, Dubai and Sharjah, host 91 per cent of the operating insurance companies. In terms of ownership of companies, 56 per cent of them are nationally owned, 6.7 per cent are Arab owned, 16.2 per cent are foreign owned, and the rest are joint ventures between nationals and foreign companies or Arab companies.

The report by the Global Investment House notes that UAE's life insurance segment, accounting for 26 per cent of the total premiums in '03, is the highest among the AGCC countries, with Kuwait close behind at 25 per cent share for life. Within the general insurance segment, motor and miscellaneous accidents are the dominant segments in the UAE." (arabic insurance)

Listed UAE Insurance Companies

This is a list of Insurance Companies in the UAE that are publicly traded:

Al-Ain Ahlia Insurance Company

Abu Dhabi Insurance Company

Al Khaznah Insurance Company

Dubai Islamic Insurance & Reinsurance (AMAN)

Al Wathba National Insurance Company

Al Dhafra Insurance Company

Dubai Insurance Co.

Dubai National Insurance Co.

Emirates Insurance Company

National General Insurance 

OMAN INSURANCE COMPANY

United Insurance Company

Union Insurance Co

(arabic insurance)

Al Wathba NIC Introduction

"AWNIC is unambiguously committed to all its Stakeholders, Policyholders, Reinsurers, Investors, Employees, and to the Society. At AWNIC every team member is encouraged to ensure that stakeholders’ interests are uppermost"(Overview ).

Vision:

The company chose and focused on some specific elements and factors to strengthen its position in the United Arab Emirates market and establish itself as a main player. Besides to that to found itself as the "company of choice", and they focused on the following(Our Vision).

Market Growth.

Complete product Coverage.

Unique Service.

Innovative Products.

Security.

Image of the Company.

Ideal Work Environment.

Mission:

AWNIC commands an image of being a professionally managed organization with innovative ideas and the adaptability to the changes and challenges of the global market. 

Al Wathba NIC History

AWINC insurance company one of the best broker company in UAE as it is managed by Mr. Rashid Al- Ketbi and the company chairman H.E.SK. Saif Bin Butti, as both of them has flawless imagination and ambition to make the company first class insurance company. These ambitions produced a professional company with amazing ideas. The company that has been well-known in the late 90's showed a rapid huge especially in the market as this company is rated all over the world. With their attention on customer service and achieve their service has always been proactive in its presence with following a systematic approach more in order to provide products and services of high quality and efficiency for its customers. Likewise, also the company continues its research and study of the market and analysis to develop the all-new. As well as their efforts to meet the needs of different sectors (Our Profile).

Al Wathba NIC Products, Services, and Trends

Services

-Fire and general accident.

- Engineering.

- Motor vehicles.

- Marine insurance.

- Oil and energy.

- Health.

- Personal line

(www.awnic.com).

Fire and General Accident:

Al Wathba Company offers an extensive choice of property products and accident insurance. As well as,it has been designed specifically to fit with customer supplies.As well as, general administration of fire and accidents to deal specifically with the property and casualty insurance in collaboration with an experienced team to insured and protect you against various dangers (Fire & General Accident).

Engineering

Al Wathba Insurance Company Engineering insurance provides protectionfor clientsagainstmanyoftherisksthatcouldaffect theengineeringprojectsthrough themachineryandfactoryequipmentthatcould collapse. It facing eightintegratedcoveragetocovertheneedsofengineeringthatwillprovideyouwithpeace of mindandbesidethemprovideyouwithmanybenefits and advantagesand distinctivethroughdistinctivedesignthatfitsyourspecificneeds(Engineering ).

Contractor's All Risks policies:

Section one: Physical Loss or Damage

This section includes contracts that cover "All Risks":

1- under construction damages

2- Losses caused by fire or electrical lightning

3- The nature disasters such as windstorm, flood, and hurricanes

4- Breaks down losses, robbery, and collision

5- Fail to any section of the contract

6- Series damages because of defective materials

7- Civil war, revolution, twister, earthquake (Contractor's All Risks).

Section two: Third party Legal Liability

This section offers compensation to the third party, because of legal liability of the protected and resulting from the carelessness of the insured up to the extent agreed(Contractor's All Risks).

1. Accidental damages, physical harm or death to the third parties.

2. Unintended damage of property except properties that are belonging to the insured and which are under his control.

3. Legal expenses and expenses for the defense of any measures (Contractor's All Risks).

Motor Vehicles

Motor vehicle has increased the cost of spare parts for vehicles, as well as car prices and repairs them.Moreover, autoinsurance had been allocatedan active partandsignificantroleif a car accident happened to the owner. Well, Al Wathba Insurance Company provide full andintegratedplansfor the owners ofprivatecarsand commercialaffordableto cover allthedamageenrolledfor the carandthecar's owneralso(Motor Vehicles ).

Policies:

1. The drivers of motor vehicles must drive their automobiles carefully and securely. Besides to that they have to avoid any problems or risks in the street. And also the insurance company always could check the automobiles whenever they want.

2. The investor or the insured person can't give the condition or the policy to someone else without giving to the company any report. In addition, both of the insurance company and the insured person don't have the permission to cancel the condition and the agreement between them without telling the other partner. And if in case of canceling the condition then the insurance company will pay the premium to the insured person.

3. If any accident accrued, the insured person must tell the insurance company about the accident and tell them all the information.

Marine insurance.

AWNIC has services to offer insurance solutions used for all kinds of merchandise,inclusive bulk cargoes, bulk oil cargoes and containerized products, steel products. We suggest an entire collection of insurance alternatives used for the transport by air, sea, land and post of any cargo, from one venue to other and among them that covers offered are (Marine Insurance):

All Risks / Basic -  by Sea or Air or Post Parcel

All Risks / Basic - Land Transit

Actual total loss

Oil and energy:

The risks correlating with energy insurance contain mining prospect and reconnoitering for oil, storage and transportation of crude to the markets, production, and risks linked to downstream activities such as storage, transportation, refining and marketing of refined petroleum products and associated gas derivatives. The majority of risks associated with energy related activities especially those arising from prospecting; production, refining and marketing are insurable though a few of the risks like fall in oil prices or washout to discover oil are not insurable (Oil & Energy).

Offshore Construction Risks:

Section1: Covers all losses and damage to the contract works and even temporary jobs. Coverage includes goods, builders, risks, and what followed that (Offshore Construction Risks).

Section2: Covers the obligations of a third party resulting from processes agreed limit (Offshore Construction Risks).

1. The content of the decade with the diagrams that displays and events the distance of the project. Besides to that the way those services are intended.

The contract will lose its value by all the main elements parts, and that include if any – pipelines.

Information of construction yards, both service provider and suppliers of the main components divisions are covered during the transition to main yard.

Information of owner, this includes management executives, repairing and safety processes (Offshore Construction Risks).

Onshore Construction:

Al AWINC provides insurance for under structure projects such as gas, oil, energy, and petrochemicals from physical damage or loss (Onshore Construction Risks).

"Materials

Machinery

Equipment

Temporary and Permanent Works

Faulty Design

Workmanship

Materials

Guarantee Maintenance (on a selective basis)" (Onshore Construction Risks).

Health:

Health insurance is treatment for medicinal care expenses that are incurred once they treat by a doctor. More frequently than not, people still have some of financial responsibilities for their medicinal expenses; on the other hand, it is less than not having health insurance. Health insurance treatment is important for peoples, in any case of how unhealthy or healthy they are. Medicinal bills can be added up and even there is a single trip to the emergency room, it can be cost. Maybe you cannot pay these bills. If you avoid going to the doctor to check on yourself due to the cost of the test, then in this situation you're putting your affecting negatively on your health. So you must insure yourself by the health insurance in the both physically and financially beneficial. Also, it is a compulsory requirement in many regions (Health).

Customer Services

"Customer delight" is our attention and building customer relationship is our priority. We are attention on excellent customer service by giving affordable solutions and measurable to our customers. We give Medical for direct access to various Medical Providers in UAE, which identifies the insured person as appropriate for Medical Services (Health).

NAS

"NAS Administration Services LLC (NAS) is incorporated in Abu Dhabi, and is owned by Alfia Investment Company LLC and the National Investor. It has set up a TPA (Third Party Administrator) operation based in the UAE with presence in GCC(Health)".

NAS launched its process in the UAE in short time. It has signed system agreements together more than 1,000 providers, inclusive clinics, laboratories and pharmacies country-wide, hospitals, diagnostic centers. NAS also has direct-billing system prepared in Kuwait, Jordan, Bahrain, Yemen, Oman, Libya Qatar, Saudi Arabia, and Egypt (Health).

NAS Services:

Acceptance Facilities

Strong software Scheme.

Allocation Services

24/7 Prompts and Clients support center (800 2311).

Processing of Demands (Network & Reimbursement).

.WorldwideSystem.

NativeSystem" (Health).

Medical Networks:

Web of the Residents.

Super BannedSystem.

Overall System.

Global Network.

CompleteSystem." (Health).

Personal line:

AWNIC is aware of the present day needs of its customers on the personal lines segment, and is working on a few more products that will best suit the individual needs. Today we have a few products off the shelf and also tailor-made, but very soon there will be a larger product-range to choose from.

AWNIC’s objective is to launch tailor made policies on all types of personal properties and interests to serve the individual needs and small & medium sized business by offering reasonable limits of indemnity under different contingencies (Personal Lines).

Al Wathba NIC Financial Information

http://www.awnic.com/awnic/en/info.aspx?m=3&id=75

According to the financial position of AWNIC the company had slow growth between the year 2009-2010 and that was due to the financial crisis. So the company was reflected negatively by the crisis and it effect on the economy of the company. Besides to that it leads to huge losses while the company is applying many threatening and difficult events in premium and underwriting.

Therefore, they fall in losses and debt due to a lack of investment and the result is their profit had been reduced. Though, in 2012 the economy position of the company had returned and prosperity, also they started to follow the right track that has resulted a little different in the profit and investments for that year 2012.

Finally, the expenses of the AWNIC had reduced between the year 2009-2010, and the profit for AWNIC had increased in the year 2010.

Al Wathba NIC Questions and Answers

Q1. What is the special insurance coverage that you offer?

Our company covers all kinds of insurance such as; engineering, health, oil and energy, personal lines, fire and general accident, motor vehicles, and marine insurance.

Q2. How do you process a claim?

Well, we need from the insured to give us the report about the accident and if the report was approved that the accident happened then our company will do their best effort in the procedure.

Q3. Which property is not insured?

We don’t have any property that is not insured.

Q4. What property insurance and self-insurance do the company provides?

For the property insurance we provide the home comprehensive. And the self-insurance is individual health, individual personal accident, travel insurance, and medical insurance for UAE visitors.

Q5.  On what basis is your company analysis loss exposure?

First thing, we keep watching the profit and losses for all the year and we keep observe them so we can avoid any losses. After that, when we control the situation, we choose the best way to be aware of losses.

Q6. What method is your company follows is financing your risk?

The manager didn't answer us this question.

Q7. Do you have a shief risk officer position?

No, we don’t have that exact position. But our facilities and the manager is doing that job perfectly.

Q8.  Retention is an important method in financing risk. In your opinion in what cases retention is most effective?

It turnover because it cost a lot.

Q9. Loss prevention is important technique in the risk control that reduces the frequency and severity of losses. What programs of loss prevention that Al Wathba provide in its process.

Al Wathba provides inspection activities to the engineering it carried out to prevent losses in the workplace. 

Q10. What type of health insurance (Straight deductible or Aggregate deductible) you company provide to your clients?

Many people want the straight deductible due to that our company discount an amount of money, so in that way the bonus is going to be less than aggregate deductible

Al Arabia Introduction

Al Arabia vision:

To be the guiding Arab Insurer.

To be the insurance mediator of selection in the GCC aria.

Our clients must be our partners. The essential point of our industry is to save and add benefit to their interest.

To deliver superior quality in insurance and risk management programs to achieve competitor advantage and customer gladness (touche, 2012).

Al Arabia values:

Honest and professional at all levels.

Loyalty and commitment to perform in the best interest of our clients.

Value the long-term relationships.

Transparency in all the transactions with the insurers with respecting to their benefit objectives and at the same time saving their money (touche, 2012).

Al Arabia History

Al Arabia Background:

For mare than 64 years of knowledge and experience in the Arab insurance community, Al Arabia Insurance represents its strength in such industry (http://www.alarabiainsurance.com/).

In 1944, Arabia insurance company was established to be included later on in Lebanon with a totally paid up assets of 51,000,000,000 Lebanese pounds (http://www.alarabiainsurance.com/).

By delivering the sufficient coverage, appropriate and prompt claims management, new services and products that include the most recent technical updating, Al Arabia Insurance has represents its strategic objectives (touche, 2012).

The focal point of its achievement lies in appreciative individual wants, needs and desires through maintaining long relationships with clients.

Al Arabia Insurance Company has many regional offices in Jordan, Lebanon, Syria, Saudi Arabia, Kuwait, Bahrain, Oman, United Arab Emirates, and Qatar. With two branches for Life Agencies in Lebanon and United Arab Emirates, Al Arabia provides individuals with financial security and safety against the financial hazard associated with loss of life (http://www.alarabiainsurance.com/).

Insurance Coverage:

Al Arabia Insurance coverage many sections in insurance industry such as Life insurance, Motor insurance, Property insurance, Marine insurance, General accidents, Health insurance, and Financial lines insurance by which this type of insurance protect and save the firm’s entity, directors, executives, employees and control shareholders advisors from any possible financial liabilities (touche, 2012).

Social Activities:

Beside to its loyalty to support charitable organizations, Al Arabia sustained its commitment to be certain that our mother the earth is continued to be green.

As a human beings are still deteriorating the echo-system of the environment, and the challenges that facing us as to the Global Warming calamity, Al Arabia take action to apply new policies for the reasonable consumption for energy and water and increasing its effectiveness. This strategy is just part of the resolution that Al Arabia aim to utilize in an effort to increase awareness for more healthy and cleaner nature (http://www.alarabiainsurance.com/).

Outlook for 2011:

For the world economy, the year 2011 was a hard year. Many unexpected events, like " Arab Spring", tsunami in Japan, civic war in Libya, undermined the tendency for global demand and additional decreased the potential growth of the world’s economy. With negative note, the financial markets closed the year 2011 (touche, 2012).

Catastrophe Milestone:

More than 325 disasters events occurred in 2011, by which 175 of them were catastrophes by nature, while 150 disasters created by man. In insurance industry it was the worst year because those 325 events declared the lives of almost 35,000 people, by which 19,000 died in the huge earthquake that hit Japan.

Outlook for 2012:

With stronger and clients focused, Al Arabia move a head to the future. Unfortunately, the Insurance Industry still witnessing a steady decrease rating in the Arab World. Insurance Markets are also suffering from lower premiums and investment’s returns.

Al Arabia still strongly loyal to its policy of raising the practical base line due to sound underwriting strategy, and selective increase in the premium returns (touche, 2012).

Al Arabia Products, Services, and Trends

Arabia Insurance provides series of products and services for its customers, below is list of products, services and policies offered by Arabia Insurance Company (all of those services and polices are listed in the official website of the company):

Life Insurance: it provides the "ARABIA LIFESTYLE" life assurance policy that gives theassuredamount. This policy enables the person to specify the plan for his life assurance to be based on his or her needs and preferences. This policy also can be applied on a single or joint life basis, and it is now only cover death but also covers terminal illness (Arabia insurance put under this category twenty of the most common known illnesses), and disability. In the same vein, Arabia insurance set a policy in which customers can have a plan for fixed death cover for a chosen period of time. Another policy is introduced by Arabia Insurance is offer an option to protect their customer to repayment for their mortgage loans; accordingly, this plan cover death of client during his payment for mortgage loans which already will be decreased in line with the mortgage dept. customer also are free to choose form the many offered product due to their needs and preferences; for example, for the family wise thinking, the customer may choose "family income benefit plan". This policy or plan provide the customer with a fixed income that paid to the family, as a result of death coverage or sickness coverage.

Motor Insurance: Arabia Insurance Company provides certain coverage for vehicles. It has certain polices for motor insurance for example, it offers an inclusive insurance coverage for Saloon cars as it include the insurance for loss or damage that caused by fire, collision and by burglary with 10% deductible on the value of the insured car, also by nasty act of third parties.Also, third party liability for motor insurance on bodily Injuries or death for third parties, as well as property damage including roadside emergency assistance services.Another policy has been set under motor insurance is Personal Accident Coverage for Driver / Insured and their family members passengers: For example, Accidental death and total permanent disability of any passenger Arabia insurance compensate with: US$ 10,000.-

- Medical expenses and urgent hospitalization resulting from a covered accident up to US$ 1000 per person and US$ 5000 per year.

Property insurance: this kind of insurance includes some different polices such as, fire policy where it covers buildings and contents against fire and lightning. Also it covers different kinds of properties against storm, tempest, flood, rainwater, bursting of pipes and overflowing of water tanks, earthquake, explosion, impact, malicious damage, riot, strike and burglary. Another policy is Householder's comprehensive policy where Arabia covers the contents of a residential house including valuable items against fire, lightning, thunderbolt, earthquake, volcanic eruption, subterranean fire, aircraft, theft, housebreaking, larceny, storm, tempest, flood, rainwater, bursting of pipes and overflowing of water tanks.

General Accidents: this service includes certain policies such as, insurance for personal accident for the individual or his legal representative for the specified insured suffers bodily injury or death due to an accident. Also, it helped the employer to make insurance that covers his employees, through Workmen's compensation as it covers employer compliance against death or injuries to his or her employees under working conditions.

Al Arabia Financial Information

The annual report for 2011 and 2010 of the company contains the financial statements that indicate the financial position of the company in the insurance market. They show the shareholders through balance sheet the obtained assets, liabilities and shareholder equities; and through income statement the company shows the profit and loss for a particular period of time. Therefore, the shareholders can decide to continue invest in this group further or not. The below statements is compared between 2010 and 2011.

First, Income statement, the most important figures tha heavily concerns the stackholders or who is pursue the to finacnial performance for companies is the profit figures. From the below graph it is appear that profits for Aabia has increased from the year of 2010 to 2011 from the amount of 591,017,583 LBP, to 602,474,321 LBP. From the first glance it is a good indicatoe for the performance of the company, because increasing profit will surly return back for investors and then increase investors in the company(Arabia Insurance, 2013).

Second, the balance sheet, there are some financial indicators that signify the progression or decline of the company in a certain period of time, those indicators were introduced in the annual report for the company in 2011 as appears in the below table; therefore, this report discused the most important measures in any market.

Earning per share: this is an inportant indicator for the organization's profitability. It is defined as "The portion of a company's profit allocated to each outstanding share of common stock" (Investopedia, 2013). It can be calculated from the below data in the finaincial statement from this equation:

It increased for 328 to 358 from 2010 to 2011, it seems good for Arabia Insurnace's stackholders to decide to reimvest in this company, also, it shows for the investors that profits is increasing.

Return on average equity, this measure can give a more precise picture of a company's profitability, especially when the shareholders' equity has changed significantly during a fiscal year. It cn be calculated:

This mesure has increased from 4% to 5% from 2010 to 2011, therefore, it can be concluded that the profitability of Arabia insurance in relation to the average shareholders’ equity has increased from 4% to 5% and this indicator is a good sign for shareholders (Investopedia, 2013).

Liquidity ratio, it used to measure the company's ability to cover its debts and other liabilities in the short-term. It can be calculated as:

This ratio in 2010 is 149%, and this is a very high percentage; however, it declined in 2011 to 145%. Basically, higher ratio of liquidity signifies more safety for the company to cover its short-term debts (Investopedia, 2013). 

Al Arabia Questions and Answers

Q1. What is the special insurance coverage that you offer?

 Al Arabia Insurance coverage many sections in insurance industry such as Life insurance, Motor insurance, Property insurance, Marine insurance, General accidents, Health insurance, and Financial lines insurance by which this type of insurance protect and save the firm’s entity, directors, executives, employees and control shareholders advisors from any possible financial liabilities

Q2. How do you process a claim?

When we receive a claim, first we have to be informed immediately after the accident occurred, then we investigate the claim and collect evidence that help us to know who is responsible for causing the accident, after that we value the loss costs and the worth of coverage. Here we have to receive a formal application from the insured. The last step is when the negotiation takes place to reach an agreement between both parties about the settlement.

Q3. Which property is not insured?

Actually, we have the all type of property’s insurance that can satisfy all needs but with some limitations and conditions we mentioned them and notice the insures when we sign the contracts.

Q4.  On what basis are your company analysis loss exposures?

Well, it’s so important to measure and quantify the loss exposures so we can manage them properly. First of all, we have to create estimation on the bases of its frequencies and severities. After this step, we ranked them according to their importance. To handle the loss exposure we face, we select the most effective techniques that fit to this actual losses.

Q5. What method is your company follows in financing your risks?

In our company, we almost retain part or all of the losses, in which called retention. Actually, this method is most effective when the losses are predictable. The other method that we follow is insurance that can apply when the frequency of potential losses but have high severity of losses.

Q6. What about the noninsurance transfer method?

Well, we already ignored this method due to the ambiguous language of the contract that may cancel the transfer. The third party may unable to cover the losses so the firm still in charge to pay the whole losses.

Q7. Do you have a chief risk officer position?

No we don’t have this position, but our executives have this skills and knowledge to handle both pure and speculative risks that we may face.

Q8.  How would you level your Surplus?

In fact, the insurance surplus can measure the firm’s financial strength and position, so let me pass this question regarding to our financial privacy.

Q9. Loss prevention is important technique in the risk control that reduces the frequency and severity of losses. What programs of loss prevention that Al Arabia provides in its process.

We have many loss prevention programs that we provide to our clients such as the safety policy management with written commitment that ensure the safety work’s procedures that has a high priority for employee’s safety.

Q10. What type of health insurance (Straight deductible or Aggregate deductible) you company provide to your clients?

We provide both straight and aggregate deductable health insurance. In UAE, almost all people prefer the straight deductable type because we deduct a certain amount of money, so the premium will be less than the aggregate type.

Conclusion

In this report, we understood what risk means and what insurance means. We understood why we need to take necessary precautions against risk and the danger that comes along with it. We understood that if risk is not properly measured and analyzed that we can suffer a lot of loss.

Now that we have gained a bit of knowledge why people need insurance and why people need to protect themselves and get the required coverage, we need to apply the understating with actual and physical insurance related institutions or trade companies. So we went on 2 interviews with two different managers in two different companies and we asked the same questions. We received different results but in the end we were able to report them in a constructive way, analyze what attributive causes lead to these results, and relate back to what we learnt in this course.

What proved to be a bit difficult is getting in touch with these companies and achieving the goals of the interviews in due time. Also the financial information was a bit hard to get let alone analyzing it.

References

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